Document ID: SEC-2018-0821-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2018-05-29T04:00Z

[Federal Register Volume 83, Number 103 (Tuesday, May 29, 2018)]
[Notices]
[Pages 24517-24533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11395]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83303; File No. SR-CHX-2018-004]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 
1 Thereto, in Connection With a Proposed Transaction Involving CHX 
Holdings, Inc. and the Intercontinental Exchange, Inc.

May 22, 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 May 8, 2018, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. On May 17, 2018, the Exchange filed Amendment No. 1 to 
the proposal. The Commission is publishing this notice to solicit 
comments on the proposed rule change, as modified by Amendment No. 1, 
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

    CHX proposes a rule change in connection with a transaction 
(``Transaction'') whereby a wholly-owned subsidiary of NYSE Group, Inc. 
(``NYSE Group'') would merge with and into the Exchange's parent, CHX 
Holdings, Inc. (``CHX Holdings''), with CHX Holdings continuing as the 
surviving corporation (``Merger''). Pursuant to the Transaction, the 
Exchange and CHX Holdings would become indirect subsidiaries of 
Intercontinental Exchange, Inc. (``ICE'').
    In connection with the proposed Transaction, the Exchange proposes 
to (a) amend the governing documents of the Exchange and CHX Holdings; 
(b) adopt organizational documents of NYSE Group, NYSE Holdings LLC 
(``NYSE Holdings''), Intercontinental Exchange Holdings, Inc. (``ICE 
Holdings''), and ICE as rules of the Exchange; and (c) amend Article 2, 
Article 19 and Article 22 of the CHX Rules.
     The text of the proposed Amended and Restated Certificate 
of Incorporation of the Chicago Stock Exchange, Inc. (``CHX 
Certificate'') and proposed Amended and Restated Bylaws of the Chicago 
Stock Exchange, Inc. (``CHX Bylaws'') is attached as Exhibits 5A and 
5B, respectively. The text of the proposed Second Amended and Restated 
Certificate of Incorporation of CHX Holdings, Inc. (``CHX Holdings 
Certificate'') and proposed Second Amended and Restated Bylaws of CHX 
Holdings, Inc. (``CHX Holdings Bylaws'') is attached as Exhibits 5C and 
5D, respectively.
     The text of the Seventh Amended and Restated Certificate 
of Incorporation of NYSE Group, Inc. (``NYSE Group Certificate'') and 
Fourth Amended and Restated Bylaws of NYSE Group, Inc. (``NYSE Group 
Bylaws'') is attached as Exhibits 5E and 5F, respectively. The text of 
the Ninth Amended and Restated Limited Liability Company Agreement of 
NYSE Holdings LLC (``NYSE Holdings Operating Agreement'') is attached 
as Exhibit 5G. The text of the Ninth Amended and Restated Certificate 
of Incorporation of Intercontinental Exchange Holdings, Inc. (``ICE 
Holdings Certificate'') and Sixth Amended and Restated Bylaws of 
Intercontinental Exchange Holdings, Inc. (``ICE Holdings Bylaws'') are 
attached as Exhibits 5H and 5I, respectively. The text of the Fourth 
Amended and Restated Certificate of Incorporation of Intercontinental 
Exchange, Inc. (``ICE Certificate''), Eighth Amended and Restated 
Bylaws of Intercontinental Exchange, Inc. (``ICE Bylaws'') and 
Independence Policy of the Board of Directors of Intercontinental 
Exchange, Inc. (``ICE Independence Policy'') is attached as Exhibits 
5J, 5K, and 5L, respectively.
     The proposed changes to CHX Article 2, Rules 2 (Executive 
Committee), 3 (Finance Committee), 4 (Regulatory Oversight Committee), 
and 11 (Nominating and Governance Committee) and CHX Article 19, Rule 2 
(Routing Brokers), as well as proposed new CHX Article 22, Rule 28 
(Additional Requirements for Listed Securities Issued by 
Intercontinental Exchange, Inc. or its Affiliates), are attached as 
Exhibit 5M, and the text of resolutions of the Board of Directors of 
CHX Holdings dated April 25, 2018 to waive certain ownership and voting 
limitations to permit the Transaction (``Resolutions'') is attached as 
Exhibit 5N.
    As discussed below, the Exchange proposes that the above rule 
changes would become operative simultaneously with the Merger that 
effectuates the Transaction (``Closing''), with the exception that the 
proposed addition of new Section XII to the CHX Holdings Bylaws would 
become operative immediately before the Closing.

[[Page 24518]]

    The text of this proposed rule change is available on the 
Exchange's website at http://www.chx.com/regulatory-operations/rule-filings/, 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 a rule change in connection with the 
Transaction whereby a wholly-owned subsidiary of NYSE Group would merge 
with and into the Exchange's parent, CHX Holdings, with CHX Holdings 
continuing as the surviving corporation. Pursuant to the Transaction, 
the Exchange and CHX Holdings would become indirect subsidiaries of 
ICE.
    Following the Transaction, the Exchange would continue to be 
registered as a national securities exchange and as a separate self-
regulatory organization (``SRO''). As such, the Exchange would continue 
to have separate rules, membership rosters, and listings that would be 
distinct from the rules, membership rosters, and listings of the four 
other registered national securities exchanges and SROs owned by NYSE 
Group, namely, the New York Stock Exchange LLC (``NYSE''), NYSE 
American LLC (``NYSE American''), NYSE Arca, Inc. (``NYSE Arca''), and 
NYSE National, Inc. (``NYSE National'' and together with the NYSE, NYSE 
American and NYSE Arca, the ``NYSE Exchanges'').
    The Exchange notes that the proposed rule change presents no novel 
issues, as all of the proposed rule text is based on existing rules of 
the NYSE Exchanges or, in the case of the proposed amendments to the 
CHX Holdings Bylaws, the Exchange.
I. Current and Proposed Ownership of the Exchange
    Since 2005, CHX has been a wholly-owned subsidiary of CHX 
Holdings.\3\ CHX Holdings is the record and beneficial owner of 1,000 
shares of CHX, par value $.01 per share, which represents all of the 
issued and outstanding shares of capital stock of CHX.
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    \3\ CHX became a wholly-owned subsidiary of CHX Holdings 
pursuant to the Exchange's demutualization as approved by the 
Commission in February 2005. See Securities Exchange Act Release No. 
51149 (February 8, 2005), 70 FR 7531 (February 14, 2005) (SR-CHX-
2004-26) (``Demutualization Release''). The Exchange and CHX 
Holdings are Delaware corporations.
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    CHX Holdings is beneficially owned by 197 firms or individuals, 
including Participants \4\ or affiliates of Participants, many of whom 
were former seat holders on the Exchange prior to its demutualization 
in 2005. Four firms hold Series A Preferred Stock and seven individuals 
hold Series B Preferred Stock. No firm, individual, or group of 
affiliated firms or individuals beneficially owns 10 percent or more of 
CHX Holdings on an as-converted basis.
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    \4\ A ``Participant'' is considered a ``member'' of the Exchange 
for purposes of the Exchange Act. See CHX, Article 1, Rule 1(s) 
(Definitions).
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    CHX Holdings is the sole member of CHXBD, LLC (``CHXBD''), the 
Exchange's affiliated routing broker. CHXBD is a facility (as defined 
in Section 3(a)(2) of the Exchange Act) \5\ of the Exchange.\6\ 
Pursuant to Article 19, Rule 2 (Routing Broker) of the CHX Rules, CHXBD 
provides the outbound routing of orders from the Exchange to other 
trading centers.\7\
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    \5\ 15 U.S.C. 78c(a)(2).
    \6\ See CHX, Article 19, Rule 2(a)(1) (Routing Brokers). The 
Exchange does not propose to amend Article 19, Rule 2 or to alter 
the obligations Article 19, Rule 2(a) places on the Exchange and 
CHXBD.
    \7\ Participants' use of CHXBD to route orders to away trading 
centers is optional, and any Participant that does not wish to use 
CHXBD may use other broker-dealers to route orders to other trading 
centers. See id.
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    NYSE Group is a wholly-owned subsidiary of NYSE Holdings, which is 
in turn wholly owned by ICE Holdings. ICE Holdings is wholly-owned by 
ICE.\8\
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    \8\ ICE is a public company listed on the NYSE. ICE, ICE 
Holdings, and NYSE Group are Delaware corporations and NYSE Holdings 
is a Delaware limited liability corporation.
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    CHX Holdings, ICE and Kondor Merger Sub, Inc. (``Merger Sub''), 
entered into a Merger Agreement dated April 4, 2018 (``Merger 
Agreement''). Merger Sub is a wholly-owned subsidiary of NYSE Group. 
Pursuant to the Merger Agreement, at the Closing, Merger Sub would 
merge with and into CHX Holdings, and CHX Holdings would be the entity 
surviving the Merger. Current holders of the common and preferred stock 
of CHX Holdings would receive cash in exchange for their shares.
    Upon Closing, NYSE Group will hold all of the outstanding and 
issued shares of CHX Holdings, and CHX Holdings will continue to be the 
record and beneficial owner of all of the issued and outstanding shares 
of capital stock of CHX and the sole member of CHXBD. Closing is 
subject to satisfaction of customary conditions for a transaction of 
this nature, including approval of this proposed rule change by the 
Securities and Exchange Commission (``Commission'').
    Moreover, upon the Closing, Archipelago Securities, LLC 
(``ArcaSec''), a Participant of the Exchange and wholly-owned 
subsidiary of NYSE Group, will become an affiliate of the Exchange. CHX 
Article 3, Rule 20 (Non Affiliation between Exchange and any 
Participant) provides, in pertinent part, that a Participant shall not 
be or become an affiliate of the Exchange, or an affiliate of any 
affiliate of the Exchange, in the absence of an effective filing under 
Section 19(b) of the Exchange Act.\9\ The Exchange and Archipelago will 
each operate in essentially the same manner upon Closing as it operates 
today. That is, upon the Closing, ArcaSec will not operate as a 
``facility'' of the Exchange, as defined under Section 3(a)(2) of the 
Exchange Act,\10\ and will continue to act, and be regulated by the 
Exchange, as a Participant on the same terms as any other Participant, 
apart from CHXBD. Accordingly, the Exchange submits that the proposed 
affiliation between the Exchange and ArcaSec would not result in unfair 
discrimination between Participants and is therefore permissible and 
consistent with the requirements of CHX Article 3, Rule 20 and Section 
6(b)(5) of the Exchange Act.\11\
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    \9\ 15 U.S.C. 78s(b).
    \10\ 15 U.S.C. 78c(a)(2).
    \11\ 15 U.S.C. 78f(b)(5). The Exchange notes that CHXBD is not a 
member, for purposes of the Exchange Act, of any of the NYSE 
Exchanges. As discussed below, the Exchange proposes to add a new 
subsection (b) to Article 19, Rule 2 to address the role of ArcaSec 
as an inbound router.
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    As discussed in further detail below, to effectuate the change in 
the ownership structure in connection with the proposed Transaction, 
the Exchange proposes the following:
     The CHX Holdings Certificate includes certain restrictions 
on the ownership and voting of shares of CHX Holdings (the ``Ownership 
and Voting Limitations'').\12\ At Closing, NYSE

[[Page 24519]]

Group would acquire all of the shares of CHX Holdings, which would 
violate the Ownership and Voting Limitations unless such limitations 
are waived. In order to effectuate the waiver, in accordance with the 
CHX Holdings Certificate,\13\ the CHX Holdings Board (a) approved the 
Resolutions, and (b) proposes to add a new Article XII, Section 12.1 to 
the CHX Holdings Bylaws (the ``Bylaw Waiver Amendment''). So that the 
Bylaw Waiver Amendment and Resolutions may effectuate a waiver of the 
Ownership and Voting Limitations and thereby permit the Transaction, 
the Bylaw Waiver Amendment would be operative immediately before the 
Closing.
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    \12\ See CHX Holdings Certificate, Article FIFTH, Paragraph (b).
    \13\ See CHX Holdings Certificate, Article FIFTH, Paragraphs 
(b)(iii)(B) and (b)(iv).
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     The Exchange proposes amendments to the CHX Certificate 
and CHX Bylaws that would conform the Exchange's governance provisions 
regarding the composition, election and terms of the Exchange Board to 
those of other NYSE Exchanges. These proposed changes would be 
operative upon Closing.
     The Exchange proposes amendments to the CHX Holdings 
Certificate and CHX Holdings Bylaws that would make the governing 
documents of the Exchange's direct parent, CHX Holdings, consistent 
with those of NYSE Group, NYSE Holdings, ICE Holdings, and ICE 
(together, the ``ICE Holding Companies''). These proposed changes would 
be operative upon Closing.
     The Exchange proposes to amend CHX Article 2, Rules 2, 3, 
4, and 11, to reflect proposed changes to the CHX Bylaws and CHX 
Certificate. These proposed changes would be operative upon Closing.
II. Proposed Rule Changes to Waive the Ownership and Voting Limitations
    Article FIFTH of the CHX Holdings Certificate provides that that no 
Person,\14\ either alone or together with its Related Persons,\15\ may, 
directly or indirectly:
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    \14\ CHX Holdings Certificate, Article FIFTH, Paragraph (a)(i) 
defines ``Person'' as ``an individual, partnership (general or 
limited), joint stock company, corporation, limited liability 
company, trust or unincorporated organization, or any governmental 
entity or agency or political subdivision thereof''.
    \15\ CHX Holdings Certificate, Article FIFTH, Paragraph (a)(ii) 
defines ``Related Persons'' as ``(A) with respect to any Person, all 
`affiliates' and `associates' of such Person (as such terms are 
defined in Rule 12b-2 under the . . . Act . . .); (B) with respect 
to any Person that holds a permit issued by the . . . Exchange . . . 
to trade securities on the . . . Exchange (a `Participant'), any 
broker or dealer with which a Participant is associated; and (C) any 
two or more Persons that have any agreement, arrangement or 
understanding (whether or not in writing) to act together for the 
purpose of acquiring, voting, holding or disposing of shares of the 
capital stock of'' CHX Holdings.
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    1. Own shares of stock of CHX Holdings representing more than 40 
percent of the then outstanding votes entitled to be cast on any 
matter.
    2. If it is a Participant, own shares of stock of CHX Holdings 
representing more than 20 percent of the then outstanding votes 
entitled to be cast on any matter.
    3. Pursuant to any voting trust, agreement, plan or other 
arrangement, vote or cause the voting of shares of the stock of CHX 
Holdings or give any consent or proxy with respect to shares 
representing more than 20 percent of the voting power of the then 
issued and outstanding capital stock of CHX Holdings; or enter into any 
agreement, plan or other arrangement (``Arrangement'') with any other 
Person, either alone or together with its Related Persons, under 
circumstances that would result in the subject shares of CHX Holdings 
not being voted on any matter or matters or any proxy relating thereto 
being withheld, where the effect of such Arrangement would be to enable 
any Person, either alone or together with its Related Persons, to vote, 
possess the right to vote or cause the voting of shares of CHX Holdings 
which would represent more than 20 percent of said voting power.\16\
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    \16\ CHX Holdings Certificate, Article FIFTH, Paragraph (b)(ii). 
Article FIFTH includes provisions to address violations of the 
current Ownership and Voting Limitations. See CHX Holdings 
Certificate, Article FIFTH, Paragraphs (d) and (e).
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    Because NYSE Group's acquisition of all the shares of CHX Holdings 
at Closing would violate these Ownership and Voting Limitations, the 
CHX Holdings Board (a) approved the Resolutions, and (b) proposes to 
add the Bylaw Waiver Amendment to the CHX Holdings Bylaws. So that the 
Bylaw Waiver Amendment and Resolutions may effectuate a waiver of the 
Ownership and Voting Limitations and thereby permit the Transaction, 
the Bylaw Waiver Amendment would be operative immediately before the 
Closing.
The Resolutions
    The CHX Holdings Certificate provides that the first and third 
Ownership and Voting Limitations set forth above may be waived by the 
CHX Holdings Board by adopting an amendment to the bylaws, if, in 
connection with the adoption of such amendment, the Board of Directors 
also adopts certain resolutions.\17\ In addition, the CHX Holdings 
Certificate provides that, notwithstanding the first and second 
Ownership and Voting Limitations, a proposed sale, assignment or 
transfer of CHX Holdings stock above the percentage limitations shall 
not become effective until the Board of Directors of CHX Holdings has 
determined, by resolution, that such purchaser and its Related Persons 
are not subject to any applicable statutory disqualification.\18\
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    \17\ See Article FIFTH, Paragraph (b)(iii)(B) of the CHX 
Holdings Certificate, which provides that any such resolution must 
state that the Board's determination is that such amendment (a) will 
not impair the ability of the Exchange to carry out its functions 
and responsibilities as an ``exchange'' under the Exchange Act, and 
the rules under the Exchange Act; (b) is otherwise in the best 
interests of CHX Holdings and its stockholders and the Exchange; (c) 
will not impair the ability of the Commission to enforce the 
Exchange Act, and (d) such amendment shall not be effective until 
approved by the Commission.
    \18\ See Article FIFTH, Paragraph (b)(iv) of the CHX Holdings 
Certificate, which provides that, notwithstanding the first and 
second Ownership and Voting Limitations, ``in any case where a 
Person, either alone or together with its Related Persons, would own 
or vote more than the above percentage limitations upon consummation 
of any proposed sale, assignment or transfer of'' CHX Holdings' 
stock, ``such sale, assignment or transfer shall not become 
effective until the Board of Directors'' of CHX Holdings ``shall 
have determined, by resolution, that such Person and its Related 
Persons are not subject to any applicable `statutory 
disqualification' (within the meaning of Section 3(a)(39)'' of the 
Exchange Act.
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    Accordingly, on April 25, 2018, the CHX Holdings Board adopted the 
following Resolutions: \19\
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    \19\ The full text of the Resolutions is set forth in Exhibit 
5N. The Exchange notes that the Resolutions use ``Corporation'' and 
``Parent'' instead of ``CHX Holdings'' and ``ICE,'' respectively. To 
avoid possible confusion, the excerpt of the Resolutions uses the 
terms defined herein.
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    1. That the Board has determined that the Bylaw Waiver Amendment, 
the (direct or indirect, as applicable) acquisition of the Proposed 
Share Ownership by each of the ICE Holding Companies and the (direct or 
indirect, as applicable) acquisition or (direct or indirect, as 
applicable) exercise of the Proposed Voting Rights by each of the ICE 
Holding Companies (i) will not impair the ability of the Exchange to 
carry out its functions and responsibilities as an ``exchange'' under 
the Exchange Act and the rules thereunder; (ii) are otherwise in the 
best interests of [CHX Holdings] and its stockholders and the Exchange; 
and (iii) will not impair the ability of the Commission to enforce the 
Exchange Act;
    2. that the Board has considered the Merger Agreement and the 
Merger, the Proposed Share Ownership and Proposed Voting Rights of each 
of the

[[Page 24520]]

ICE Holding Companies that would result therefrom, and after having 
received, considered and discussed information provided by the 
Exchange, has determined that neither the ICE Holding Company, nor any 
of its Related Persons, is subject to ``statutory disqualification'' 
within the meaning of Section 3(a)(39) of the Exchange Act;
    3. that the Board hereby approves and directs that the Amendments, 
including the Bylaw Waiver Amendment,\20\ be submitted to the 
Commission for approval in connection with the [present] Rule 19b-4 
Filing . . . , that when effective, would waive the Ownership and 
Voting Limitations solely to permit NYSE Group to possess ownership and 
voting rights in [CHX Holdings] in excess of the Ownership and Voting 
Limitations following consummation of the Merger;
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    \20\ ``Amendments'' includes any amendments related to the 
Merger and other transactions contemplated by the Merger Agreement.
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    4. that the Board hereby determines that the execution and delivery 
of the Merger Agreement by [ICE] constitutes notice of the ICE Holding 
Companies' intention in writing to acquire the Proposed Share Ownership 
and Proposed Voting Rights, and the Board hereby consents to a period 
of notice shorter than forty-five (45) days before the proposed 
ownership of such shares or the proposed exercise of such voting 
rights.\21\
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    \21\ For the notice requirement, see CHX Holdings Certificate, 
Article FIFTH, Paragraph (b)(v).
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The Proposed Amendment
    In addition to the Resolutions, to waive the current Ownership and 
Voting Limitations, pursuant to Article FIFTH, Paragraph (b)(iii)(B) of 
the CHX Holdings Certificate, the Exchange proposes the Bylaw Waiver 
Amendment to the CHX Holdings Bylaws. The Bylaw Waiver Amendment would 
be added to the CHX Holdings Bylaws for the sole purpose of allowing 
the Transaction to Close. It would provide as follows: \22\
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    \22\ The Exchange notes that the CHX Holdings Bylaws use ``the 
Corporation'' instead of ``CHX Holdings.'' To avoid possible 
confusion, the above text uses ``CHX Holdings.''
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    (a) For the sole purpose of permitting the merger contemplated by 
an Agreement and Plan of Merger, dated April 4, 2018, among [CHX 
Holdings], Kondor Merger Sub, Inc. and Intercontinental Exchange, Inc., 
under which [CHX Holdings] will become a wholly-owned subsidiary of the 
NYSE Group, Inc. and will become an indirect subsidiary of NYSE 
Holdings LLC, Intercontinental Exchange Holdings, Inc. and 
Intercontinental Exchange, Inc. (for the purposes of this Article XII, 
Section 12.1, NYSE Group, Inc., NYSE Holdings LLC, Intercontinental 
Exchange Holdings, Inc. and Intercontinental Exchange, Inc. are 
collectively referred to herein as the ``ICE Holding Companies'' and 
individually referred to herein as the ``ICE Holding Company''), the 
Board of Directors hereby waives pursuant to Article FIFTH, paragraph 
(b)(iii)(B) of the certificate of incorporation of [CHX Holdings] dated 
July 27, 2006, as amended (``2006 Certificate''), with respect to each 
of the ICE Holding Companies: (i) the restrictions on ownership of 
capital stock of [CHX Holdings] described in Article FIFTH, paragraph 
(b)(ii)(A) of the 2006 Certificate (``Ownership Limits'') to permit the 
ICE Holding Company to possess ownership in [CHX Holdings] in excess of 
the Ownership Limits (``Proposed Share Ownership''); and (ii) the 
restrictions on voting rights with respect to the capital stock of [CHX 
Holdings] as described in Article FIFTH, paragraph (b)(ii)(C) of the 
2006 Certificate (``Voting Limits'') to permit the ICE Holding Company 
to possess voting rights in excess of the Voting Limits (``Proposed 
Voting Rights'').
    (b) In so waiving the applicable Ownership Limits and Voting 
Limits, the Board of Directors has determined, with respect to each of 
the ICE Holding Companies, that: (i) The acquisition of the Proposed 
Share Ownership by the ICE Holding Company will not impair the ability 
of the CHX to carry out its functions and responsibilities as an 
``exchange'' under the Exchange Act and the rules and regulations 
promulgated thereunder, is otherwise in the best interests of [CHX 
Holdings], its stockholders and the CHX, and will not impair the 
ability of the Commission to enforce the Exchange Act and the rules and 
regulations promulgated thereunder; (ii) the acquisition or exercise of 
the Proposed Voting Rights by the ICE Holding Company will not impair 
the ability of the CHX to carry out its functions and responsibilities 
as an ``exchange'' under the Exchange Act and the rules and regulations 
promulgated thereunder, that it is otherwise in the best interests of 
[CHX Holdings], its stockholders and the CHX, and that it will not 
impair the ability of the Commission to enforce the Exchange Act and 
the rules and regulations promulgated thereunder; and (iii) neither the 
ICE Holding Company, nor any of its Related Persons, is subject to 
``statutory disqualification'' within the meaning of Section 3(a)(39) 
of the Exchange Act.\23\
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    \23\ 15 U.S.C. 78c(a)(39).
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III. Amendments to the CHX Bylaws and CHX Certificate
    In connection with the Transaction, the Exchange proposes to retain 
most of the current provisions of the CHX Certificate and CHX Bylaws, 
except that the Exchange proposes to make certain revisions to the 
provisions regarding the composition, election and terms of the 
Exchange Board.
    Following consummation of the Transaction, the Exchange would 
become part of a corporate family including five separate registered 
national securities exchanges. The Exchange believes that it is 
important for each of such exchanges to have a consistent approach to 
corporate governance in certain matters. Therefore, to simplify 
complexity and create greater consistency with the organizational 
documents and governance practices of the NYSE Exchanges, the Exchange 
proposes to revise the provisions of the CHX Certificate and CHX Bylaws 
as described below.
    The Exchange believes that the proposed changes to the CHX 
Certificate and CHX Bylaws are consistent with the requirements of the 
Exchange Act.
CHX Bylaws
    The Exchange proposes to restructure and amend Article II, Sections 
2 and 3 of the Bylaws governing the powers, composition, nomination and 
election of its Board to more closely align the Bylaws with the 
relevant provisions of the other NYSE Exchanges.\24\ In addition, the 
Exchange proposes to amend other sections of the Bylaws to make 
conforming changes and to correct a non-substantive typographical 
error.
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    \24\ Because NYSE National and NYSE Arca are the most similar to 
the Exchange in corporate organization and in their use of ``permit 
holders,'' as opposed to ``members,'' the Exchange has primarily 
based proposed changes to the CHX Bylaws on the NYSE National and 
NYSE Arca Bylaws. A similar approach was taken with the National 
Stock Exchange (``NSX'') governing documents when it was acquired in 
2017. See Securities Exchange Act Release Nos. 79902 (January 30, 
2017), 82 FR 9258 (February 3, 2017) (SR-NSX-2016-16) (order 
approving proposed rule change in connection with a proposed 
acquisition of NSX by NYSE Group) (``NYSE National Approval''), and 
79684 (December 23, 2016), 81 FR 96552 (December 30, 2016) (SR-NSX-
2016-16) (notice of filing of proposed rule change in connection 
with the proposed acquisition of NSX by NYSE Group, Inc.) (``NYSE 
National Notice'').
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    To effect these changes, the Exchange proposes the following:
Title
    The Exchange proposes to add ``Amended and Restated'' to the start 
of the title of the CHX Bylaws.

[[Page 24521]]

Article I, Section 2 (Other Offices)
    The first sentence of Article I, Section 2 makes a reference to the 
``Board of Governors.'' The Exchange believes that the reference should 
be to the Board of Directors, as it has not had a Board of Governors 
since its demutualization.\25\ Accordingly, it proposes to replace 
``Governors'' with ``Directors.''
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    \25\ See Demutualization Release, supra note 3, at 7534.
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Article II, Section 2 (Number, Term of Office and Qualifications)
    The Exchange proposes to make the number, composition, term of 
office and qualifications of the Board consistent with the make-up of 
the boards of directors of the NYSE Exchanges.\26\ Accordingly, the 
Exchange proposes to replace Article II, Section 2(a)-(c) with new 
subsections (a)-(f), and to move the text in subsection (d) to become 
the final sentence of new subsection (e). The proposed new Article II, 
Section 2 would be substantially similar to provisions in the NYSE Arca 
Bylaws and NYSE National Bylaws.\27\
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    \26\ See Amended and Restated NYSE Arca, Inc. Bylaws (``NYSE 
Arca Bylaws''), Section 3.02(a), Fourth Amended and Restated By-laws 
of NYSE National (``NYSE National Bylaws''), Section 3.2(a), and 
NYSE National Notice, supra note 24, at 96554. See also Eleventh 
Amended and Restated Operating Agreement of New York Stock Exchange 
LLC (``NYSE Operating Agreement''), Article II, Section 2.03(a) and 
(l), and Eleventh Amended and Restated Operating Agreement of NYSE 
American LLC (``NYSE American Operating Agreement''), Article II, 
Section 2.03(a) and (l).
    \27\ See NYSE Arca Bylaws Section 3.02 and NYSE National Bylaws, 
Article III, Sections 3.2(a)-(c) and 3.3.
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    Section 2(a)-(b): Article II, Section 2(a) of the current CHX 
Bylaws governs the number of directors, providing that the Board is 
composed of between 10 and 16 directors, the exact number of which is 
determined by the Board, and that the number may be changed by a 
majority of the Board.
    Article II, Section 2(b) of the current CHX Bylaws sets forth the 
composition of the Board, providing that the Board shall consist of the 
Chief Executive Officer of the Exchange, ``Public Directors'' and 
``Participant Directors.'' Section 2(b) specifies that the Public 
Directors make up one-half of the directors, and that a director who is 
neither the Chief Executive Officer nor a Public Director shall be a 
Participant Director. Section 2(b) defines ``Public Director'' as a 
director who (i) is not a Participant, or an officer, managing member, 
partner or employee of an entity that is a Participant, (ii) is not an 
employee of the Exchange or any of its affiliates, (iii) is not broker 
or dealer or an officer or employee of a broker or dealer, or (iv) does 
not have any other material business relationship with (x) CHX 
Holdings, the Exchange or any of their affiliates or (y) any broker or 
dealer. It defines ``Participant Director'' as a director who is a 
Participant or an officer, managing member or partner of an entity that 
is a Participant, and that the ``Participant'' shall mean any 
individual, corporation, partnership or other entity that holds a 
trading permit issued by Exchange. Finally, current Section 2(b) 
provides that a director shall qualify as a Public Director or 
Participant Director only so long as such director meets the 
requirements for that position.
    The Exchange proposes to replace Section 2(a) and (b) with a new 
proposed Section 2(a). Such subsection would provide that the number of 
directors would be determined from time to time by the stockholders, 
provided that the Board must meet the composition requirements in the 
Bylaws. This change would be consistent with the NYSE National Bylaws 
and NYSE Arca Bylaws, which provide that the shareholders and holding 
member, respectively, set the number of directors, as well as the NYSE 
and NYSE American Operating Agreements, which both provide that the 
number of directors is determined by the member, in each case provided 
that the boards of directors meet the composition requirements.\28\
---------------------------------------------------------------------------

    \28\ See NYSE National Bylaws, Article III, Section 3.2(a); NYSE 
Arca Bylaws Section 3.02(a); NYSE Operating Agreement, Article II, 
Section 2.03(a); and NYSE American Operating Agreement, Article II, 
Section 2.03(a).
---------------------------------------------------------------------------

    Specifically, new subsection (a) would require that the Board be 
made up as follows:
     At least 50 percent of the directors would be persons from 
the public and would not be, or be affiliated with, a broker-dealer in 
securities or employed by, or involved in any material business 
relationship with, the Exchange or its affiliates (``Public 
Directors''); and
     at least 20 percent of the directors would consist of 
individuals nominated by the trading permit holders who are permitted 
to trade on the Exchange's facilities for the trading of equities that 
are securities as covered by the Exchange Act (collectively, ``Permit 
Holders'') (such directors, the ``STP Participant Directors'').\29\
---------------------------------------------------------------------------

    \29\ Consistent with its use elsewhere in the CHX Bylaws, 
``Exchange Act'' would be defined in proposed Article II, Section 
2(a).
---------------------------------------------------------------------------

    Although the NYSE National and NYSE Arca Bylaws use the term ``Non-
Affiliated Directors'' rather than ``STP Participant Directors,'' the 
Exchange proposes to use ``STP Participant Directors'' consistent with 
its current terminology.
    In addition, proposed subsection (a) would provide that, for 
purposes of calculation of the minimum number of STP Participant 
Directors, if 20 percent of the Directors is not a whole number, such 
number of Directors to be nominated and selected by the Permit Holders 
would be rounded up to the next whole number. Proposed subsection (a), 
like current subsection (a), would provide that the term of office of a 
director shall not be affected by any decrease in the authorized number 
of directors.
    Proposed new subsection (b) would provide that nominees for a 
director position shall provide the Secretary of the Exchange such 
information as is reasonably necessary to serve as the basis for a 
determination of the nominee's qualifications as a director, and that 
the Secretary shall make such determination concerning the nominee's 
qualifications.\30\
---------------------------------------------------------------------------

    \30\ This provision would be consistent with the NYSE National 
Bylaws and NYSE Arca Bylaws. See NYSE National Bylaws, Article III, 
Section 3.2(b) and NYSE Arca Bylaws, Section 3.02(b).
---------------------------------------------------------------------------

    Section 2(c): Current Article II, Section 2(c) sets forth the 
structure of the board. Specifically, it provides that the Board shall 
be divided into three classes serving three-year terms, with the term 
of office of one class expiring each year, and that directors shall 
continue in office after the expiration of their terms until their 
successors are elected or appointed and qualified, except in the event 
of early resignation, removal or disqualification.
    The Exchange proposes to replace Section 2(c) with new subsections 
(c) through (e). New subsection (c) would provide that at the each 
annual meeting of the stockholders, except as otherwise provided by the 
Bylaws, the stockholders would elect directors to serve until the next 
annual meeting or until their successors are elected and qualified. 
Proposed new subsection (d) would provide that the Exchange Board shall 
appoint the Chairman of the Board by majority vote. Proposed new 
subsection (e) would provide that each director shall hold office for a 
term that expires at the annual meeting of the stockholders next 
following his or her election, provided that if he or she is not re-
elected and his or her successor is not elected and qualified at the 
meeting and there remains a vacancy on the Board, he or she shall 
continue to serve until his or her successor is elected and qualified 
or until his or her earlier death, resignation or removal. Finally, 
current Section 2(d), which provides

[[Page 24522]]

that a director may serve for any number of terms, consecutive or 
otherwise, would be the final sentence in proposed subsection (e).
    The proposed change from a three-class board with staggered terms 
to a board with one class of directors elected annually would make the 
organization of the Board consistent with those of all of the NYSE 
Exchanges.\31\
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    \31\ See NYSE National Bylaws, Article III, Section 3.3; NYSE 
Arca Bylaws Section 3.02(e); NYSE Operating Agreement Article II, 
Section 2.03(a) and (l); and NYSE American Operating Agreement, 
Article II, Section 2.03(a) and (l).
---------------------------------------------------------------------------

    Section 2(f): Finally, a new subsection (f) would provide that, 
except as otherwise provided in the CHX Bylaws or the rules, the 
shareholder shall nominate directors for election at the annual meeting 
of the shareholder, which nominations shall comply with the Exchange's 
rules and the CHX Bylaws.\32\
---------------------------------------------------------------------------

    \32\ This provision would be consistent with the NYSE National 
Bylaws and NYSE Arca Bylaws. See NYSE National Bylaws, Article III, 
Section 3.2(d) and NYSE Arca Bylaws Section 3.02(f).
---------------------------------------------------------------------------

Article II, Section 3 (Nomination and Election)
    Article II, Section 3 sets forth the process for the nomination and 
election of the Board. The Exchange proposes to revise Article II, 
Section 3(a), replace Section 3(b)-(e) with a new Section 3(b), replace 
Section 3(f)-(g) with a new Section 3(c), and add a new Section 3(d).
    The proposed new Article II, Section 3 would be substantially 
similar to provisions in the NYSE Arca Bylaws and NYSE National 
Bylaws,\33\ and so would be consistent with the nomination and election 
process of the board of directors of such NYSE Exchanges, subject to 
the use of terms specific to the Exchange.\34\ The proposed provision 
would be consistent with the proposed change from a three-class board 
with staggered terms to a board with one class of directors elected 
annually.
---------------------------------------------------------------------------

    \33\ See NYSE Arca Rule 3.2(b)(3)(B) and (C) and NYSE National 
Bylaws Article III, Section 3.4 and Article V, Section 5.2.
    \34\ For example, proposed Article III, Section 3 would use 
``STP Participant Director'' instead of ``Non-Affiliated Director''; 
``Permit Holder'' instead of ``ETP Holder'' or ``OTP Holder''; and 
``Participant'' instead of ``ETP Holders or Persons Associated with 
an ETP Holder (in any combination)'' or ``ETP Holders or Allied 
Persons or Associated Persons of an OTP Firm or ETP Holder or Allied 
Person or Associated Persons of an ETP Holder.''
---------------------------------------------------------------------------

    Section 3(a): Article II, Section 3(a) provides that candidates for 
election as director shall be nominated by a Nominating and Governance 
Committee (``NGC''), which shall consist of two Public Directors and 
two Original STP Participant Directors, as defined below, one of whom 
must not be a representative of a firm that is a holder of Series A 
Preferred Stock of CHX Holdings. The NGC shall be appointed by the CHX 
Board.
    The Exchange proposes to rename the NGC the ``Nominating 
Committee'' consistent with NYSE National and NYSE Arca, which both 
have nominating committees that fill substantially the same role that 
the Exchange proposes the CHX Nominating Committee play.\35\ 
Accordingly, proposed Article II, Section 3(a) would provide that the 
candidates for the election as director shall be nominated by a 
Nominating Committee.
---------------------------------------------------------------------------

    \35\ See NYSE Arca Rule 3.2(b)(3)(B) and (C) and NYSE National 
Bylaws Article III, Section 3.4.
---------------------------------------------------------------------------

    The Exchange proposes that, like the NYSE National nominating 
committee, the Nominating Committee be composed solely of STP 
Participant Directors and/or Permit Holder representatives. Consistent 
with the NYSE National definition of ``ETP Holder Representative,'' 
``Permit Holder representative'' would mean an officer, director, 
employee or agent of a Permit Holder.\36\
---------------------------------------------------------------------------

    \36\ See NYSE National Bylaws Article I, Section 1.1(E)(2) 
(``ETP Holder Representative''), and Article V, Section 5.7.
---------------------------------------------------------------------------

    Section 3(b)-(e): Current Section 3(b) requires that, each year, 
the NGC shall nominate directors for each open director position, and 
shall only nominate as Participant Directors those persons whose names 
have been presented to, and approved by, the Participants pursuant to 
the procedures set forth in Section 3. Current Article II, Section 3(c) 
provides that the Board shall identify one Participant Director 
position in each class which shall be subject to the petition process 
(an ``Original STP Participant Director''), and similarly provides that 
the NGC shall only nominate as Original STP Participant Directors those 
persons whose names have been presented to, and approved by, the 
Participants pursuant to the procedures set forth in current Section 3. 
Current Article II, Section 3(d) sets forth procedures for the NGC to 
receive candidate recommendations for the Original STP Participant 
Director positions. Finally, current Article II, Section 3(e) sets 
forth the procedure for nominating the Original STP Participant 
Directors, including the possibility for petition candidates nominated 
by Participant firms.
    Proposed Article II, Section 3(b) would replace current Article II, 
Section 3(b)-(e).\37\ Proposed Section 3(b) would provide that the 
Nominating Committee shall publish the name(s) of one or more 
Participants as its nominee(s) for STP Participant Directors of the 
Board of Directors of the Exchange. The definition of ``Participant'' 
in present Section 2(b) would be moved to proposed Section 3(b). 
Proposed Section 3(b) would further provide that the Nominating 
Committee would name sufficient nominees so that at least 20 percent of 
the directors consist of STP Participant Directors. The proposed 
provision would further provide that the names of the nominees shall be 
published on a date in each year sufficient to accommodate the process 
described. The date would be known as the ``Announcement Date.''
---------------------------------------------------------------------------

    \37\ This provision would be consistent with the NYSE National 
Bylaws and NYSE Arca Rules. See NYSE Arca Rule 3.2(b)(3)(C)(ii) and 
NYSE National Bylaws Article III, Section 3.4(b).
---------------------------------------------------------------------------

    Further, proposed Section 3(b) would provide that, after the name 
of proposed nominee(s) is published, Permit Holders in good standing 
may submit a petition to the Exchange in writing to nominate additional 
eligible candidate(s) to fill STP Participant Director position(s) 
during the next term. If a written petition of at least 10 percent of 
Permit Holders in good standing were submitted to the Nominating 
Committee within two weeks after the Announcement Date, such person(s) 
would also be nominated by the Nominating Committee, provided, however, 
that no Permit Holder, either alone or together with other Permit 
Holders that are deemed its affiliates, may account for more than 50 
percent of the signatories to the petition endorsing a particular 
petition nominee for the STP Participant Director position(s) on the 
Board. Proposed Section 3(b) would stipulate that each petition for a 
petition candidate must include a completed questionnaire used to 
gather information concerning director candidates, with the form of the 
questionnaire provided by the Exchange upon the request of any Permit 
Holder. Finally, proposed Section 3(b) would provide that, 
notwithstanding anything to the contrary, the Nominating Committee 
shall determine whether any petition candidate is eligible to serve on 
the Board (including whether such person is free of any Statutory 
Disqualification), and such determination shall be final and 
conclusive.
    Section 3(f) and (g): Current Article II, Section 3(f) sets forth 
the process for elections of Original STP Participant Directors if one 
or more valid petitions

[[Page 24523]]

are received. Pursuant to current Section 3(g), if no valid petitions 
from the Participants are received by 35 days prior to the annual 
meeting of stockholders, the NGC's initial nominees shall be the 
persons approved by the Participants as the Original STP Participant 
Director nominees.
    Proposed Article II, Section 3(c) would replace current Article II, 
Section 3(f)-(g).\38\ Proposed Section 3(c) would set forth the 
petition election process, providing that, in the event that the number 
of nominees exceeds the number of available seats, the Nominating 
Committee shall submit the contested nomination to the Permit Holders 
for selection. Permit Holders would be afforded a confidential voting 
procedure and be given no less than 20 calendar days to submit their 
votes. Under the proposed Section, each Permit Holder in good standing 
may select one nominee for the contested seat on the Board; provided, 
however that no Permit Holder, either alone or together with other 
Permit Holders who are deemed its affiliates, may account for more than 
20 percent of the votes cast for a particular nominee for the STP 
Participant Director position(s) on the Board. With respect to the 
contested position, the proposed Section would provide that the nominee 
for the Board receiving the most votes of Permit Holders shall be 
submitted by the Nominating Committee to the Board and that the 
Nominating Committee shall also submit uncontested nominees to the 
Board. Under the proposed provision, tie votes shall be decided by the 
Board at its first meeting following the election.
---------------------------------------------------------------------------

    \38\ This provision would be consistent with the NYSE National 
Bylaws and NYSE Arca Rules. See NYSE Arca Rule 3.2(b)(3)(C)(iii) and 
NYSE National Bylaws Article III, Section 3.4(c).
---------------------------------------------------------------------------

    Finally, proposed Section 3(d) would provide that the Board of 
Directors shall appoint the Nominating Committee, consistent with the 
final sentence of current Section 3(a), which provides that the Board 
of Directors shall appoint the NGC.
Article II, Section 6 (Vacancies)
    In accordance with its proposed change from a three-class board 
with staggered terms to a board with one class of directors elected 
annually as set forth in proposed Article II, Section 2, the Exchange 
proposes to amend the penultimate sentence in Article II, Section 6. 
Currently, such sentence provides as follows.
    A director chosen to fill a vacancy or newly-created directorship 
by the directors then in office shall hold office until the end of the 
next annual meeting of stockholders, at which time a director shall be 
elected by vote of the stockholders to fill any remaining portion of 
the term of the class to which such director belongs.
    As there would no longer be different classes of director, the 
Exchange proposes to delete ``, at which time a director shall be 
elected by vote of the stockholders to fill any remaining portion of 
the term of the class to which such director belongs.''
Conforming Changes
    In accordance with its proposed change to the NGC, the Exchange 
proposes to delete ``and Governance'' from ``Nominating and Governance 
Committee'' in the following provisions: Article II, Section 5(b) (Vice 
Chairman); Article IV, Section 1 (Number of Committees) and Section 2 
(Appointment of Committees); and Article V, Section 5 (Officers 
Appointed by Chief Executive Officer).
    In accordance with its proposed use of ``STP Participant Director'' 
and amendments to the composition of the Board set forth in proposed 
Article II, Section 2(a), the Exchange proposes to add ``STP'' before 
``Participant Director'' in Article II, Section 6 and Section 7 
(Participation in Meeting, Action or Proceeding).
    In accordance with proposed Article II, Section 3(d), the Exchange 
proposes to update the cross reference in the first sentence of Article 
IV, Section 2 from Article II, Section 3(a) to Article II, Section 
3(d).
CHX Certificate
    The Exchange proposes to restructure and amend Article FIFTH of the 
CHX Certificate governing the composition, nomination and election of 
its Board to more closely align with the proposed amended CHX Bylaws 
and the relevant provisions of the other NYSE Exchanges.\39\ In 
addition, the Exchange proposes to make certain administrative and 
conforming changes.
---------------------------------------------------------------------------

    \39\ See NYSE Arca Bylaws, Section 3.02(a), NYSE National 
Bylaws, Article III, Section 3.2(a), and NYSE National Notice, supra 
note 24, at 96554. See also NYSE Operating Agreement, Article II, 
Section 2.03(a) and (l), and NYSE American Operating Agreement, 
Article II, Section 2.03(a) and (l).
---------------------------------------------------------------------------

    To effect these changes, the Exchange proposes the following 
amendments.
Title and Signature Line
    The Exchange proposes to add ``Amended and Restated'' to the start 
of the title of the CHX Certificate and to add a signature line at the 
end of the CHX Certificate.
Introductory Paragraph
    The Exchange proposes to adopt an introductory sentence providing 
that the proposed CHX Certificate has been duly adopted in accordance 
with Sections 242 and 245 of the General Corporation Law of Delaware.
Article First
    The Exchange proposes to add a second sentence to current Article 
FIRST stating that the original Certificate of Incorporation of CHX was 
filed with the Secretary of State of the State of Delaware on March 15, 
1972, and the name under which the Corporation filed the Original 
Certificate of Incorporation was Midwest Stock Exchange Incorporated.
Article Second
    The Exchange proposes to amend the address and name of its 
registered office and registered agent in the State of Delaware set 
forth in Article SECOND, to update them to the information for the 
registered office and registered agent that it will use following the 
Transaction.\40\
---------------------------------------------------------------------------

    \40\ See Securities Exchange Act Release Nos. 82925 (March 22, 
2018), 83 FR 13165 (March 27, 2018) (SR-NYSENAT-2018-04), and 82635 
(February 6, 2018), 83 FR 6057 (February 12, 2018) (SR-NYSENAT-2018-
03).
---------------------------------------------------------------------------

Article Fifth
    Current Article FIFTH sets forth provisions regarding the number, 
composition, term, election, and removal of Directors, as well as 
vacancies on the Board. The Exchange proposes to revise Article FIFTH, 
Paragraphs (b)-(g) to conform to proposed Article II, Section 2 of the 
CHX Bylaws.\41\
---------------------------------------------------------------------------

    \41\ See text accompanying notes 26 through 31, supra. The 
Exchange does not propose to amend Article FIFTH, Paragraph (a).
---------------------------------------------------------------------------

    Article FIFTH, Paragraph (b)-(c): Consistent with Article II, 
Section 2(a) of the current CHX Bylaws, current Article FIFTH, 
Paragraph (b) provides that the Board will consist of between 10 and 16 
directors, the exact number to be fixed by the Board from time to time. 
Current Article FIFTH, Paragraph (c) sets forth the requirements for 
the composition of the Board, consistent with current Article II, 
Section 2(b) of the CHX Bylaws.
    The Exchange proposes to replace Article FIFTH, Paragraphs (b) and 
(c) with a provision substantially similar to proposed Article II, 
Section 2(a) of the CHX Bylaws.\42\ Such subsection would provide that 
the number of directors

[[Page 24524]]

would be determined from time to time by the stockholders, provided 
that the Board must meet the same composition requirements in the 
proposed Bylaws. Proposed Article FIFTH, Paragraph (b) would require 
that at least 50 percent of the directors be Public Directors and at 
least 20 percent of the directors be STP Participant Directors. In 
addition, it would provide that, for purposes of calculation of the 
minimum number of STP Participant Directors, if 20 percent of the 
Directors is not a whole number, the number of directors to be 
nominated and selected by the Permit Holders will be rounded up to the 
next whole number; and that the term of office of a director shall not 
be affected by any decrease in the authorized number of directors.
---------------------------------------------------------------------------

    \42\ As it is not previously defined therein, ``Exchange Act'' 
would be defined in proposed Article FIFTH, Paragraph (b).
---------------------------------------------------------------------------

    The Exchange proposes to add a new Article FIFTH, Paragraph (c) 
with the same provision as proposed Article II, Section 2(b) of the CHX 
Bylaws, with the exception that the cross reference to Section 2(a) of 
the CHX Bylaws would be to Article FIFTH, Paragraph (b).
    Article FIFTH, Paragraph (d): Consistent with Article II, Section 
2(c) of the current CHX Bylaws, Article FIFTH, Paragraph (d) sets forth 
the structure of the board. It provides that the Board shall be divided 
into three classes serving staggered three-year terms, with the term of 
office of one class expiring each year, and sets forth how the three-
year terms shall be commenced. Finally, it provides that directors 
shall continue in office after the expiration of their terms until 
their successors are elected or appointed and qualified, except in the 
event of early resignation, removal or disqualification.
    The Exchange proposes to replace the current Article FIFTH, 
Paragraph (d) with the same provision as proposed Article II, Section 
2(e) of the CHX Bylaws, which sets forth the proposed terms of the 
directors.
    Article FIFTH, Paragraph (e): Consistent with current Article III, 
Section 9 (Quorum and Vote Required for Action) of the CHX Bylaws, 
current Article FIFTH, Paragraph (e) provides that at each annual 
meeting of stockholders at which a quorum is present, the persons 
receiving a plurality of the votes cast shall be directors, and no 
director need be a stockholder.
    The Exchange proposes to replace the current Article FIFTH, 
Paragraph (e) with the same provision as proposed Article II, Section 
2(c) of the CHX Bylaws, which states that at each annual meeting of 
stockholders, except as otherwise provided by the CHX Bylaws the 
stockholders shall elect directors to serve until the next annual 
meeting or until their successors are elected and qualified.
    Article FIFTH, Paragraph (f): In accordance with its proposed 
change to remove the different classes of directors, the Exchange 
proposes to delete ``or class of directors'' from the first sentence of 
Article FIFTH, Paragraph (f).
    Article FIFTH, Paragraph (g): In accordance with its proposed 
change to remove the different classes of directors, the Exchange 
proposes to delete ``, at which time a director shall be elected by 
vote of the stockholders to fill any remaining portion of the term of 
the class to which such director belongs'' from the penultimate 
sentence of Article FIFTH, Paragraph (g). In addition, it proposes to 
add ``STP'' before ``Participant Director'' in the parenthetical in the 
second sentence of the provision.
IV. Amendments to the CHX Holdings Bylaws and CHX Holdings Certificate
    Following the consummation of the Transaction, CHX Holdings will be 
one of a series of holding companies of the Exchange. The Exchange 
believes that it is important for each of its five holding companies to 
have a consistent approach to certain matters.\43\
---------------------------------------------------------------------------

    \43\ See Securities Exchange Act Release Nos. 80752 (May 24, 
2017), 82 FR 25018 (May 31, 2017) (SR-NYSE-2017-13; SR-NYSEArca-
2017-29; SR-NYSEMKT-2017-17; and SR-NYSENAT-2017-01) (order 
approving proposed rule changes to amend the certificate and bylaws 
of ICE), and 82084 (November 15, 2017), 82 FR 55460 (SR-NYSENAT-
2017-05) (notice of filing and immediate effectiveness of proposed 
rule change to amend the governing documents of its intermediate 
parent companies to make them more consistent with the governing 
documents of their ultimate parent, ICE).
---------------------------------------------------------------------------

    Upon Closing, CHX Holdings' governing documents would be as set 
forth in the CHX Holdings Bylaws and CHX Holdings Certificate 
(together, the ``CHX Holdings Governing Documents''). To limit 
complexity and create greater consistency with the organizational 
documents of the ICE Holding Companies, as proposed, the CHX Holdings 
Governing Documents would be substantially similar to the NYSE Group 
Bylaws and NYSE Group Certificate, with the limited differences 
described below. To effect the changes, upon Closing:
     The proposed changes to the CHX Holdings Certificate set 
forth in Exhibit 5C, which would replace the current text of the CHX 
Holdings Certificate in its entirety except for the title, would become 
operative.
     The proposed changes to the CHX Holdings Bylaws set forth 
in Exhibit 5D, which would replace the current text of the CHX Holdings 
Bylaws in its entirety except for the title, would become operative, 
with the exception of the Bylaw Waiver Amendment, which would have 
become operative immediately before the Closing.\44\
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    \44\ When operative, the Bylaw Waiver Amendment would add an 
Article XII to the current CHX Holdings Bylaws. However, upon 
Closing, when the proposed changes to the CHX Holdings Bylaws become 
effective, there would be a gap in the numbering between Article VII 
and Article XII. Accordingly, to ensure that the numbering of the 
Articles in the CHX Holdings Bylaws remains sequential, the Exchange 
proposes to add new Articles VIII-XI, which would be marked 
``Reserved.''
---------------------------------------------------------------------------

Differences From the NYSE Group Certificate and Bylaws
CHX Holdings Bylaws
    Article I, Section 1.1 of the CHX Holdings Bylaws would reference 
CHX Holdings instead of NYSE Group, and the title would be ``Second 
Amended and Restated Bylaws of CHX Holdings, Inc.''
    Because CHX Holdings, unlike NYSE Group, does not have preferred 
stock, the text ``Subject to the rights of the holders of any series of 
Preferred Stock to elect additional directors under specified 
circumstances,'' would not be included in Article III, Section 3.1 
(General Powers) of the proposed CHX Holdings Bylaws. For the same 
reason, the text ``Subject to the rights of the holders of any series 
of Preferred Stock with respect to such series of Preferred Stock,'' 
would not be included in Article III, Section 3.5 (Removal) of the 
proposed CHX Holdings Bylaws.
CHX Holdings Certificate
    Some of the differences between the proposed CHX Holdings 
Certificate and the NYSE Group Certificate would reflect the 
differences in their name, ownership, and history.
     The introductory paragraph, recitals, Article XIV and the 
signature line of the NYSE Group Certificate would not be included.\45\
---------------------------------------------------------------------------

    \45\ Pursuant to the Merger Agreement, the entity surviving the 
Merger will be CHX Holdings, but its governing documents will be 
those of Merger Sub. Prior to the Closing, Merger Sub would amend 
and restate its certificate of incorporation and bylaws so that they 
are the same as the proposed CHX Holdings Bylaws and CHX Holdings 
Certificate, subject to the difference in name. In that manner, when 
CHX Holdings and Merger Sub merge, the proposed CHX Holdings Bylaws 
and CHX Holdings Certificate will become the governing documents of 
the merged entity, CHX Holdings, subject to an update in the name.
---------------------------------------------------------------------------

     Article I (Name of Corporation) of the proposed CHX 
Holdings Certificate would reference CHX Holdings instead of NYSE 
Group, and the title would be ``Second Amended and Restated Certificate 
of Incorporation of CHX Holdings, Inc.''
     Article IV, Section 4 (Transfers of Stock of the 
Corporation) of the NYSE

[[Page 24525]]

Group Certificate would be adopted as Article IV, Section 2 of the 
proposed CHX Certificate, provided that, in the first sentence of 
Section 2(a), ``NYSE Holdings LLC, a Delaware limited liability company 
(`NYSE Holdings')'' would be adopted as ``NYSE Group, Inc., a Delaware 
corporation (`NYSE Group').'' \46\ In addition, subsections (a) and (b) 
would refer to NYSE Group instead of NYSE Holding.
---------------------------------------------------------------------------

    \46\ Consistent with the change, cross references in the NYSE 
Group Certificate to Section 4 of Article IV and its subsections 
would be adopted as cross references to Section 2 of Article IV and 
its subsections. See proposed Article IV, Sections 2(b), 2(b)(1)(A)-
(D), 2(b)(2)(A),(C)-(E), and 2(b)(3)-(4); and Article VIII, Section 
2. Also, the definition ``board of directors of the Corporation (the 
`Board')'' would be in the second paragraph of proposed Article IV, 
Section (2)(b)(1)(A), instead of in Section 2, as it is in the NYSE 
Group Certificate.
---------------------------------------------------------------------------

    CHX Holdings has 100 shares of common stock, and, unlike NYSE 
Group, does not have preferred stock or options. Accordingly, the 
proposed CHX Holdings Certificate would have differences from the NYSE 
Group Certificate reflecting the entities' distinct stock structures.
     Proposed Article IV, Section 1 (Authorized Stock) would be 
as follows: ``The total number of shares of all classes of stock which 
the Corporation shall have authority to issue is one hundred (100), all 
of which shall be shares of Common Stock, par value $0.01 per share.''
     Article IV, Section 2 (Preferred Stock) and Section 3 
(Options, Warrants and Other Rights) as well as Article V, Section 7 
(Directors Selected by Holders of Preferred Stock) of the NYSE Group 
Certificate would not be adopted.\47\
---------------------------------------------------------------------------

    \47\ Consistent with the change, Article V, Section 8 
(Considerations of the Board) of the NYSE Group Certificate would be 
adopted as Article V, Section 7 of the proposed CHX Holdings 
Certificate, and references to ``this Section 8 of Article V'' 
therein would be adopted as ``this Section 7 of Article V.'' 
Likewise, the cross reference to Section 8 of Article V in Article 
XI, Section 2 of the NYSE Group Bylaws would be adopted as a cross 
reference to Section 7 of Article V in proposed Article XI, Section 
2 of the proposed CHX Holdings Certificate. The definition of 
``Person'' would be in proposed Article IV, Section 2(b)(1)(G), 
instead of in Article IV, Section 3(1), as it is in the NYSE Group 
Certificate.
---------------------------------------------------------------------------

     In proposed Article V, Section 3 (Number of Directors), 
the phrase ``Subject to the rights of the holders of any series of 
Preferred Stock to elect additional directors under specified 
circumstances,'' would not be adopted from Article V, Section 3 of the 
NYSE Group Certificate. Similarly, in proposed Article V, Section 5 
(Removal of Directors) the phrase ``Subject to the rights of the 
holders of any series of Preferred Stock with respect to such series of 
Preferred Stock, and'' would not be adopted from Article V, Section 5 
of the NYSE Group Certificate.
     In proposed Article VII, Section 2 (Quorum), the second 
sentence would not be adopted from Article VII, Section 2 of the NYSE 
Group Certificate.\48\
---------------------------------------------------------------------------

    \48\ Such sentence reads as follows: ``For purposes of the 
foregoing, where a separate vote by class or classes is required for 
any matter, the holders of a majority of the voting power of the 
outstanding shares of such class or classes entitled to vote, 
present in person or represented by proxy, shall constitute a quorum 
to take action with respect to that vote on that matter.''
---------------------------------------------------------------------------

Provisions of the Proposed CHX Holdings Governing Documents
    As set forth below, the proposed CHX Holdings Governing Documents 
include various provisions addressing CHX Holdings' role as the holding 
company of a national securities exchange registered under Section 6 of 
the Exchange Act (each such national securities exchange so controlled, 
a ``U.S. Exchange''),\49\ including provisions regarding matters 
related to the preservation of the independence of the self-regulatory 
function of each U.S. Exchange.
---------------------------------------------------------------------------

    \49\ As defined, ``U.S. Exchange'' includes both the Exchange 
and any other national securities exchange that CHX Holdings may 
control. See proposed Article VII, Section 7.9(b) of the CHX 
Holdings Bylaws and proposed Article IV, Section 2(b)(1)(A) of the 
CHX Holdings Certificate. The Exchange Act definition of 
``exchange'' states that ``exchange'' ``includes the market place 
and the market facilities maintained by such exchange.'' 15 U.S.C. 
78c(a)(1). Accordingly, all market places and market facilities 
maintained by a U.S. Exchange would fall within the definition of 
U.S. Exchange. See 82 FR 25018, 25019, supra note 43. The Exchange 
notes that the proposed CHX Holdings Governing Documents use the 
term ``Exchange'' instead of ``U.S. Exchange.'' However, because in 
the present document ``Exchange'' means the Chicago Stock Exchange, 
Inc., ``U.S. Exchange'' is used herein.
---------------------------------------------------------------------------

Transfers of Stock
    Article IV, Section 2(a) of the Proposed Certificate would ensure 
that any change in ownership of CHX Holdings would be subject to 
Commission approval, by providing that CHX Holdings may not transfer or 
assign any stock unless such transfer or assignment is filed with and 
approved by the Commission under Section 19 of the Exchange Act.\50\
---------------------------------------------------------------------------

    \50\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

Restrictions on Voting and Ownership
    Article IV, Section 2(b) of the proposed CHX Holdings Certificate 
would set forth voting and ownership concentration limitations. The 
proposed provision would be substantially similar to the limitations in 
the governing documents of all the ICE Holding Companies, which apply 
so long as the relevant ICE Holding Company owns any U.S. Exchange.\51\ 
Proposed Article IV, Section 2(b) would provide that:
---------------------------------------------------------------------------

    \51\ See ICE Certificate, Article V, Sections A and B; ICE 
Holdings Certificate, Article V, Sections A and B; NYSE Holdings 
Operating Agreement, Article IX, Sections 9.1(a) and (b); and NYSE 
Group Certificate, Article IV, Section 4(b)(1) and (2).
---------------------------------------------------------------------------

     No person (alone or together with its related persons) 
shall be entitled to vote or cause the voting of stock of CHX Holdings 
representing in the aggregate more than 10 percent of the then 
outstanding votes entitled to be cast on such matter, and no person 
(either alone or together with its related persons) may acquire the 
ability to vote more than 10 percent of the aggregate number of votes 
being cast on any matter by virtue of agreements entered into with 
other persons not to vote shares of CHX Holding's outstanding capital 
stock. CHX Holding will disregard any such votes purported to be cast 
in excess of these limitations.\52\
---------------------------------------------------------------------------

    \52\ See proposed CHX Holdings Certificate, Article IV, Section 
2(b)(1)(A).
---------------------------------------------------------------------------

     In addition, no person (alone or together with its related 
persons) may at any time beneficially own stock of CHX Holdings 
representing in the aggregate more than 20% of the then outstanding 
votes entitled to be cast on any matter.\53\
---------------------------------------------------------------------------

    \53\ See proposed CHX Holdings Certificate, Article IV, Section 
2(b)(2)(A).
---------------------------------------------------------------------------

     In the event that a person (alone or together with its 
related persons) beneficially owns stock of CHX Holdings in excess of 
the 20 percent ownership threshold, such person and its related persons 
will be obligated to sell, and CHX Holdings will be obligated to 
purchase (to the extent that funds are legally available) the number of 
shares necessary to reduce the ownership level of such person and its 
related persons to below the permitted threshold, after taking into 
account that such repurchased shares will become treasury shares and 
will no longer be deemed to be outstanding. \54\
---------------------------------------------------------------------------

    \54\ See proposed CHX Holdings Certificate, Article IV, Section 
2(b)(2)(D).
---------------------------------------------------------------------------

    Proposed Article IV, Section 2(b)(4) would provide that the CHX 
Holdings Board shall have the right to require any person (and its 
related persons) to provide information regarding its share ownership 
to CHX Holdings if the Board reasonably believes such person (and its 
related persons) is subject to the voting and ownership limits or owns 
beneficially an aggregate of 5 percent or more of the then outstanding 
shares of CHX Holdings.
    The provisions regarding voting and ownership limits may be waived 
if the CHX Holdings Board resolves to expressly permit it, and if such 
resolutions have been filed with, and

[[Page 24526]]

approved by, the Commission under Section 19 of the Exchange Act.\55\ 
The CHX Holdings Board shall not adopt the resolutions unless it has 
made certain determinations, including that:
---------------------------------------------------------------------------

    \55\ 15 U.S.C. 78s(b)(1). See proposed CHX Holdings Certificate, 
Article IV, Sections 2(b)(1)(A) and 2(b)(2)(B).
---------------------------------------------------------------------------

     The proposed act will not impair the ability of CHX 
Holdings or any U.S. Exchange to discharge their respective 
responsibilities under the Exchange Act and the rules and regulations 
thereunder and is otherwise in the best interests of CHX Holdings, its 
stockholders and each U.S. Exchange.\56\
---------------------------------------------------------------------------

    \56\ See proposed CHX Holdings Certificate, Article IV, Sections 
2(b)(1)(A)(w) and 2(b)(2)(C)(i).
---------------------------------------------------------------------------

     The proposed act would not impair the Commission's ability 
to enforce the Exchange Act.\57\
---------------------------------------------------------------------------

    \57\ See proposed CHX Holdings Certificate, Article IV, Sections 
2(b)(1)(A)(x) and 2(b)(2)(C)(ii).
---------------------------------------------------------------------------

     The person seeking to exceed the voting thresholds or 
ownership limit is not subject to any statutory disqualification as 
defined in Section 3(a)(39) of the Exchange Act\58\ (``Statutory 
Disqualification'') and, for so long as CHX Holdings directly or 
indirectly controls a U.S. Exchange, neither such person nor its 
related persons is a Member of a U.S. Exchange.\59\
---------------------------------------------------------------------------

    \58\ 15 U.S.C. 78c(a)(39).
    \59\ See proposed CHX Holdings Certificate, Article IV, Sections 
2(b)(1)(A)(y) and (z) and 2(b)(2)(C)(iii) and (iv). ``Member'' shall 
mean a Person that is a ``member'' of a U.S. Exchange within the 
meaning of Section 3(a)(3)(A) of the Exchange Act. A ``Participant'' 
is considered a ``member'' of the Exchange.
---------------------------------------------------------------------------

Considerations of the Board
    Article V, Section 7 of the proposed CHX Holdings Certificate would 
set forth considerations each director must take into account in 
discharging his or her responsibilities, including consideration of the 
effect that CHX Holding's actions would have on the ability of the U.S. 
Exchanges to carry out their responsibilities under the Exchange Act. 
In addition, Article V, Section 7 would require that each director, 
officer or employee of CHX Holdings comply with the federal securities 
laws and the rules and regulations thereunder, cooperate with the 
Commission and cooperate with each U.S. Exchange pursuant to and to the 
extent of its regulatory authority.
Statutory Disqualification
    Article VI of the proposed CHX Holdings Certificate would provide 
that no person that is subject to any Statutory Disqualification may be 
a director or officer of CHX Holdings.
Jurisdiction
    Article IX of the proposed CHX Holdings Certificate would provide 
that CHX Holdings, its directors and officers, and its employees whose 
principal place of business and residence is outside of the United 
States, submit to the jurisdiction of the federal courts and the 
Commission, and waive claims that it or they are not personally subject 
to the jurisdiction of the Commission and of inconvenient forum, 
improper venue, or lack of subject matter jurisdiction.
Confidential Information; Books and Records
    Article X of the proposed CHX Holdings Certificate would address 
the books and records of the U.S. Exchanges. Specifically, it would 
provide that confidential information pertaining to the self-regulatory 
function of any U.S. Exchange contained in books and records in the 
possession of the Corporation shall only be made available to officers, 
directors, employees and agents of CHX Holdings (``CHX Holdings 
Personnel'') with a reasonable need to know the contents thereof; shall 
be retained in confidence by CHX Holdings and CHX Holdings Personnel; 
and shall not be used for any commercial purposes.
    Article X of the proposed CHX Holdings Certificate would provide 
that nothing in the proposed CHX Holdings Certificate shall be 
interpreted to limit or impede the rights of the Commission or any U.S. 
Exchange to access and examine such U.S. Exchange's confidential 
information pursuant to the federal securities laws and the rules and 
regulations thereunder, or to limit or impede the ability of any CHX 
Holdings Personnel to disclose such confidential information to the 
Commission or a U.S. Exchange. In addition, proposed Article X would 
provide that CHX Holdings' books and records shall be subject at all 
times to inspection and copying by the Commission and the relevant U.S. 
Exchange.
    Finally, proposed Article X would provide that, for so long as CHX 
Holdings directly or indirectly controls any U.S. Exchange, the books, 
records, premises, officers, directors and employees of CHX Holdings 
shall be deemed to be of such Exchange for purposes of and subject to 
oversight pursuant to the Exchange Act.
Compliance With Securities Laws
    Article XI, Section 1 of the proposed CHX Holdings Certificate 
would provide that CHX Holdings shall comply with the federal 
securities laws and the rules and regulations thereunder and shall 
cooperate with the Commission and the U.S. Exchanges pursuant to and to 
the extent of their respective regulatory authority, and shall take 
reasonable steps necessary to cause its agents to cooperate, with the 
Commission and, where applicable, a U.S. Exchange pursuant to their 
regulatory authority.
    Article XI, Section 2 of the proposed CHX Holdings Certificate 
would provide that CHX Holdings shall take reasonable steps necessary 
to cause its officers, directors and employees, prior to accepting 
their position, to consent to the applicability of proposed Section 7 
of Article V, Article IX, Article X and Section 3 of Article XI of the 
proposed CHX Holdings Certificate with respect to their activities 
related to any U.S. Exchange.
    Article XI, Section 3 of the proposed CHX Holdings Certificate 
would provide that CHX Holdings, its directors, officers and employees 
shall give due regard to the preservation of the independence of the 
self-regulatory function of each U.S. Exchange and to 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 or managers of a U.S. Exchange relating to their regulatory 
functions (including disciplinary matters) or that would interfere with 
the ability of the U.S. Exchange to carry out its responsibilities 
under the Exchange Act.
Amendments
    Article XII of the proposed CHX Holdings Certificate and Article 
VII, Section 7.9(b) of the proposed CHX Holdings Bylaws would provide 
that, for so long as CHX Holdings controls any U.S. Exchange, before 
any amendment or repeal of any provision of the relevant CHX Holdings 
Governing Document shall be effective, it shall either (a) be filed 
with or filed with and approved by the Commission under Section 19 of 
the Exchange Act and the rules promulgated thereunder \60\; or (b) be 
submitted to the boards of directors of each U.S. Exchange. If one or 
more of the boards of directors determine that the amendment or repeal 
must be filed with, or filed with and approved by, the Commission 
before it may be effectuated, then such amendment or repeal shall not 
be effectuated until filed with or filed with and approved by the 
Commission, as the case may be.
---------------------------------------------------------------------------

    \60\ 15 U.S.C. 78s(b)(1).

---------------------------------------------------------------------------

[[Page 24527]]

V. Adoption of Organizational Documents of the ICE Holding Companies
    Following the Transaction, the Exchange and CHX Holdings will both 
have direct and indirect parent companies. The Exchange accordingly 
proposes to adopt the NYSE Group Certificate, NYSE Group Bylaws, NYSE 
Holdings Operating Agreement, ICE Holdings Certificate, ICE Holdings 
Bylaws, ICE Certificate and ICE Bylaws as rules of the Exchange. Such 
documents include provisions addressing each ICE Holding Company's role 
as a holding company of U.S. Exchanges, including as described below.
Transfers of Stock
    NYSE Group, NYSE Holdings, and ICE Holdings are subject to 
provisions requiring that any transfer of assignment of the respective 
entity's stock would be subject to Commission approval.\61\
---------------------------------------------------------------------------

    \61\ See NYSE Group Certificate Article IV, Section 4(a); NYSE 
Holdings Operating Agreement, Article VII, Section 7.2; and ICE 
Holdings Certificate, Article IV, Section C.
---------------------------------------------------------------------------

Restrictions on Voting and Ownership
    Each of the ICE Holding Companies is subject to voting and 
ownership concentration limitations, which apply so long as the 
relevant ICE Holding Company owns any U.S. Exchange.\62\ The voting and 
ownership limits may be waived only if certain requirements are met.
---------------------------------------------------------------------------

    \62\ See NYSE Group Certificate, Article IV, Section 4(b)(1) and 
(2); NYSE Holdings Operating Agreement, Article IX, Sections 9.1(a) 
and (b); ICE Holdings Certificate, Article V, Sections A and B; and 
ICE Certificate, Article V, Sections A and B.
---------------------------------------------------------------------------

Considerations of the Board
    Each of the ICE Holding Companies is subject to provisions setting 
forth considerations directors must take into account in discharging 
their responsibilities, including consideration of the effect that the 
relevant ICE Holding Company's actions would have on the ability of the 
U.S. Exchanges to carry out their responsibilities under the Exchange 
Act.\63\ In addition, such provisions require that each director, 
officer or employee of the relevant ICE Holding Company comply with the 
federal securities laws and cooperate with the Commission and each U.S. 
Exchange pursuant to and to the extent of its regulatory authority.
---------------------------------------------------------------------------

    \63\ See NYSE Group Certificate, Article V, Section 8; NYSE 
Holdings Operating Agreement, Article III, Section 3.12(b) and (c); 
ICE Holdings Bylaws, Article III, Section 3.14(a) and (b); and ICE 
Bylaws, Article III, Section 3.14(a) and (b).
---------------------------------------------------------------------------

Statutory Disqualification
    No person that is subject to any Statutory Disqualification may be 
a director or officer of the NYSE Group or NYSE Holdings.\64\
---------------------------------------------------------------------------

    \64\ See NYSE Group Certificate, Article VI; and NYSE Holdings 
Operating Agreement Article IV, Section 4.1.
---------------------------------------------------------------------------

Jurisdiction
    Each of the ICE Holding Companies is subject to provisions 
submitting to the jurisdiction of the federal courts and the 
Commission.\65\
---------------------------------------------------------------------------

    \65\ See NYSE Group Certificate, Article IX; NYSE Holdings 
Operating Agreement Article XIII; ICE Holdings Bylaws, Article VII: 
and ICE Bylaws, Article VII.
---------------------------------------------------------------------------

Confidential Information; Books and Records
    Each of the ICE Holding Companies is subject to provisions 
regarding the books and records of the U.S. Exchanges. Such provisions 
provide, among other things, that:
     Confidential information that relates to the self-
regulatory function of any U.S. Exchange shall only be made available 
to officers, directors, employees and agents with a reasonable need to 
know the contents thereof.\66\
---------------------------------------------------------------------------

    \66\ See NYSE Group Certificate, Article X, NYSE Holdings 
Operating Agreement Article XII, Section 12.1; ICE Holdings Bylaws, 
Article VIII, Section 8.1; and ICE Bylaws, Article VIII, Section 
8.1.
---------------------------------------------------------------------------

     Nothing in the relevant document shall be interpreted to 
limit or impede the rights of the Commission or any U.S. Exchange to 
access and examine such U.S. Exchange's confidential information 
pursuant to relevant law. \67\
---------------------------------------------------------------------------

    \67\ See NYSE Group Certificate, Article X; NYSE Holdings 
Operating Agreement Article XII, Section 12.2; ICE Holdings Bylaws, 
Article VIII, Section 8.2; and ICE Bylaws, Article VIII, Section 
8.2.
---------------------------------------------------------------------------

     The U.S. Exchanges' books and records shall be subject at 
all times to inspection and copying by the Commission and the relevant 
U.S. Exchange.\68\
---------------------------------------------------------------------------

    \68\ See NYSE Group Certificate, Article X; NYSE Holdings 
Operating Agreement Article XII, Section 12.3; ICE Holdings Bylaws, 
Article VIII, Section 8.3; and ICE Bylaws, Article VIII, Section 
8.3.
---------------------------------------------------------------------------

     The books, records, premises, officers, directors and 
employees of the U.S. Exchanges shall be deemed to be of such U.S. 
Exchange for purposes of and subject to oversight pursuant to the 
Exchange Act.\69\
---------------------------------------------------------------------------

    \69\ See NYSE Group Certificate, Article X; NYSE Holdings 
Operating Agreement Article XII, Section 12.4; ICE Holdings Bylaws, 
Article VIII, Section 8.3; and ICE Bylaws, Article VIII, Section 
8.4.
---------------------------------------------------------------------------

Compliance With Securities Laws
    Each of the ICE Holding Companies is required to comply with the 
federal securities laws and the rules and regulations thereunder. The 
relevant provisions require, among other things, the relevant ICE 
Holding Company to:
     Cooperate with the Commission and the U.S. Exchanges 
pursuant to and to the extent of their respective regulatory 
authority.\70\
---------------------------------------------------------------------------

    \70\ See NYSE Group Certificate, Article XI, Section 1; NYSE 
Holdings Operating Agreement Article XIV, Section 14.1; ICE Holdings 
Bylaws, Article IX, Section 9.1; and ICE Bylaws, Article IX, Section 
9.1.
---------------------------------------------------------------------------

     Take reasonable steps to cause officers, directors and 
employees to consent to the applicability of provisions regarding their 
activities related to any U.S. Exchange.\71\
---------------------------------------------------------------------------

    \71\ See NYSE Group Certificate, Article XI, Section 2; NYSE 
Holdings Operating Agreement Article XIV, Section 14.2; ICE Holdings 
Bylaws, Article IX, Section 9.2; and ICE Bylaws, Article IX, Section 
9.2.
---------------------------------------------------------------------------

     Along with its directors, officers and employees, give due 
regard to the preservation of the independence of the self-regulatory 
function of each U.S. Exchange and to obligations to investors and the 
general public and to not take any actions that would interfere with 
the effectuation of any decisions by the board of directors or managers 
of a U.S. Exchange relating to their regulatory functions or that would 
interfere with the ability of the U.S. Exchange to carry out its 
responsibilities under the Exchange Act.\72\
---------------------------------------------------------------------------

    \72\ See NYSE Group Certificate, Article XI, Section 3; NYSE 
Holdings Operating Agreement Article XIV, Section 14.3; ICE Holdings 
Bylaws, Article IX, Section 9.3; and ICE Bylaws, Article IX, Section 
9.3.
---------------------------------------------------------------------------

Amendments
    Finally, each of the ICE Holding Companies is subject to 
limitations on their ability to amend or repeal their governing 
documents without the proposed amendment or repeal being filed with, or 
filed with and approved by, the Commission.\73\
---------------------------------------------------------------------------

    \73\ NYSE Group Certificate, Article XII; NYSE Group Bylaws, 
Article VII, Section 7.9; NYSE Holdings Operating Agreement, Article 
XVI, Section 16.1; ICE Holdings Certificate, Article X; ICE Holdings 
Bylaws, Article XI, Section 11.3; ICE Certificate, Article X; and 
ICE Bylaws, Article XI, Section 11.3.
---------------------------------------------------------------------------

ICE Independence Policy
    The Exchange proposes that, in connection with the Transaction, the 
Commission approve the ICE Independence Policy, which is to be amended 
concurrently with the Transaction to reflect ownership of the Exchange. 
The ICE Independence Policy would be amended to provide similar 
protections to the Exchange as are currently provided to the NYSE 
Exchanges by the policy.
    More specifically, the ICE Director Independence Policy would be 
amended to add the Exchange to the section describing ``Independence 
Qualifications.'' In particular, the

[[Page 24528]]

Exchange would be added to categories (1)(b) and (c) that refer to 
``members,'' as defined in section 3(a)(3)(A)(i), 3(a)(3)(A)(ii), 
3(a)(3)(A)(iii) and 3(a)(3)(A)(iv) of the Exchange Act.\74\ The 
Exchange would also be added to subsections (4) and (5) of the 
``Independence Qualifications'' section.
---------------------------------------------------------------------------

    \74\ See 15 U.S.C. 78c(a)(3)(a). 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 ``(`Members') in category (1)(b) or to category 2.
---------------------------------------------------------------------------

    The NYSE no longer has allied members.\75\ Accordingly, the 
Exchange proposes to delete the text ``as defined in paragraph (c) of 
Rule 2 of the New York Stock Exchange LLC and'' from category 1(b) of 
``Independence Qualifications.''
---------------------------------------------------------------------------

    \75\ 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.).
---------------------------------------------------------------------------

    In addition, references to NYSE MKT LLC under ``Independence 
Qualifications'' and ``Member Organizations'' would be updated to 
reflect its name change to NYSE American LLC. \76\ Finally, NYSE Arca 
Equities, Inc. merged with NYSE Arca, Inc., and therefore no longer 
exists.\77\ Accordingly, under ``Independence Qualifications,'' the 
text ``and Rule 1.1(c) of NYSE Arca Equities, Inc.'' in category 1(b) 
and references to NYSE Arca Equities, Inc. in categories 2 and 5 would 
be deleted.
---------------------------------------------------------------------------

    \76\ See Securities Exchange Act Release Nos. 80283 (March 21, 
2017), 82 FR 15244 (March 27, 2017) (SR-NYSEMKT-2017-14).
    \77\ See Securities Exchange Act Release No. 81419 (August 17, 
2017), 82 FR 40044 (August 23, 2017) (SR-NYSEArca-2017-40).
---------------------------------------------------------------------------

    Conforming changes would also be made to delete and replace 
connectors.
VI. Amendments to the Rules of the Exchange
    The Exchange proposes to amend CHX Article 2, Rules 2, 3, 4, and 
11, consistent with the proposed changes to the provisions in the CHX 
Bylaws and CHX Certificate regarding the composition of the Exchange 
Board. In addition, the Exchange proposes to amend CHX Article 19, Rule 
2(b), to address the role of ArcaSec as an inbound router. The Exchange 
also proposes to add new Rule 28 to CHX Article 22, which rule would 
set forth requirements for the Exchange relating to trading securities 
issued by ICE or its affiliates.
Exchange Board
    As proposed, Section 2(a) of the CHX Bylaws would provide that the 
number of directors would be determined from time to time by the 
stockholders, provided that the Board must meet the composition 
requirements in the Bylaws.\78\ There would no longer be a minimum of 
number of directors. Accordingly, the Exchange proposes to reduce the 
minimum size of the Executive, Finance and Regulatory Oversight 
Committees set forth in CHX Article 2, Rules 2, 3 and 4. The proposed 
change would set the minimum number of committee members at three, 
conforming the committee size to the governing documents of the NYSE 
Exchanges, all of which provide that their respective regulatory 
oversight committees consist of three directors.\79\
---------------------------------------------------------------------------

    \78\ The proposed change would be consistent with the governing 
documents of the NYSE Exchanges. See NYSE National Bylaws, Article 
III, Section 3.2(a); NYSE Arca Bylaws Section 3.02(a); NYSE 
Operating Agreement, Article II, Section 2.03(a); and NYSE American 
Operating Agreement, Article II, Section 2.03(a).
    \79\ See NYSE National Bylaws, Article V, Section 5.6(b); NYSE 
Arca Rule 3.3(a)(1)(B); NYSE Operating Agreement Article II, Section 
2.03(h)(ii); and NYSE American Operating Agreement Article II, 
Section 2.03(h)(ii). The NYSE Exchanges do not have Executive or 
Finance Committees.
---------------------------------------------------------------------------

    The proposed changes are as follows.
     The first sentence of CHX Article 2, Rule 2, provides that 
the Executive Committee ``shall have not less than five members, all of 
whom shall be directors, plus the Chairman of the Board.'' The Exchange 
proposes to replace ``five'' with ``two,'' so the Executive Committee 
would have no less than three members, one of whom shall be the 
Chairman of the Board.
     The first sentence of CHX Article 2, Rule 3, provides that 
the Finance Committee ``shall have not less than five members, in 
addition to the Chairman of the Board, all of whom shall be 
Directors.'' The Exchange proposes to replace ``five'' with ``two,'' so 
the Finance Committee would have no less than three members, one of 
whom shall be the Chairman of the Board.
     The first sentence of CHX Article 2, Rule 4, provides that 
the Regulatory Oversight Committee ``shall consist of at least five 
Public Directors. The Exchange proposes to replace ``five'' with 
``three.'' As a result, the Regulatory Oversight Committee would have 
no less than three members, all of whom would be Public Directors.\80\ 
In the second sentence, the Exchange proposes to add ``STP'' before 
``Participant Directors,'' consistent with the defined term in Article 
II, Section 2(a) of the proposed CHX Bylaws. In addition, sentence 
three of CHX Article 2, Rule 4, provides that the ``Chairman of the 
Board, if he is not also serving as the Chief Executive Officer, shall 
be one of the Public Directors on the committee.'' The Exchange 
proposes to replace ``shall'' with ``may,'' to reflect the fact that 
the Chairman of the Board is not required to be a Public Director under 
proposed Section 2(a) of the CHX Bylaws.
---------------------------------------------------------------------------

    \80\ The membership requirements of the Exchange Regulatory 
Oversight Committee would be consistent with the NYSE Exchanges' 
regulatory oversight committees, which are made up of public 
directors. Id.
---------------------------------------------------------------------------

    CHX Article 2, Rule 11 sets forth the responsibilities of the 
Nominating and Governance Committee. Consistent with the changes to the 
name and role of the committee set forth in proposed Article II, 
Section 3(a) of the CHX Bylaws, in the first sentence of Rule 11 the 
Exchange proposes to delete ``and Governance'' from the first sentence, 
add ``and responsibilities'' prior to ``set out,'' and to delete the 
second sentence of the Rule. The amended text would read as follows:
    There shall be a Nominating Committee which shall have the 
composition and responsibilities set out in the Exchange's Bylaws.
    The proposed name and responsibilities for the committee would be 
consistent with NYSE National and NYSE Arca, which both have nominating 
committees that fill substantially the same role that the Exchange 
proposes the CHX Nominating Committee play.\81\
---------------------------------------------------------------------------

    \81\ See NYSE Arca Rule 3.2(b)(3)(B) and (C) and NYSE National 
Bylaws, Article III, Section 3.4.
---------------------------------------------------------------------------

Inbound Router
    ArcaSec is a Participant of the Exchange, and may route approved 
types of orders from any of the NYSE Exchanges to the Exchange. Once 
the Transaction closes, ArcaSec will also be an affiliate of the 
Exchange. Accordingly, the Exchange proposes to add a new subparagraph 
(b) to CHX Article 19, Rule 2 to provide that ArcaSec may act as an 
inbound router. Proposed CHX Article 19, Rule 2(b) would be 
substantially similar to rules of the NYSE Exchanges.\82\
---------------------------------------------------------------------------

    \82\ See NYSE Arca Rule 7.45-E(c), NYSE Rule 17(c)(2), and NYSE 
American Rule 7.45E(c); Securities Exchange Act Release No. 38235 
(June 23, 2011), 76 FR 38235 [sic] (June 29, 2011) (SR-NYSEArca-
2011-38).
---------------------------------------------------------------------------

    More specifically, proposed Rule 2(b)(1) would provide that, for so 
long as the Exchange is affiliated with the NYSE Exchanges and ArcaSec, 
in its capacity as a facility of the NYSE Exchanges, is utilized for 
the routing of any approved types of orders from those

[[Page 24529]]

exchanges to the Exchange (such function of ArcaSec is referred to as 
the ``Inbound Router''), each of the Exchange and Arca Sec shall 
undertake as follows:
     The Exchange shall maintain an agreement pursuant to Rule 
17d-2 under the Exchange Act (``Rule 17d-2 Plan'') with a non-
affiliated SRO to relieve the Exchange of regulatory responsibilities 
for ArcaSec with respect to rules that are common rules between the 
Exchange and the non-affiliated SRO.
     The Exchange shall maintain a regulatory services 
agreement (``RSA'') with a non-affiliated SRO to perform regulatory 
responsibilities for ArcaSec for unique Exchange rules.\83\
---------------------------------------------------------------------------

    \83\ ``Common rules'' would be defined in the Rule 17d-2 Plan.
---------------------------------------------------------------------------

     The RSA shall require the Exchange and the non-affiliated 
SRO to monitor ArcaSec for compliance with the Exchange's trading 
rules, and collect and maintain, in an easily accessible manner, all 
alerts, complaints, investigations and enforcement actions 
(collectively ``Exceptions'') in which ArcaSec (in routing orders to 
the Exchange) is identified as a participant that has potentially 
violated applicable Exchange or Commission rules. The RSA shall require 
that the non-affiliated SRO provide a report, at least quarterly, to 
the Chief Regulatory Officer of the Exchange quantifying all 
Exceptions.
     The Exchange, on behalf of the holding company owning both 
the Exchange and ArcaSec, shall establish and maintain procedures and 
internal controls reasonably designed to prevent ArcaSec from receiving 
any benefit, taking any action or engaging in any activity based on 
non-public information regarding planned changes to Exchange systems, 
obtained as a result of its affiliation with the Exchange, until such 
information is available generally to similarly situated Participants 
of the Exchange in connection with the provision of inbound order 
routing to the Exchange.
     The Exchange may furnish to ArcaSec the same information 
on the same terms that the Exchange makes available in the normal 
course of business to any other Participant.
    Proposed Rule 2(b)(2) would state that, provided the above 
conditions are complied with, ArcaSec may provide inbound routing 
services to the Exchange from the NYSE Exchanges.\84\
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    \84\ The Exchange will ensure a Rule 17d-2 Plan is in place and 
comply with the other listed conditions prior to ArcaSec acting as 
an Inbound Router of the Exchange.
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Affiliate Securities Traded on the Exchange
    The Exchange proposes to add a new Rule 28 to CHX Article 22 to set 
forth requirements for the Exchange relating to trading securities 
issued by ICE or its affiliates. Proposed Rule 28 is based in part on 
NYSE Rule 497 and NYSE American Rule 497--Equities. After the Closing, 
the Exchange would be a wholly-owned subsidiary of ICE, as would be 
stated in proposed Rule 28(a)(3). Proposed Rule 28.1(a)(1) [sic] would 
define the term ``ICE Affiliate'' to mean ICE and any entity that 
directly or indirectly, through one or more intermediaries, controls, 
is controlled by, or is under common control with ICE, where 
``control'' means that one entity possesses, directly or indirectly, 
voting control of the other entity either through ownership of capital 
stock or other equity securities or through majority representation on 
the board of directors or other management body of such entity. This 
proposed rule is based on NYSE Rule 497(a)(1) and NYSE American Rule 
497(a)(1)--Equities without any substantive differences. Proposed Rule 
28.1(a)(2) [sic] would define the term ``Affiliate Security'' to mean 
any security issued by an ICE Affiliate or any Exchange-listed option 
on any such security. This proposed rule is based on NYSE American Rule 
497(a)(2)--Equities without any differences.
    Because the Exchange is not a primary listing venue, the Exchange 
proposes a difference from both NYSE Rule 497 and NYSE American Rule 
497--Equities to provide in proposed Rule 28.1(b) [sic] that ``No 
Affiliate Security will be listed on the Exchange.'' Because no 
Affiliate Security will be listed on the Exchange, the Exchange does 
not propose rule text based on NYSE Rule 497(c)(1)(a), (c)(2), or 
(c)(3). Proposed Rule 28.1(c) [sic] would instead provide that 
throughout the trading of the Affiliate Security on the Exchange, the 
Exchange would prepare a quarterly report on the Affiliate Security for 
the Exchange's Regulatory Oversight Committee that describes Exchange 
regulatory staff's monitoring of the trading of the Affiliate Security 
including summaries of all related surveillance alerts, complaints, 
regulatory referrals, adjusted trades, investigations, examinations, 
formal and informal disciplinary actions, exception reports and trading 
data used to ensure the Affiliate Security's compliance with the 
Exchange's trading rules.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act,\85\ in general, and furthers the 
objectives of Section 6(b)(1) \86\ 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. 
Following the Transaction, the Commission will continue to have the 
same plenary regulatory authority over the Exchange that it currently 
has. The Exchange will continue to be registered as a national 
securities exchange and as a separate SRO. As such, the Exchange would 
continue to have separate rules, membership rosters, and listings that 
would be distinct from the rules, membership rosters, and listings of 
the four other registered national securities exchanges and SROs owned 
by NYSE Group. The proposed rule change is consistent with and will 
facilitate an ownership structure that will provide the Commission with 
appropriate oversight tools to ensure that the Commission will have the 
ability to enforce the Exchange Act with respect to the Exchange and 
its directors, officers, employees and agents to the extent they are 
involved in its activities.
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    \85\ 15 U.S.C. 78f(b).
    \86\ 15 U.S.C. 78f(b)(1).
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    In addition, the proposed CHX Holdings Governing Documents and 
governing documents of the ICE Holding Companies contain provisions 
intended to protect and maintain the independence and integrity of the 
self-regulatory functions of the Exchange upon Closing. Such provisions 
include submitting such entities to the jurisdiction of the federal 
courts and the Commission; obligating them to comply with the federal 
securities laws and the rules and regulations thereunder; requiring 
directors to take into consideration the effect that the relevant 
entity's actions would have on the ability of the U.S. Exchanges, 
including the Exchange, to carry out their responsibilities under the 
Exchange Act; setting ownership and voting concentration limits on 
prospective owners; and imposing requirements regarding confidential 
information and books and records. In particular, the Exchange believes 
that the ownership and voting concentration limits preclude undue 
influence over or interference with the Exchange's self-regulatory 
functions and fulfillment of its regulatory duties under the Exchange

[[Page 24530]]

Act. Accordingly, the Exchange believes that the proposed rule change 
is consistent with and will facilitate an ownership structure that will 
provide the Commission with appropriate oversight tools to ensure that 
the Commission will have the ability to enforce the Exchange Act with 
respect to the upstream governance of the Exchange.
    The Exchange believes that the proposed change would enable 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, because the 
proposed Bylaw Waiver Amendment, amendments to the governing documents 
of the Exchange and CHX Holdings, adoption of governing documents of 
the ICE Holding Companies as rules of the Exchange, and rule changes 
would effectuate the changes to the Exchange rules necessary to close 
the Transaction and provide for an efficient transition into a new 
organizational structure as soon as practicable after approval by the 
Commission of the proposed rule change. At the same time, because the 
Exchange is not proposing any significant changes to its existing 
operational and trading structure in connection with the change in 
ownership, the Exchange will operate in essentially the same manner 
upon Closing as it operates today. The Exchange believes this will 
provide consistency, predictability and clarity in its rules during the 
post-Closing transition, which would be beneficial to both investors 
and the public interest.
    The Exchange believes that amending the CHX Bylaw and CHX 
Certificate provisions and CHX Article 2 governing the powers, 
composition and election of its Board would enable 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, because the 
proposed changes would establish an organizational structure designed 
to ensure that the Exchange will be able to continue to discharge its 
obligations as an SRO pursuant to the Exchange Act. For the same 
reason, the Exchange believes that, by putting mechanisms in place such 
as the Rule 17d-2 Plan, RSA, Exception reporting requirements, 
procedures and internal controls, the proposed changes to CHX Article 
19, Rule 2(b) would protect the independence of the Exchange's self-
regulatory function and are designed to prevent ArcaSec from acting on 
non-public information regarding planned changes to Exchange systems 
obtained as a result of its affiliation with the Exchange, thereby 
enabling 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. 
Similarly, the Exchange believes that the reporting requirements set 
forth in proposed CHX Article 22, Rule 28 would enable 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, by ensuring ROC 
oversight of the trading of Affiliate Securities, through quarterly 
reports regarding the Exchange regulatory staff's monitoring of such 
trading. At the same time, all other provisions regarding the SRO 
function of the Exchange would remain substantively unchanged and in 
full force and effect prior to, during and after the Closing. The 
Exchange believes that would provide continuity in Exchange governance 
so as to facilitate the transition to the post-Closing governance 
structure, protecting and maintaining the independence of the self-
regulatory functions of the Exchange and allowing it to continue to 
discharge its obligations as an SRO throughout any post-Closing 
transition.
    The Exchange believes that the proposed amendments to Article II, 
Sections 2 and 3 of the CHX Bylaws and Article FIFTH of the CHX 
Certificate would be consistent with Section 6(b)(3) of the Exchange 
Act,\87\ which is intended to give members a voice in the selection of 
an exchange's directors and the administration of its affairs. The 
proposed changes would require that at least 50 percent of the Board 
members be Public Directors, and at least 20 percent of the Board 
members be STP Participant Directors nominated by the Permit Holders. 
The proposed changes would provide that all Permit Holders have the 
same rights to participate in the Nominating Committee and the 
nomination of STP Participant Directors and, in the case of a contested 
nomination, the same voting rights. The Exchange believes that having a 
Nominating Committee made up of STP Participant Directors and/or Permit 
Holder representatives would increase Permit Holders' participation in 
the nomination process compared to the current NGC, which consists only 
of Board members.\88\ The proposed nominating and voting process would 
be consistent with the process for nominating non-affiliated directors 
of NYSE National and NYSE Arca.\89\ The requirement that the STP 
Participant Directors make up at least 20% of the Board members would 
be consistent with the requirements for the boards of directors of the 
NYSE Exchanges, as would the proposal to allow NYSE Group to determine 
the size of the Board.\90\ For these reasons, the Exchange believes 
that the proposed change would provide for the fair representation of 
members in the administration of the affairs of the Exchange, including 
the rulemaking and the disciplinary process, through representation on 
the Board and its committees.
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    \87\ 15 U.S.C. 78f(b)(3).
    \88\ See CHX Bylaws, Article II, Section 3(a).
    \89\ See NYSE National Approval, supra note 24, and Securities 
Exchange Act Release No. 81419 (August 17, 2017), 82 FR 40044 
(August 23, 2017) (SR-NYSEArca-2017-40).
    \90\ See NYSE National Approval, supra note 24; Securities 
Exchange Act Release Nos. 81419 (August 17, 2017), 82 FR 40044 
(August 23, 2017) (SR-NYSEArca-2017-40); 59683 (April 1, 2007), 74 
FR 15799 (April 7, 2009) (SR-NYSE-2009-12); and 58673 (September 29, 
2008), 73 FR 57707 (October 3, 2008) (SR-Amex-2008-62). See also 
Securities Exchange Act Release No. 69869 (June 27, 2013), 78 FR 
40252 (SR-NYSE-2013-32); 59683 (April 1, 2009). The rules of other 
SROs allow their member or shareholders, as applicable, to determine 
the size of their boards of directors. See Second Amended Limited 
Liability Company Agreement of The NASDAQ Stock Market LLC, Section 
9(a); Amended and Restated By-laws of Miami International Securities 
Exchange, LLC, Article II, Section 2.2(a).
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    The Exchange also believes that the filing furthers the objectives 
of Section 6(b)(5) of the Exchange Act,\91\ in that it would 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,

[[Page 24531]]

because the Exchange believes that the proposed amendments to the CHX 
Bylaws, CHX Certificate, and CHX Article 2 will promote consistency 
among the various governance documents of the NYSE Exchanges. The 
proposed amendments will make the framework and processes relating to 
the Exchange Board more similar to those of the NYSE Exchanges' boards 
of directors, in particular NYSE National and NYSE Arca, which have 
been well-established as fair and designed to protect investors and the 
public interest.\92\
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    \91\ 15 U.S.C. 78f(b)(4) and (5).
    \92\ See NYSE National Approval, supra note 24, and Securities 
Exchange Act Release No. 81419 (August 17, 2017), 82 FR 40044 
(August 23, 2017) (SR-NYSEArca-2017-40).
---------------------------------------------------------------------------

    In addition, by clearly stating that the stockholders determine the 
size of the Board; presenting the Board composition requirements, 
including how the minimum number of Non-Affiliated directors shall be 
calculated; and setting forth how the Board shall be elected, the 
proposed amendments to Article II, Sections 2 and 3 of the CHX Bylaws, 
Article FIFTH of the CHX Certificate and CHX Article 2 would contribute 
to the orderly operation of the Exchange by adding clarity, 
transparency and consistency to its rules.
    The Exchange further believes that making non-substantive technical 
and conforming changes throughout the CHX Certificate, CHX Bylaws and 
CHX Article 2 to reflect the Exchange's proposed new ownership, 
including updating corporate names, defined terms, and cross references 
and removing an obsolete reference to the Board of Governors, removes 
impediments to and perfects the mechanism of a free and open market by 
removing confusion that may result from having these references in the 
governing documents following the Transaction. The Exchange further 
believes that the proposal removes impediments to and perfects the 
mechanism of a free and open market by ensuring that persons subject to 
the Exchange's jurisdiction, regulators, and the investing public can 
more easily navigate and understand its governing documents. 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 transparency, thereby reducing potential confusion. Removing 
such obsolete references will also further the goal of transparency and 
add clarity to the Exchange's rules.
    The Exchange believes that adopting proposed CHX Holdings Governing 
Documents that are based on the documents of the ICE Holding Companies 
generally, and NYSE Group specifically, and adopting governing 
documents of the ICE Holding Companies as rules of the Exchange, would 
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, because it would create more 
equivalent governing standards among all of the Exchange's direct and 
indirect parents, creating consistency, predictability and clarity in 
its rules, which is beneficial to both investors and the public 
interest. The proposed amendments will make the framework of the 
Exchange's direct parent substantially similar to the relevant 
framework and processes of the ICE Holding Companies, which have been 
well-established as fair and designed to protect investors and the 
public interest.\93\
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    \93\ See supra note 43.
---------------------------------------------------------------------------

    In addition, the Exchange believes that amending the ICE 
Independence Policy to reflect the change in ownership of the Exchange 
and to remove outdated or obsolete references will 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 by removing confusion that may results from having these 
references in the ICE Independence Policy, allowing persons subject to 
the Exchange's jurisdiction, regulators, and investors to more easily 
navigate and understand the policy.
    The Exchange believes that adopting proposed CHX Holdings Governing 
Documents that are based on the documents of the ICE Holding Companies 
generally, and NYSE Group specifically, will promote consistency among 
the various governance documents of the Exchange's holding companies 
and facilitate the ability of the Commission to provide oversight 
regarding the upstream governance of the Exchange. The proposed CHX 
Holdings Governing Documents contain provisions intended to protect and 
maintain the independence and integrity of the self-regulatory 
functions of the Exchange upon Closing. As such, these provisions 
operate to assure that the Exchange's rules meet the statutory 
requirements of Section 6(b)(5) of the Exchange Act to promote just and 
equitable principles of trade and to protect investors and the public 
interest.
    Moreover, the Exchange believes that the proposed affiliation 
between the Exchange and Archipelago will not result in unfair 
discrimination between Participants as Archipelago will not operate as 
a ``facility'' of the Exchange, as defined under Section 3(a)(2) of the 
Exchange Act,\94\ and will continue to act, and be regulated by the 
Exchange, as a Participant on the same terms as any other Participant, 
apart from CHXBD. Accordingly, the Exchange submits that the proposed 
affiliation between the Exchange and Archipelago is consistent with the 
requirements of Section 6(b)(5) of the Exchange Act.\95\
---------------------------------------------------------------------------

    \94\ 15 U.S.C. 78c(b)(2).
    \95\ 15 U.S.C. 78f(b)(5).
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    Finally, the Exchange believes that, the proposed changes to CHX 
Article 19, Rule 2(b) and new CHX Article 22, Rule 28 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, as after the Closing CHX Article 19, Rule 2(b)[it] 
will allow the routing of orders from affiliated exchanges to the 
Exchange. At the same time, by putting mechanisms in place such as the 
Rule 17d-2 Plan, RSA, Exception reporting requirements, procedures and 
internal controls, the Exchange believes that the proposed changes 
would protect the independence of the Exchange's self-regulatory 
function and are designed to prevent ArcaSec from acting on non-public 
information regarding planned changes to Exchange systems obtained as a 
result of its affiliation with the Exchange. Similarly, the Exchange 
believes that proposed CHX Article 22, Rule 28 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, because the reporting requirements set forth in Rule 28 would 
ensure ROC oversight of the trading of Affiliate Securities through 
quarterly reports regarding the Exchange regulatory staff's monitoring 
of such trading. The Exchange believes that the differences between 
proposed CHX Article 22, Rule 28 and the rules of NYSE and NYSE 
American would promote just and equitable principles of trade because 
the Exchange will not be a primary listing venue and has

[[Page 24532]]

represented in proposed CHX Article 22, Rule 28 that no Affiliate 
Security will be listed on the Exchange.
    For these reasons, the Exchange believes that the proposal is 
consistent with the Exchange Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Exchange Act,\96\ the 
Exchange believes that the proposed rule change will not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Exchange Act. The rule change is 
being proposed in connection with the Transaction that would, upon 
completion, change the ownership structure of CHX Holdings.
---------------------------------------------------------------------------

    \96\ 15 U.S.C. 78f(b)(8).
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    Indeed, the Exchange believes that the proposed rule change will 
enhance competition among trading venues, as the Exchange believes that 
the Transaction will result in various synergies and efficiencies. For 
example, the Transaction will allow CHX to utilize Pillar, which is an 
integrated trading technology platform designed to use a single 
specification for connecting to the equities and options markets 
operated by the NYSE Exchanges.\97\ The potential use of a single 
technology platform may also reduce investors' costs of connecting to 
and using the CHX and the NYSE Exchanges, including through the 
combination of data centers and market data services. The Exchange 
expects that the synergies and efficiencies will benefit it by reducing 
CHX's and the NYSE Exchanges' combined costs, creating the opportunity 
to further reduce costs to their respective members and other 
constituents.
---------------------------------------------------------------------------

    \97\ See, e.g., Securities Exchange Act Release No. 82819 (March 
7, 2018), 83 FR 11098 (March 13, 2018) (SR-NYSENAT-2018-02).
---------------------------------------------------------------------------

    The Exchange notes that the Exchange and the NYSE Exchanges 
generally operate with different business models and target different 
customer bases, limiting any concern that the Transaction could burden 
competition. Therefore, the Exchange expects that the Transaction will 
benefit investors, issuers, shareholders and the market as a whole. The 
Exchange will continue to conduct regulated activities (including 
operating and regulating its market and members) of the type it 
currently conducts, but will be able to do so in a more efficient 
manner to the benefit of its members. These efficiencies will pass 
through to the benefit of investors and issuers, promoting further 
efficiencies, competition and capital formation, placing no burden on 
competition not necessary or appropriate in furtherance of the Exchange 
Act.
    Furthermore, the Exchange notes that the proposed rule change 
presents no novel issues, as all of the proposed rule text is derived 
from existing rules of the NYSE Exchanges or, in the case of the Bylaw 
Waiver Amendment, the Exchange. The Exchange's conclusion that the 
proposed rule change would not result in any burden on competition that 
is not necessary or appropriate in furtherance of the purposes of the 
Exchange Act is consistent with the Commission's prior conclusions 
about similar combinations involving multiple exchanges in a single 
corporate family.\98\
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    \98\ See, e.g., NYSE National Approval, supra note 24; 
Securities Exchange Act Release Nos. 79585 (December 16, 2016), 81 
FR 93988 (December 22, 2016 (SR-BatsBZX-2016-68; SR-BatsBYX-2016-29; 
SR-BatsEDGA-2016-24; SR-BatsEDGX- 2016-60) (order granting approval 
of proposed rule change in connection with the proposed corporate 
transaction involving Bats Global Markets, Inc. and CBOE Holdings, 
Inc.); 71375 (January 23, 2014), 79 FR 4771 (January 29, 2014) (SR-
BATS-2013-059; SR-BYX-2013-039) (order granting approval of proposed 
rule change in connection with the proposed business combination 
involving BATS Global Markets, Inc. and Direct Edge Holdings LLC); 
58324 (August 7, 2008), 73 FR 46936 (August 12, 2008) (SR-BSE-2008-
02; SR-BSE-2008-23; SR-BSE-2008-25; SR-BSECC-2008-01) (order 
granting approval of proposed rule change in connection with the 
proposed acquisition of Boston Stock Exchange, Incorporated by the 
NASDAQ OMX Group, Inc.); and 53382 (February 27, 2006), 71 FR 11251 
(March 6, 2006) (SR-NYSE-2005-77) (order granting approval of 
proposed rule change relating to the NYSE's business combination 
with Archipelago Holdings, Inc.).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
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 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 such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as modified by Amendment No. 1, 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-CHX-2018-004 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-2018-004. 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-CHX-2018-004, and should be submitted on 
or before June 19, 2018.

[[Page 24533]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\99\
---------------------------------------------------------------------------

    \99\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-11395 Filed 5-25-18; 8:45 am]
 BILLING CODE 8011-01-P