Document ID: SEC-2015-1079-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2015-06-30T04:00Z

[Federal Register Volume 80, Number 125 (Tuesday, June 30, 2015)]
[Notices]
[Pages 37316-37323]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15984]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75288; File No. SR-NYSE-2015-27]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Amending the Eighth Amended 
and Restated Operating Agreement of the Exchange To Establish a 
Regulatory Oversight Committee as a Committee of the Board of Directors 
of the Exchange and Make Certain Conforming Amendments to Exchange 
Rules

June 24, 2015
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 hereunder,\3\ notice is hereby 
given that, on June 12, 2015, New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to: (1) amend the Eighth Amended and Restated 
Operating Agreement of the Exchange (``Operating Agreement'') to 
establish a Regulatory Oversight Committee (``ROC'') as a committee of 
the board of directors of the Exchange (the ``Board'') and make certain 
conforming amendments to Rules 0 [sic], 1, 46, 46A and 497; (2) 
terminate the delegation agreement (the ``Delegation Agreement'') among 
the Exchange, NYSE Market (DE), Inc. (``NYSE Market (DE)''), and NYSE 
Regulation, Inc. (``NYSE Regulation''), delete Rule 20, which sets 
forth the terms of the delegation, and make certain conforming 
amendments to Section 4.05 of the Operating Agreement and Rules 0, 1, 
22, 36, 37, 46, 48, 49, 54, 70, 103, 103A, 103B, 104, 422, 476A, and 
497; (3) remove from the Exchange rules certain organizational 
documents of NYSE Regulation and NYSE Market (DE) in connection with 
the proposed termination of the Delegation Agreement; (4) amend the 
Operating Agreement to establish a Director Candidate Recommendation 
Committee (``DCRC'') as a committee of the Board and change the process 
by which non-Affiliated Director candidates are named; (5) amend the 
Operating Agreement to establish a Committee for Review as a sub-
committee of the ROC and make conforming changes to Rules 308, 475, 
476, 476A and 9310; and (6) replace references to the Chief Executive 
Officer of NYSE Regulation in Rules 48, 49 and 86 with references to 
the Chief Regulatory Officer of the Exchange. The text of the proposed 
rule change is available on the Exchange's Web site at www.nyse.com, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to: (1) amend the Operating Agreement to 
establish a ROC as a Board committee and make certain conforming 
amendments to Rules 1, 46, 46A and 497; (2) terminate the Delegation 
Agreement, delete Rule 20, which sets forth the delegation from the 
Exchange to NYSE Market (DE) and NYSE Regulation,\4\ and make certain 
conforming amendments to Section 4.05 of the Operating Agreement and 
Rules 0, 1, 22, 36, 37, 46, 48, 49, 54, 70, 103, 103A, 103B, 104, 422, 
476A and 497; (3) remove from the Exchange rules certain constituent 
documents of NYSE Regulation and NYSE Market (DE) in connection with 
the proposed termination of the Delegation Agreement; (4) amend the 
Operating Agreement to establish a DCRC as a committee of the Board and 
change the process by which Non-Affiliated Director candidates are 
named; (5) amend the Operating Agreement to establish a Committee for 
Review as a sub-committee of the ROC and make conforming changes to 
Rules 308, 475, 476, 476A and 9310; and (6) replace references to the 
Chief Executive Officer of NYSE Regulation in Rules 48, 49 and 86 with 
references to the Chief Regulatory Officer of the Exchange (``CRO'').
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    \4\ NYSE Regulation, a not-for-profit subsidiary of the 
Exchange, performs the Exchange's regulatory functions pursuant to 
the Delegation Agreement. NYSE Regulation performs regulatory 
functions for the Exchange's affiliates NYSE MKT LLC (``NYSE MKT'') 
and NYSE Arca, Inc. (``NYSE Arca'') pursuant to intercompany 
Regulatory Services Agreements (each, an ``RSA'') that give each 
exchange the contractual right to review NYSE Regulation's 
performance.
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    The Exchange proposes that creation of the ROC, termination of the 
Delegation Agreement, and the above rule changes would be operative 
simultaneously. The Exchange would effect the changes described herein 
following approval of this rule filing no later than June 30, 2016, on 
a date determined by its Board.
Amendment of Operating Agreement To Create a ROC
    In connection with its proposal to terminate the Delegation 
Amendment, which is discussed below, the Exchange proposes to establish 
a ROC. The proposed ROC would have the responsibility to independently 
monitor the Exchange's regulatory operations. To effect this change, 
the Exchange proposes to amend Section 2.03(h) of the Operating 
Agreement to add a subsection (ii) providing for a ROC and delineating 
its composition and functions. The proposed new Section 2.03(h)(ii) of 
the Operating Agreement would be substantially similar to the recently 
approved changes by the Exchange's affiliates NYSE Arca and NYSE MKT to 
establish ROCs \5\ as well as Article III, Section 5(c) of the By-Laws 
of the NASDAQ Stock Market LLC

[[Page 37317]]

(``NASDAQ'') (the ``NASDAQ Bylaws'').\6\
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    \5\ See Securities Exchange Act Release No. 75155 (June 11, 
2015) (SR-NYSEArca-2015-29) (``Arca ROC Approval Order'') (approving 
creation of a ROC with primary responsibility to independently 
monitor the exchange's regulatory operations) and Securities 
Exchange Act Release No. 75148 (June 11, 2015) (SR-NYSEMKT-2015-27) 
(``MKT ROC Approval Order'') (same).
    \6\ See Securities Exchange Act Release No. 53128 (January 13, 
2006), 71 FR 3550 (January 23, 2006) (File No. 10-131) (``NASDAQ 
Approval Order'') (order granting application of NASDAQ for 
registration as a national securities exchange). As noted below, 
members of the NASDAQ ROC must satisfy both NASDAQ's public director 
and independent director requirements.
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    In particular, Section 2.03(h)(ii) would provide that the Board 
shall appoint a ROC on an annual basis. Proposed Section 2.03(h)(ii) 
would describe the composition of the ROC. Proposed Section 2.03(h)(ii) 
would also describe the functions and authority of the ROC. The 
proposed ROC's responsibilities would be to:
     oversee the Exchange's regulatory and self-regulatory 
organization responsibilities and evaluate the adequacy and 
effectiveness of the Exchange's regulatory and self-regulatory 
organization responsibilities;
     assess the Exchange's regulatory performance; and
     advise and make recommendations to the Board or other 
committees of the Board about the Exchange's regulatory compliance, 
effectiveness and plans.\7\
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    \7\ These three core responsibilities of the proposed ROC would 
be substantially similar to those of the ROCs of self-regulatory 
organizations (``SROs''). See, e.g., Arca ROC Approval Order, at 2; 
MKT ROC Approval Order, at 2; NASDAQ Bylaws, Article III, Section 5; 
Securities Exchange Act Release No. 58375 (August 18, 2008), 73 FR 
49498, 49502 (August 21, 2008) (File No. 10-182) (``Release No. 34-
58375'') (approving application of BATS Exchange, Inc. (``BATS'') 
seeking registration as a national securities exchange); Securities 
Exchange Act Release No. 61698 (March 10, 2010), 75 FR 13151, 13161 
(March 12, 2010) (``BATS Approval Order'') (approving application of 
EDGX Exchange, Inc. and EDGA Exchange, Inc., seeking registration as 
a national securities exchange); and Amended and Restated By-Laws of 
Miami International Securities Exchange, LLC, Article IV, Section 
4.5(c).
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    In furtherance of these functions, the proposed new subsection of 
the Operating Agreement would provide the ROC with the authority and 
obligation to review the regulatory budget of the Exchange and 
specifically inquire into the adequacy of resources available in the 
budget for regulatory activities. Under the proposed amendment, the ROC 
would be charged with meeting regularly with the CRO in executive 
session and, in consultation with the Exchange's Chief Executive 
Officer, establishing the goals, assessing the performance, and 
recommending the CRO's compensation. Finally, under the proposed rule, 
the ROC would be responsible for keeping the Board informed with 
respect to the foregoing matters.\8\
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    \8\ The obligations of the proposed ROC would be substantially 
similar to those of other SROs' ROCs. See, e.g., NASDAQ Bylaws, 
Article III, Section 5; Bylaws of NASDAQ OMX PHLX LLC, Article V, 
Section 5-2; Third Amended and Restated Bylaws of BATS-Exchange, 
Inc., Article V, Section 6(c).
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    The Exchange proposes that the ROC would consist of at least three 
members, each of whom would be a director of the Exchange that 
satisfies the independence requirements of the Exchange.\9\ The 
Exchange believes that a ROC comprised of at least three independent 
members is appropriate. The size and composition of the proposed ROC 
would be the same as that of the ROCs of other SROs.\10\ A ROC with at 
least three independent directors has been recognized as one of several 
measures that can help ensure the independence of the regulatory 
function from the market operations and commercial interests of a 
national securities exchange.\11\
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    \9\ The Exchange's independence requirements are set forth in 
the Independence Policy of the Board of Directors of the Exchange 
available at http://wallstreet.cch.com/MKT/pdf/independence_policy.pdf. See Securities Exchange Act Release No. 
67564 (August 1, 2012), 77 FR 47161 (August 7, 2012) (SR-NYSE-2012-
17; SR-NYSEArca-2012-59; SR-NYSEMKT-2012-07) (approving NYSE's 
director independence policy).
    \10\ See e.g., NASDAQ By-laws, Article III, Section 5(c) 
(specifying a ROC comprising three independent directors); Third 
Amended and Restated Bylaws of BATS Exchange, Inc., Article V, 
Section 6(c) (``BATS Bylaws'') (same); and Chicago Board Options 
Exchange, Incorporated (``CBOE'') Bylaws, Article IV, Section 4.5 
(specifying a ROC of at least three directors all of whom shall be 
``non-industry'' directors).
    \11\ See, e.g., Release No. 34-58375, 73 FR at 49502; Securities 
Exchange Act Release No. 61152 (December 10, 2009), 74 FR 66699, 
66704-705 (December 16, 2009) (File No. 10-191) (approving 
application of C2 Options Exchange, Incorporated, seeking 
registration as a national securities exchange); BATS Approval 
Order, 75 FR at 13161.
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    Further, proposed Section 2.03(h)(ii) would provide that the Board 
may, on affirmative vote of a majority of directors, at any time remove 
any member of the ROC for cause. Proposed Section 2.03(h)(ii) would 
also provide that a failure of the member to qualify as independent 
under the independence policy would constitute a basis to remove a 
member of the ROC for cause. Similar authority is found in the bylaws 
governing the ROCs of other SROs.\12\ In addition, proposed Section 
2.03(h)(ii) would provide that, if the term of office of a ROC 
committee member terminates under this section, and the remaining term 
of office of such committee member at the time of termination is not 
more than three months, during the period of vacancy the ROC would not 
be deemed to be in violation of its compositional requirements by 
virtue of the vacancy. Once again, this is consistent with the rules 
and bylaws of other SROs.\13\ Finally, the Exchange proposes to add 
text to Section 2.03(h) providing that vacancies in the membership of 
any board committee would be filled by the Exchange board, which is 
consistent with proposed Section 2.03(h)(ii).\14\
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    \12\ See e.g., BATS Bylaws, Article V, Section 2(a) (``the 
Chairman may, at any time, with or without cause, remove any member 
of a committee so appointed, with the approval of the Board.''); 
Second Amended and Restated By-laws of National Stock Exchange, 
Inc., Article V, Section 5.2 (same). Comparable provisions were 
recently approved for the Exchange's affiliates NYSE Arca and NYSE 
MKT. See Arca ROC Approval Order, at 2; MKT ROC Approval Order, at 
3. [sic]
    \13\ See e.g., NASDAQ Bylaws, Article III, Section 2(b).
    \14\ NYSE Arca, NYSE MKT and NASDAQ have the same provision. See 
Arca ROC Approval Order, at 3; MKT ROC Approval Order, at 3; Second 
Amended Limited Liability Co. Agreement of the NASDAQ Stock Market 
LLC, Section 9(g).
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    The Exchange believes that the proposed rule change creating an 
independent Board committee to oversee the adequacy and effectiveness 
of the performance of its self-regulatory responsibilities is 
consistent with previously approved rule changes for other SROs and 
would enable the Exchange to undertake its regulatory responsibilities 
under a corporate governance structure that is consistent with its 
industry peers.\15\ Moreover, the Exchange believes that the proposed 
ROC would ensure the continued independence of the regulatory 
process.\16\ In particular, integral to the proposal is that the 
oversight of the Exchange's self-regulatory responsibilities and 
regulatory performance, including review of the regulatory plan, 
programs, budget and staffing would be by a ROC composed of individuals 
independent of Exchange management and a CRO having general supervision 
of the regulatory operations of the Exchange that meets regularly with 
the ROC.\17\
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    \15\ See NASDAQ Bylaws, Article III, Section 5(c); BATS Bylaws, 
Article V, Section 6(c). See also Arca ROC Approval Order and MKT 
ROC Approval Order, note 5, supra.
    \16\ See, e.g., Securities Exchange Act Release No. 48946 
(December 17, 2003), 68 FR 74678, 74687 (August 21, 2008) (SR-NYSE-
2003-34) (``Release No. 34-48946'') (approving significant 
restructure of NYSE governance architecture centered on Board 
independent f [sic] members, member organizations, and listed 
issuers).
    \17\ See, e.g., Release No. 34-48946, 68 FR at 74687.
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    The Exchange also proposes to make the following conforming 
amendments to Rules 1, 46, 46A and 497:
     The Exchange proposes to amend Rule 1, which defines the 
``Exchange'', to replace a reference to the ``Board of Directors of 
NYSER'' with the ``Exchange's Regulatory Oversight Committee'', which 
would be the successor to the regulatory responsibilities of the NYSE 
Regulation board of directors.
     The Exchange proposes to amend Rule 46(b), which governs 
the

[[Page 37318]]

appointment of Floor Officials, to replace the reference to the ``NYSE 
Regulation Board of Directors'' with the proposed ROC as the entity 
that the Board would consult with on those appointments.
     Similarly, the Exchange proposes to amend Rule 46A, which 
governs the appointment of Executive Floor Governors, to replace the 
``Board of Directors of NYSE Regulation'' with the proposed ROC as the 
entity that the Board would consult with on those appointments.
     Finally, Rule 497 sets forth certain requirements that 
securities issued by Intercontinental Exchange, Inc., or its affiliates 
must meet before they can be listed on the Exchange. The Exchange 
proposes to replace ``NYSE Regulation Board of Directors'' in Rule 
497(b) and (c)(1) with ``Exchange's Regulatory Oversight Committee''. 
Following approval of this rule filing, the ROC would be the entity 
that would approve regulatory findings that the security to be listed 
satisfies Exchange listing rules under Rule 497(b) and that would 
receive the reports specified in Rule 497(c).\18\
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    \18\ As discussed below, the Exchange also proposes additional 
amendments to Rule 497 arising out of the termination of the 
Delegation Agreement.
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Termination of Delegation Agreement and Deletion of Rule 20
    The Exchange proposes to terminate the Delegation Agreement and 
delete Rule 20, which sets forth the delegation to its subsidiaries 
NYSE Regulation and NYSE Market (DE) of the Exchange's regulatory and 
market functions, respectively.\19\
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    \19\ See Rule 20(a). Rule 20(b) requires that NYSE Market (DE) 
establish a Market Performance Committee and that NYSE Regulation 
establish a Regulatory Advisory Committee, each to include persons 
associated with member organizations and representatives of both 
those member organizations doing business on the Floor of the 
Exchange and those who do not do business on the Floor. As discussed 
below, the Exchange does not propose to retain these committees. 
Rather, the Exchange proposes that the Committee for Review, which 
would include persons associated with member organizations and 
representatives of both those member organizations doing business on 
the Floor of the Exchange and those who do not do business on the 
Floor, assume their advisory capacity. See note 44, infra, and 
accompanying text.
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    The Delegation Agreement was executed in 2006 following the merger 
of New York Stock Exchange, Inc. (``NYSE, Inc.''), with Archipelago 
Holdings, Inc. As noted, as part of that transaction NYSE Regulation 
became a separate not-for-profit entity and the NYSE Regulation board 
of directors assumed the ROC's oversight functions and 
responsibilities.\20\ The Delegation Agreement set forth the terms 
under which the Exchange delegated its functions to its newly created 
subsidiaries. It should be noted that, although the Exchange delegated 
performance of its regulatory functions to NYSE Regulation and the 
performance of its market functions to NYSE Market (DE), the Exchange 
retained ultimate responsibility for the operations, rules and 
regulations developed by NYSE Regulation and NYSE Market (DE) as well 
as their enforcement.\21\
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    \20\ The merger had the effect of ``demutualizing'' NYSE, Inc., 
by separating equity ownership from trading privileges, and 
converting it to a for-profit entity. See Securities Exchange Act 
Release No. 53382, 71 FR 11251, 11254 (February 27, 2006) (SR-NYSE-
2005-77) (``Arca Merger Approval Order''). In the resulting re-
organization, the Exchange became a wholly-owned subsidiary of NYSE 
Group Inc., and succeeded to NYSE, Inc.'s registration as a national 
securities exchange under the Exchange Act. See id., at 11255. NYSE, 
Inc.'s pre-merger liabilities related to its regulatory functions 
were transferred to NYSE Regulation. See id.
    \21\ See Arca Merger Approval Order, 71 FR at 11264 (the 
Exchange retains ``ultimate responsibility for the fulfillment of 
its statutory and self-regulatory obligations under the Act''). The 
functions the Exchange delegated to NYSE Market (DE) included, among 
other things, operating the NYSE marketplace, including the 
automated systems supporting it; providing and maintaining a 
communications network infrastructure linking market participants 
for the efficient process and handling of quotations, orders, 
transaction reports and comparisons of transactions; acting as a 
Securities Information Processor for quotations and transaction 
information related to securities traded on NYSE and other trading 
facilities operated by NYSE Market (DE); administering the 
Exchange's participation in National Market System Plans; and 
collecting, processing, consolidating and providing to NYSE 
Regulation accurate information requisite to operation of the 
surveillance audit trail. See generally Exhibit 5C.
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    The Exchange proposes to terminate the Delegation Agreement and re-
integrate its regulatory and market functions. The proposed ROC would 
provide independent oversight of the regulatory function of the 
Exchange. As the Commission has noted, a complete structural separation 
of the regulatory and market functions of an SRO is only one of a 
``variety'' of ways to ensure the independence of the regulatory 
process.\22\ As noted above, the Exchange believes its proposal to 
establish a ROC to undertake the oversight of the Exchange's regulatory 
responsibilities would ensure independence in the regulatory process 
and would have the additional benefit of aligning the Exchange's 
corporate governance practices with its industry peers.
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    \22\ See Release No. 34-48946, 68 FR at 74687.
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    The Exchange proposes to functionally separate its regulatory 
function from its business lines. The Exchange's CRO would head the 
proposed regulatory department and continue to manage the Exchange's 
regulatory function, under the oversight of the proposed ROC. The 
regulatory staff supporting the NYSE's regulatory functions would 
continue to report to the CRO.\23\
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    \23\ See id. The Exchange notes that the BOX Options Exchange's 
CRO reports to both the ROC and the President of the Exchange. See 
Release No. 34-66871 (April 27, 2012), 77 FR 26323, 26330 (May 3, 
2012) (File No. 10-206) (citing BOX Exchange Bylaws Section 7.01). 
NASDAQ's CRO reports solely to the Chief Executive Officer of 
NASDAQ. See NASDAQ Approval Order, 71 FR at 3555 (citing NASDAQ 
Bylaws, Article IV, Section 7).
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    Similarly, following termination of the Delegation Agreement, NYSE 
Market (DE)'s delegated market responsibilities would once again be 
performed by the Exchange. In a corporate structure such as the one the 
Exchange is proposing, where there is not a complete structural 
separation of the Exchange's regulatory and market functions, a CRO 
reporting to an independent ROC adds a ``significant degree of 
independence'' that should ``insulate'' regulatory activity from 
economic pressures and potential conflicts of interest.\24\
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    \24\ Release No. 34-48946, 68 FR at 74687.
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    In light of the foregoing, the Exchange believes it appropriate to 
terminate the Delegation Agreement and delete Rule 20.
    The Exchange proposes to make certain conforming amendments to its 
Rules to reflect the termination of Delegation Agreement and the re-
integration of its regulatory operations. In particular, the Exchange 
proposes to make the following conforming amendments:
     The Exchange proposes to amend Section 4.05 of the 
Operating Agreement to remove references to ``NYSE Regulation, Inc.'' 
and replace one reference with ``the Exchange's regulatory staff''. The 
Exchange also proposes to delete the references to NYSE Regulation 
``assets'' to reflect the proposed reintegration of the regulatory 
function. The crux of the provision would continue to require the 
Exchange to ensure that any fees, fines or penalties collected by 
Exchange regulatory staff would not be used for commercial purposes or 
distributed to NYSE Group, Inc. (which is the ``Member'' for purposes 
of the Operating Agreement) or any other entity. The proposed revision 
does not in any way alter previous commitments with respect to the use 
of fine income; \25\
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    \25\ See Securities Exchange Act Release No. 55216 (January 31, 
2007), 72 FR 5779 (February 7, 2007) (NYSE-2006-109) (approving 
internal procedures to assure proper exercise of power to fine 
Exchange member organizations and proper use of fine income). In 
particular, the Exchange reiterates previous commitments that fines 
would play no role in the annual regulatory operating budget process 
and that the use of fine income by Exchange regulatory staff would 
be subject to review and approval by the proposed ROC. See 
Securities Exchange Act Release No. 55003 (December 22, 2006), 71 FR 
78497, 78498 (December 29, 2006) (NYSE-2006-109).

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[[Page 37319]]

     The Exchange proposes to amend Rule 0 (Definitions of 
Terms), which describes the regulatory services agreement between the 
NYSE and FINRA, to remove references to ``NYSE Regulation, Inc., NYSE 
Regulation staff or departments'', retaining the existing reference in 
Rule 0 to Exchange staff, which reference would encompass the 
Exchange's regulatory staff;
     The Exchange proposes to amend Rule 1, which defines the 
term the ``Exchange'', to replace references to ``officer of NYSER'' 
and ``employee of NYSER'' with ``Exchange officer'' and ``Exchange 
employee'', respectively;
     The Exchange proposes to amend Rule 22 (Disqualification 
Because of Personal Interest), which disqualifies member [sic] of 
certain Exchange boards and committees from considering a matter if 
there are certain types of indebtedness between the board or committee 
member and a member organization's affiliate or other related parties, 
to remove references to ``NYSE Market'' and ``NYSE Regulation'' board 
of directors;
     The Exchange proposes to amend Supplementary Material .30 
of Rule 36 (Communications Between Exchange and Members' Offices), 
which governs communications between the Exchange and member offices 
and requires records to ``be maintained in a format prescribed NYSE 
Regulation'' (sic) to remove the reference to ``NYSE Regulation'' and 
replace it with ``the Exchange''. The Exchange also proposes to correct 
the typographical error and add the word ``by'' before ``the 
Exchange''.
     The Exchange proposes to amend Rule 37 (Visitors), 
governing admittance of visitors to the Exchange trading Floor, to 
remove the reference to ``an Officer of NYSE Market or NYSE 
Regulation''; \26\
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    \26\ NYSE Market (DE) was formerly known as ``NYSE Market, 
Inc.'' Accordingly, references to ``NYSE Market'' in the Exchange 
Rules and Operating Agreement are references to NYSE Market (DE).
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     The Exchange proposes to amend Rule 46 (Floor Officials--
Appointment) to replace the reference to ``employees of NYSE 
Regulation, Inc.'' with a reference to the ``Exchange's regulatory 
employees'';
     The Exchange proposes to amend Rule 48 (Exemptive Relief--
Extreme Market Volatility Condition), which sets forth the procedures 
for invoking an extreme market volatility condition, to replace the 
reference to ``officers of NYSE Market and NYSE Regulation'' with 
``Exchange regulatory and market operational employees that are 
officers of the Exchange'';
     The Exchange proposes to amend Rule 49 (Emergency Powers), 
which addresses the Exchange's emergency powers, to replace ``NYSE 
Regulation, Inc.'' with ``the Exchange'' in the definition of 
``qualified Exchange officer''.
     The Exchange proposes to amend subpart (b) of Rule 54 
(Dealings on Floor--Persons) to replace ``NYSE Regulation, Inc. 
(``NYSER'')'' with ``the Exchange's regulatory staff''. Rule 54(b) 
permits approval of appropriately registered and supervised booth staff 
of member organizations who are not ``members'' to process orders sent 
to the booth in the same manner that a sales trader in an ``upstairs 
office'' is allowed to process orders.
     The Exchange proposes to amend subparts (1) & (7) of 
Supplementary Material .40 of Rule 70 (Execution of Floor Broker 
Interest), which provides that a member organization will be permitted 
to operate a booth premise similar to the member organization's 
``upstairs'' office, to replace ``the Exchange's regulatory staff'' for 
``NYSE Regulation, Inc. (``NYSER'')'';
     The Exchange proposes to amend Rule 103 (Registration and 
Capital Requirements of Designated Market Makers (``DMM'') and DMM 
Units), which governs registration and capital requirements for DMMs, 
to replace ``the Exchange'' for NYSE Regulation'';
     The Exchange proposes to amend 103A (Member Education), 
which governs the continuing education requirement for members active 
on the Exchange trading Floor, to replace ``NYSE Regulation, Inc. 
(``NYSER'')'' and ``NYSE Regulation, Inc.'' with ``the Exchange'';
     The Exchange proposes to amend 103B (Security Allocation 
and Reallocation), which governs the security allocation and 
reallocation process, to replace ``staff of NYSE Regulation'' with 
``Exchange regulatory'' staff in Policy Note (G);
     The Exchange proposes to amend 104 (Dealings and 
Responsibilities of DMMs), which describes DMM functions and 
responsibilities, to replace ``NYSE Regulation's Division of Market 
Surveillance'' with ``Exchange regulatory staff'' in subdivision (k);
     The Exchange proposes to amend 422 (Loans of and to 
Directors, etc.), which prohibits unsecured loans between members of 
the board of directors or any committee of ICE, ICE Holdings, NYSE 
Holdings, the Exchange, NYSE Market (DE), and NYSE Regulation or an 
officer or employee the foregoing without the prior consent of the NYSE 
Board, to remove references to ``NYSE Market'' and ``NYSE Regulation''; 
\27\
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    \27\ In addition, in order to conform references to the Exchange 
in Rule 422 to other references, ``Exchange LLC'' would be replaced 
with ``the Exchange''.
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     The Exchange proposes to amend 476A (Imposition of Fines 
for Minor Violation(s) of Rules), which sets forth the Exchange's Minor 
Rule Violation Plan, to replace the reference to ``NYSE Regulation'' 
with ``Exchange regulatory staff'' in subpart (d) identifying the 
parties that can contest a fine imposed under the Rule; \28\ and
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    \28\ Rule 476A is a legacy rule that only applies to proceedings 
for which a written notice was issued under the Rule prior to July 
1, 2013. In 2013, the NYSE adopted aspects of FINRA's process and 
fine levels for minor rule violations but retained the specific list 
of rules set forth in Rule 476A and now found in Rule 9217. See 
Securities Exchange Act Release Nos. 68678 (Jan. 16, 2013), 78 FR 
5213 (Jan. 24, 2013) and 69045 (Mar. 5, 2013), 78 FR 15394 (Mar. 11, 
2013) (SR-NYSE-2013-02).
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     The Exchange proposes to amend 497 (Additional 
Requirements for Listed Securities Issued by Intercontinental Exchange, 
Inc. or its Affiliates), which imposes certain pre-listing approvals 
and post-listing monitoring requirements on Affiliated Securities (as 
defined therein) listed on the Exchange, to remove the definition of 
NYSE Market in Rule 497(a)(4) and the definition of NYSE Regulation in 
Rule 497(a)(5) and replace references to each with ``the Exchange's 
regulatory staff'' or ``regulatory staff''.
Deletion of NYSE Regulation and NYSE Market (DE) Constituent Documents
    With the termination of the Delegation Agreement, NYSE Regulation 
and NYSE Market (DE) would no longer be performing the Exchange's 
regulatory and market functions, respectively. The Exchange believes 
that the previously filed constituent documents of NYSE Regulation and 
NYSE Market (DE) would therefore no longer constitute ``rules of the 
exchange'' under Section 3(a)(27) of the Exchange Act.\29\ Accordingly, 
along with the Delegation Agreement itself, the Exchange proposes to 
remove the following NYSE Regulation and NYSE Market (DE) constituent 
documents as rules of the Exchange upon termination of the Delegation 
Agreement:
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78c(a)(27).
---------------------------------------------------------------------------

     Restated Certificate of Incorporation of NYSE Regulation, 
Inc. See Exhibit 5D.\30\
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    \30\ The Commission notes that Exhibit 5D is attached to the 
filing, not to this Notice.

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[[Page 37320]]

     Seventh Amended and Restated Bylaws of NYSE Regulation, 
Inc. See Exhibit 5E.\31\
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    \31\ The Commission notes that Exhibit 5E is attached to the 
filing, not to this Notice.
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     Third Amended and Restated Certificate of Incorporation of 
NYSE Market (DE), Inc. See Exhibit 5F.\32\
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    \32\ The Commission notes that Exhibit 5F is attached to the 
filing, not to this Notice.
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     Fourth Amended and Restated Bylaws of NYSE Market (DE), 
Inc. See Exhibit 5G.\33\
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    \33\ The Commission notes that Exhibit 5G is attached to the 
filing, not to this Notice.
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     Independence Policy of NYSE Market (DE), Inc. See Exhibit 
5H.\34\
---------------------------------------------------------------------------

    \34\ The Commission notes that Exhibit 5H is attached to the 
filing, not to this Notice.
---------------------------------------------------------------------------

     Independence Policy of NYSE Regulation, Inc. See Exhibit 
5I.\35\
---------------------------------------------------------------------------

    \35\ The Commission notes that Exhibit 5I is attached to the 
filing, not to this Notice.
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Amendment of Operating Agreement To Create DCRC and Change Process for 
Naming Non-Affiliated Director Candidates
    Currently, Section 2.03(a)(iii) of the Operating Agreement provides 
that Non-Affiliated Director Candidates (also known as Fair 
Representation directors) are nominated by the nominating and 
governance committee of the ICE board of directors, which must 
designate as Non-Affiliated Director Candidates the candidates 
recommended jointly by the NYSE Market (DE) DCRC and NYSE Regulation 
DCRC. Section 2.03(a)(iv) describes the process whereby member 
organizations can nominate alternate candidates to those selected by 
the NYSE Market (DE) and NYSE Regulation DCRCs.
    The Exchange proposes to establish a DCRC as a committee of the 
Board by adding a new section (h)(i) to Section 2.03 of the Operating 
Agreement and making conforming changes to Section 2.03(a)(iii) and 
Section 2.03(a)(iv) to substitute the new proposed DCRC for the NYSE 
Market (DE) DCRC and NYSE Regulation DCRC in the process for nominating 
Non-Affiliated Director Candidates. The Exchange believes that once the 
Delegation Agreement is terminated neither the NYSE Market (DE) DCRC 
nor the NYSE Regulation DCRC should have a role in process for 
nominating Non-Affiliated Director Candidates, as they will no longer 
be delegated regulatory and market responsibilities.
    Proposed Section 2.03(h)(i) of the Operating Agreement would 
provide that the Board would appoint the NYSE DCRC on an annual basis 
and that the NYSE DCRC would be responsible for recommending Non-
Affiliated Director Candidates to the ICE NGC.\36\ Proposed Section 
2.03(h)(i) would also set out the requirements for the composition of 
the NYSE DCRC.\37\ Specifically, as proposed the DCRC would include 
individuals that are associated with a member organization and:
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    \36\ The Commission notes that ``ICE NGC'' is defined as ``the 
nominating and governance committee of the board of directors of 
ICE'' in Section 2.03(a)(iii) of the Exchange's Operating Agreement.
    \37\ The proposed requirements are substantially similar to 
those of the NYSE MKT, NYSE Regulation and NYSE Market (DE) DCRCs. 
See Seventh Amended and Restated Bylaws of NYSE Regulation, Inc., 
Article III, Section 5; Fourth Amended and Restated Bylaws of NYSE 
Market (DE), Inc., Article III, Section 5, and Sixth Amended and 
Restated Operating Agreement of NYSE MKT LLC, Section 2.03(h). 
However, NYSE MKT has a fourth category of requirements: Individuals 
that are associated with a member organization and spend a majority 
of their time on the trading floor of the Exchange and have as a 
substantial part of their business the execution of transactions on 
the trading floor of the Exchange for their own account or the 
account of his or her Member Organization, but are not registered as 
specialists. Because neither the NYSE Market (DE) DCRC nor the NYSE 
Regulation DCRC, which the NYSE DCRC is replacing, has this fourth 
category, the Exchange does not propose to include it in the revised 
Operating Agreement.
---------------------------------------------------------------------------

     Engage in a business involving substantial direct contact 
with securities customers;
     are registered as a DMM and spend a substantial part of 
their time on the trading floor; and
     spend a majority of their time on the trading floor of the 
Exchange and have as a substantial part of their business the execution 
of transactions on the trading floor of the Exchange for other than 
their own account or the account of his or her Member Organization, but 
are not registered as a DMM.
    The proposed DCRC would include at least one individual from each 
of these categories.
    Proposed Section 2.03(h)(i) would also provide that the Board would 
appoint such individuals after appropriate consultation with 
representatives of member organizations.
    Finally, references to the ``NYSE Market DCRC'' and ``NYSE 
Regulation DCRC'' in Section 2.03(a)(iii) and Section 2.03(a)(iv) would 
be replaced by ``NYSE DCRC.''
    The Exchange believes that the proposed rule change is consistent 
with the approach approved for its affiliate NYSE MKT, whose Operating 
Agreement providing for a DCRC was the model for the NYSE proposal.\38\ 
The proposed rule change would also have the benefit of harmonizing the 
Exchange's process for selecting Non-Affiliated Director Candidates 
with its NYSE MKT affiliate. Finally, the proposed rule change would 
allow the SRO board to have a more direct role in the appointments of 
Non-Affiliated Director Candidates while respecting the fair 
representation requirement of Section 6(b)(3) of the Exchange Act,\39\ 
which is intended to give members a voice in the selection of an 
exchange's directors and the administration of its affairs. In 
particular, as is the case with the NYSE Regulation DCRC and NYSE 
Market (DE) DCRC, the proposed DCRC would be composed of persons 
associated with Exchange member organizations and selected after 
appropriate consultation with those member organizations. As is the 
case now, the proposed Operating Agreement would include a process by 
which members can directly petition and vote for representation on the 
Exchange Board. The proposal would therefore continue to allow members 
to have a voice in the Exchange's ``use of its self-regulatory 
authority'' consistent with Section 6(b)(3) of the Exchange Act.\40\
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    \38\ See Securities Exchange Act Release No. 58673, 73 FR 57707, 
57713 (September 29, 2008) (SR-Amex-2008-62) (``Release No. 34-
58673''). In addition, neither NYSE Regulation nor NYSE Market (DE) 
participates in the NYSE Arca process whereby permit holders 
nominate directors of NYSE Arca. See NYSE Arca Rule 3.2(b)(2).
    \39\ See 15 U.S.C. 78f(b)(3).
    \40\ See Release No. 34-58673, 73 FR at 57713.
---------------------------------------------------------------------------

Amend Operating Agreement To Establish Committee for Review as a Sub-
Committee of the ROC
    The Exchange proposes to establish a Committee for Review (``CFR'') 
as a sub-committee of the ROC by adding a new section (h)(iii) to 
Section 2.03 of the Operating Agreement and making conforming changes 
to Rules 308, 475, 476, 476A, and 9310. The proposed CFR would be the 
successor to current CFR, which is a committee of the NYSE Regulation 
board of directors. Proposed Section 2.03(h)(iii) of the Operating 
Agreement would accordingly incorporate the salient requirements of the 
current CFR as set forth in Article III, Section 5 of the NYSE 
Regulation Bylaws.\41\
---------------------------------------------------------------------------

    \41\ See Arca Merger Approval Order, 71 FR at 11259 & 11266.
---------------------------------------------------------------------------

    Section 2.03(h)(iii) of the Operating Agreement would provide that 
the Board shall annually appoint a CFR as a sub-committee of the ROC. 
As is currently the case, proposed Section 2.03(h)(iii) would provide 
that the CFR would be comprised of both Exchange directors that satisfy 
the independence requirements \42\ as well as persons who

[[Page 37321]]

are not directors. Like the current CFR, the Exchange also proposes 
that a majority of the members of the CFR voting on a matter subject to 
a vote of the CFR must be directors of the Exchange.
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    \42\ See note 9 supra. Because the majority of the Exchange 
Board must be independent and any Non-Affiliated Director must be 
independent, as a functional matter if the Exchange has a five 
person Board, four of the five directors would qualify for CFR 
membership. See Operating Agreement Article II, Section 2.03(a).
---------------------------------------------------------------------------

    Further, proposed Section 2.03(h)(iii) would provide that among the 
persons on the CFR who are not directors would be included 
representatives of member organizations that engage in a business 
involving substantial direct contact with securities customers 
(upstairs firms), DMMS, and floor brokers. Once again, this is the way 
the current CFR is structured.\43\
---------------------------------------------------------------------------

    \43\ See id.
---------------------------------------------------------------------------

    Like the current CFR, proposed Section 2.03(h)(iii) would provide 
that the CFR would be responsible for reviewing the disciplinary 
decisions on behalf of the Board and reviewing determinations to limit 
or prohibit the continued listing of an issuer's securities on the 
Exchange.\44\
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    \44\ See Arca Merger Approval Order, 71 FR at 11259 & 11266. 
Currently, these powers are set forth in the charter of the NYSE 
Regulation CFR, which also states that the CFR can provide general 
advice to the NYSE Regulation board of directors of in connection 
with disciplinary, listing and other regulatory matters. The 
Exchange proposes to delineate the appellate and advisory powers of 
the proposed CFR in Section 2.03(h)(iii) of the Operating Agreement. 
Further, as discussed below, the Exchange proposes to conform Rules 
308, 475, 476, 476A and 9310 governing review of disciplinary 
appeals to the proposal. Appeals of delisting determinations are 
governed by Rule 8.04 of the NYSE Listed Company Manual, which 
provides that delisting determinations are to be reviewed by a 
``Committee of the Board of Directors of the Exchange''. The 
Exchange does not propose to amend Rule 8.04 because the proposed 
CFR would be the referenced committee of the Board.
---------------------------------------------------------------------------

    As noted above, the Exchange does not propose to retain a Market 
Performance Committee or a Regulatory Advisory Committee to act in an 
advisory capacity regarding trading rules and disciplinary matters and 
regulatory rules other than trading rules, respectively. Historically, 
these advisory committees have been composed of persons associated with 
member organizations and representatives of both those member 
organizations doing business on the Exchange's trading floor and those 
who do not do business on the Floor.
    The Exchange notes that the same categories of members would be 
represented on the proposed CFR, whose mandate as set forth in proposed 
Section 2.03(h)(iii) would include acting in an advisory capacity to 
the Board with respect to disciplinary matters, the listing and 
delisting of securities, regulatory programs, rulemaking and regulatory 
rules, including trading rules. The proposed CFR would therefore serve 
in the same advisory capacity as the Market Performance and Regulatory 
Advisory Committees. The Exchange accordingly believes that retaining 
the Market Performance Committee or Regulatory Advisory Committee would 
be redundant and unnecessary. Moreover, the Exchange believes that 
member participation on the proposed CFR would be sufficient to provide 
for the fair representation of members in the administration of the 
affairs of the Exchange, including rulemaking and the disciplinary 
process, consistent with Section 6(b)(3) of the Exchange Act.\45\
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    \45\ See 15 U.S.C. 78f(b)(3).
---------------------------------------------------------------------------

    Finally, the Exchange proposes to make conforming amendments to 
Rules 308, 475, 476, 476A and 9310 to replace references to the current 
NYSE Regulation CFR with references to the ``Committee for Review''.
    The Exchange believes that the proposed rule change is consistent 
with the approach approved for the current CFR which, as noted, was the 
model for the current proposal.\46\ The proposed rule change is also 
consistent with the fair representation requirement of Section 6(b)(3) 
of the Exchange Act,\47\ which is intended to give members a voice in 
the selection of an exchange's directors and the administration of its 
affairs. In particular, as is the case with the current CFR, the 
proposed CFR would be composed of persons associated with Exchange 
members and selected after appropriate consultation with those members. 
The proposal would therefore continue to provide for the fair 
representation of members in the ``administration of the affairs of the 
exchange'', including the disciplinary process, consistent with Section 
6(b)(3) of the Exchange Act.\48\
---------------------------------------------------------------------------

    \46\ See Arca Merger Approval Order, 71 FR at 11259 & note 41, 
supra.
    \47\ See 15 U.S.C. 78f(b)(3).
    \48\ See Arca Merger Approval Order, 71 FR at 11260.
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Amendments to Rules 48, 49, 86 and 9310
    The Exchange also proposes to amend Rule 48 (Exemptive Relief--
Extreme Market Volatility Condition), Rule 49 (Emergency Powers) and 
Rule 86 (NYSE Bonds\SM\) to replace references to the Chief Executive 
Officer of NYSE Regulation with references to the CRO of the Exchange.
    Rule 48 currently provides that, for purposes of the rule,\49\ a 
``qualified Exchange officer'' means the Chief Executive Officer of 
ICE, or his or her designee, or the Chief Executive Officer of NYSE 
Regulation, Inc., or his or her designee. Rule 86 currently provides 
that Clearly Erroneous Execution panels in connection with trades on 
NYSE MKT Bonds \50\ be comprised of the Chief Executive Officer of NYSE 
Regulation or a designee and representatives from two members or member 
organizations that are users of NYSE Bonds. Finally, Rule 49 addresses 
the Exchange's emergency powers and defines the term ``qualified 
Exchange officer'' as, inter alia, the ``NYSE Regulation, Inc. Chief 
Executive Officer'' or his or her designee.
---------------------------------------------------------------------------

    \49\ Rule 48 provides that the Exchange can invoke an extreme 
market volatility condition at the open (or reopen of trading 
following a market-wide halt of securities) during which time the 
Exchange can suspend NYSE Rules 15, 79A.30, and 123D(1) regarding 
obtaining certain prior Floor Official approvals and requirements 
for mandatory indications.
    \50\ NYSE Bonds is the Exchange's electronic bond trading 
platform. Rule 86 prescribes what bonds are eligible to trade on the 
NYSE Bonds platform and how bonds are traded on the platform, 
including the receipt, execution and reporting of bond transactions.
---------------------------------------------------------------------------

    ``Chief Executive Officer'' of NYSE Regulation is used in these 
four rules but CRO is used throughout the Exchange's rules to designate 
the same person.\51\ In particular, CRO is used in Rule 128 (Clearly 
Erroneous Executions for NYSE Equities) to designate the individual who 
can participate or designate participants on a CEE panel. CRO is also 
used to identify the participant in various panels adjudicating 
Exchange decisions affecting member organizations, including panels 
convoked under Rule 13 (Orders and Modifiers) for member organizations 
to dispute an Exchange decision to disqualify it from submitting 
``retail'' orders; Rule 88 (Bonds Liquidity Providers) for member 
organizations to dispute an Exchange decision to disapprove or 
disqualify it as a Bonds Liquidity Provider; Rule 107B (Supplemental 
Liquidity Providers) for member organizations to dispute a 
determination by the Supplemental Liquidity Provider Liaison Committee 
to impose a non-regulatory penalty under the Rule; and Rule 107C 
(Retail Liquidity Program) for member organizations to dispute an 
Exchange decision to disapprove or disqualify it from the participating 
in the Retail Liquidity Program. Accordingly, the Exchange proposes to 
replace references to ``Chief Executive Officer'' of NYSE Regulation in 
Rules 48, 49 and 86 with either the term

[[Page 37322]]

``Chief Regulatory Officer'' or ``CRO'', as appropriate.
---------------------------------------------------------------------------

    \51\ See, e.g., Rules 1, 13, 88, 107B, 107C, 128, 9120, 9216, 
9270, 9522, 9523, 9610, 9810, 9524, 9556, 9557, 9558, 9559, and 
9860.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act \52\ in general, and with Section 
6(b)(1) \53\ 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.
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 78f(b).
    \53\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    The proposed change would create an independent board committee to 
oversee the adequacy and effectiveness of the performance of the 
Exchange's self-regulatory responsibilities. The proposed ROC, similar 
in composition and functions to the approved ROCs of other SROs, would 
be designed to oversee the Exchange's regulatory and self-regulatory 
organization responsibilities and evaluate the adequacy and 
effectiveness of the Exchange's regulatory and self-regulatory 
organization responsibilities; assess the Exchange's regulatory 
performance; and advise and make recommendations to the Board or other 
committees of the Board about the Exchange's regulatory compliance 
effectiveness and plans. Accordingly, the Exchange believes that the 
proposed rule change would contribute to the orderly operation of the 
Exchange and would enable the Exchange to be so organized as to have 
the capacity to carry out the purposes of the Exchange Act and comply 
and enforce compliance by its members and persons associated with its 
members, with the provisions of the Exchange Act. The Exchange 
therefore believes that approval of the amendments to the Operating 
Agreement is consistent with Section 6(b)(1).
    The proposal to terminate the Delegation Agreement would allow the 
Exchange to re-integrate its regulatory and market functions with an 
independent ROC to undertake the oversight of the Exchange's regulatory 
responsibilities. The Exchange believes that this proposed structure 
would adequately ensure sufficient independence in the regulatory 
process and would have the additional benefit of aligning the 
Exchange's corporate governance practices with its industry peers. The 
Exchange therefore believes that termination of the Delegation 
Agreement and deletion of Rule 20, which sets forth the terms of the 
Exchange's delegation to its subsidiaries, is consistent with Section 
6(b)(1). For the same reasons, the proposal to remove from the Exchange 
rules certain organizational documents of NYSE Regulation and NYSE 
Market (DE) in connection with the proposed termination of the 
Delegation Agreement is also consistent with Section 6(b)(1).
    Further, the proposal to create a DCRC that would also be similar 
in composition and functions to the DCRC of the Exchange's affiliate 
NYSE MKT would bring the Exchange's process for nominating Non-
Affiliated Director Candidates into greater conformity with the process 
of its affiliate and give the Exchange a more direct role in the 
appointments of Non-Affiliated Director Candidates. Accordingly, the 
Exchange believes the proposed creation of a DCRC is consistent with 
the fair representation requirement of Section 6(b)(3) of the Exchange 
Act,\54\ which is intended to give members a voice in the selection of 
an exchange's directors and the administration of its affairs.
---------------------------------------------------------------------------

    \54\ See 15 U.S.C. 78f(b)(3).
---------------------------------------------------------------------------

    Similarly, the proposal to establish a CFR as a sub-committee of 
the ROC, which, among other things, is charged with hearing appeals of 
disciplinary determinations, complies with the Exchange Act's 
requirement to provide for a fair procedure for the disciplining of 
member and persons associated with members. The proposed ROC [sic] 
would be composed of both Exchange directors that satisfy the 
independence requirements (i.e., any Exchange director, other than the 
chief executive officer) as well as persons who are not directors; the 
Exchange proposes that a majority of the members of the CFR voting on a 
matter subject to a vote of the CFR, however, must be directors of the 
Exchange. Further, the proposed CFR would include among the members who 
are not directors representatives of member organizations that engage 
in a business involving substantial direct contact with securities 
customers (upstairs firms), DMMS, and floor brokers. Accordingly, the 
Exchange believes the proposed creation of a ROC [sic] is consistent 
with Section 6(b)(7) of the Exchange Act,\55\ which, among other 
things, requires that the rules of a national securities exchange 
provide a fair procedure for the disciplining of members and persons 
associated with members.
---------------------------------------------------------------------------

    \55\ See 15 U.S.C. 78f(b)(7).
---------------------------------------------------------------------------

    The Exchange also believes that this filing furthers the objectives 
of Section 6(b)(5) of the Exchange Act \56\ because the proposed rule 
change would be consistent with and facilitate a governance and 
regulatory structure that is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to, and perfect the mechanism of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest. As discussed above, the 
Exchange believes that the proposed creation of the ROC would align the 
Exchange's corporate governance practices with other SROs that have 
adopted a ROC to monitor the adequacy and effectiveness of the 
regulatory program, assess regulatory performance, and assist the board 
of directors in reviewing the regulatory plan and the overall 
effectiveness of the regulatory function. The Exchange believes that an 
independent ROC would ensure the integrity and independence of the 
regulatory process and would protect investors and the public interest. 
For the same reasons, the proposed termination of the Delegation 
Agreement and deletion of Rule 20 following creation of the proposed 
ROC would be consistent with Section 6(b)(5) of the Exchange Act.
---------------------------------------------------------------------------

    \56\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Deletion of certain organizational documents of NYSE Regulation and 
NYSE Market (DE) from Exchange rules removes impediments to and 
perfects a national market system because it would reduce potential 
confusion that may result from having these documents remain Exchange 
rules following the proposed termination of the Delegation Agreement 
when NYSE Regulation and NYSE Market (DE) would no longer be performing 
the Exchange's regulatory and market functions, respectively.
    Similarly, the Exchange believes that the proposed creation of a 
DCRC would carry forward the Exchange's current governance structure 
and continue to satisfy the fair representation requirements, thereby 
furthering the objectives of Section 6(b)(5) of the Exchange Act. The 
Exchange believes that the proposed rule change is therefore consistent 
with and facilitates a governance and regulatory structure that 
furthers the objectives of Section 6(b)(5) of the Exchange Act.

[[Page 37323]]

    The Exchange also believes that having the CFR serve in the 
advisory capacity of the Market Performance Committee and Regulatory 
Advisory Committee is consistent with and facilitates a governance and 
regulatory structure that furthers the objectives of Section 6(b)(5) of 
the Exchange Act. The Exchange believes that member participation on 
the proposed CFR would be sufficient to provide for the fair 
representation of members in the administration of the affairs of the 
Exchange, including rulemaking and the disciplinary process, consistent 
with Section 6(b)(3) of the Exchange Act.
    The Exchange believes that eliminating references to ``Chief 
Executive Officer'' of NYSE Regulation in Rules 48, 49 and 86 and 
replacing them with CRO, which is used throughout the Exchange's rules, 
removes impediments to and perfects a national market system because it 
would reduce potential confusion that may result from retaining 
different designations for the same individual in the Exchange's 
rulebook. Removing potentially confusing conflicting designations would 
also further the goal of transparency and add consistency to the 
Exchange's rules.
    Finally, making conforming amendments to Rules 0, 1, 22, 36, 37, 
46, 46A, 48, 49, 54, 70, 103, 103A, 103B, 104, 308, 422, 475, 476, 
476A, 497 and 9310 in connection with creation of the proposed ROC and 
the CFR subcommittee and termination of the Delegation Agreement 
removes impediments to and perfects the mechanism of a free and open 
market by removing confusion that may result from having obsolete 
references in the Exchange's rulebook. 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 the Exchange's rulebook. The Exchange 
believes that eliminating obsolete references 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.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act. The proposed rule 
change is not intended to address competitive issues but rather is 
concerned solely with the administration and functioning of the 
Exchange's board of directors.

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

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

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2015-27 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2015-27. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSE-2015-27 and should be submitted on or before July 
21, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\57\
---------------------------------------------------------------------------

    \57\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-15984 Filed 6-29-15; 8:45 am]
 BILLING CODE 8011-01-P