Document ID: SEC-2020-1449-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MEMX, LLC
Posted Date: 2020-09-10T04:00Z

[Federal Register Volume 85, Number 176 (Thursday, September 10, 2020)]
[Notices]
[Pages 55915-55919]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19943]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89763; File No. SR-MEMX-2020-05]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Corporate Documents of the Exchange's Parent Company

September 3, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on August 28, 2020, MEMX LLC (``MEMX'' or the ``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 Exchange. The Exchange filed the proposal as 
a ``non-controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 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 is filing with the Commission a proposed rule change 
to proposed rule change to amend the Fourth Amended and Restated 
Limited Liability Company Agreement (the ``Holdco LLC Agreement'') of 
MEMX Holdings LLC (``Holdco''), as further discussed below. Holdco is 
the parent company of the Exchange and directly or indirectly owns all 
of the limited liability company membership interests in the Exchange. 
The text of the proposed rule change is provided in Exhibit 5.

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 Exchange 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 these 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 aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to amend the Holdco LLC Agreement to: (i) Add 
defined terms reflecting the admission of each of BLK SMI, LLC 
(``BlackRock'') and Wells Fargo Central Pacific Holdings, Inc. (``Wells 
Fargo'') as a Class A Member \5\ of Holdco (a ``Holdco Class A 
Member''), amend the definitions of ``Excluded Class A Member'' \6\ and 
``Bank Class A Member'' \7\ to include reference to Wells Fargo and 
make other related conforming changes throughout the Holdco LLC 
Agreement; (ii) provide that the board of directors of Holdco (the 
``Holdco Board'') shall establish and designate a market structure 
committee of the Holdco Board (the ``Holdco Market Structure 
Committee'') and that a representative of BlackRock shall be a member 
of such Committee and the chairperson of such Committee if BlackRock so 
requests; (iii) update the compositional requirements of the Industry 
Advisory Board \8\ of Holdco (the ``Holdco Industry Advisory Board'') 
to reflect that BlackRock has been admitted as a Holdco Class A Member, 
and as such would be entitled to appoint a representative to the Holdco 
Industry Advisory Board, and to make other clarifying changes to such 
requirements and related provisions; (iv) specify the compositional 
requirements of any Holdco Subsidiary Industry Advisory Board (as 
defined below); and (v) clarify that Members of Holdco which do not 
operate (or have an Affiliate \9\ that operates) a U.S.-registered 
broker-dealer that executes transactions directly on U.S. exchanges are 
not required to cause any such Member of Holdco (or its Affiliates, as 
applicable) to use good faith efforts to connect to the Exchange, and 
specifically provide that such requirement also does not apply to 
BlackRock and its Affiliates.
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    \5\ The term ``Class A Member'' refers to a Member of Holdco 
holding Class A-1 Units or Class A-2 Units of Holdco. See Section 
1.1 of the Holdco LLC Agreement. The term ``Member'' refers to a 
person admitted as a member of Holdco.
    \6\ Presently, the term ``Excluded Class A Member'' refers to 
UBS Americas Inc. See Section 1.1 of the Holdco LLC Agreement.
    \7\ The term ``Bank Class A Member'' refers to each of Banc of 
America Strategic Investments Corporation, Strategic Investments I, 
Inc., UBS Americas Inc., JPMC Strategic Investments I Corporation, 
Goldman Sachs PSI Global Holdings, LLC, and any other Member of 
Holdco that is specifically designated as a Bank Class A Member 
(which would include Wells Fargo pursuant to the proposed amendments 
described herein), in each case, together with each of their 
respective Affiliates. See Section 1.1 of the Holdco LLC Agreement.
    \8\ The term ``Industry Advisory Board'' refers to an advisory 
board of Holdco with industry representation. See Section 8.19(a) of 
the Holdco LLC Agreement.
    \9\ The term ``Affiliate'' refers to, with respect to any 
person, any other person who, directly or indirectly (including 
through one or more intermediaries), controls, is controlled by, or 
is under common control with, such person. See Section 1.1 of the 
Holdco LLC Agreement.
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Add ``BlackRock'' and ``Wells Fargo'' as Defined Terms
    On April 7, 2020, Wells Fargo purchased Class A Units of Holdco and 
was admitted as a Holdco Class A Member, as previously approved by the 
Holdco Board. On May 11, 2020, BlackRock purchased Class A Units of 
Holdco and was admitted as a Holdco Class A Member, as previously 
approved by the Holdco Board.
    The Exchange now proposes to add ``BlackRock'' and ``Wells Fargo'' 
as defined terms in the Holdco LLC Agreement to reflect that each of 
BlackRock and Wells Fargo has been admitted as a Holdco Class A Member. 
The proposed definitions of BlackRock and Wells Fargo are consistent 
with the definitions of other Holdco Class A Members with similar 
rights and preferences as BlackRock and Wells Fargo, respectively. 
Related to the addition of Wells Fargo as a defined term in the Holdco 
LLC Agreement, the Exchange also proposes to amend the definition of 
the term ``Excluded Class A Member'' to include reference to Wells 
Fargo (in addition to UBS Americas Inc.), as Wells Fargo was granted 
the same rights under the Holdco LLC Agreement as UBS Americas Inc. by 
the Holdco Board, and to make related conforming changes throughout the 
Holdco LLC Agreement

[[Page 55916]]

to reflect that there would be two Excluded Class A Members instead of 
one as presently drafted (such as changing references to ``the Excluded 
Class A Member'' to ``each Excluded Class A Member''). The Exchange 
also proposes to amend the definition of ``Bank Class A Member'' to 
include reference to Wells Fargo as a designated Bank Class A Member. 
Presently, the designation of Wells Fargo as a Bank Class A Member 
under the Holdco LLC Agreement does not impact the governance of Holdco 
or any Holdco Subsidiary, or have any other effect, but is consistent 
with Holdco's approach of including an Excluded Class A Member that is 
a bank within this definition. The designation as a Bank Class A Member 
would only have an effect to the extent Wells Fargo becomes a 
Nominating Class A Member \10\ with the right to appoint a director of 
Holdco at some point in the future. The Exchange believes these are 
non-substantive changes to update the corporate documents of Holdco to 
reflect the recent admission of two new Holdco Class A Members and to 
harmonize other defined terms used in the Holdco LLC Agreement.
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    \10\ The term ``Nominating Class A Member'' refers to a Class A 
Member of Holdco which has the right to nominate a director to the 
Holdco Board. See Section 8.3(b) of the Holdco LLC Agreement.
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Holdco Market Structure Committee
    Section 8.9 of the Holdco LLC Agreement presently provides that the 
Holdco Board may designate one or more committees, which shall be 
comprised of one or more directors and alternate directors of the 
Holdco Board, and that such committees shall have the authority to make 
recommendations to the Holdco Board in an advisory role only and shall 
not have the authority to act for or on behalf of, or to bind, Holdco 
or any of its subsidiaries (including the Exchange) (each, a ``Holdco 
Subsidiary'' and, collectively, the ``Holdco Subsidiaries'').
    Pursuant to Section 8.9, on May 5, 2020, the Holdco Board 
established and designated the Holdco Market Structure Committee as a 
committee of the Holdco Board and approved a charter directing the 
Holdco Market Structure Committee to consider and present to the Holdco 
Board non-binding recommendations regarding matters relating to market 
structure applicable to Holdco and the Holdco Subsidiaries, which 
matters may include, but are not limited to, regulatory proposals, 
infrastructure and resiliency initiatives, transparency initiatives, 
market and commercial trends and market data issues, as the Holdco 
Board considers such market structure matters in the course of its 
duties. The charter of the Holdco Market Structure Committee and the 
resolutions of the Holdco Board related to the designation of the 
Holdco Market Structure Committee provide that, so long as BlackRock 
remains a Nominating Class A Member of Holdco (a ``Holdco Nominating 
Class A Member''), BlackRock shall have the right, but not the 
obligation, to designate one of its representatives to serve on the 
Holdco Market Structure Committee at all times and that, if BlackRock 
so requests, a representative of BlackRock shall be the chairperson of 
the Holdco Market Structure Committee.
    The Exchange now proposes to amend Section 8.9 to, without deleting 
or modifying any existing text, add a provision requiring the Holdco 
Board to establish the Holdco Market Structure Committee and providing 
for the foregoing rights of BlackRock related to its representation on 
the Holdco Market Structure Committee, as previously approved by the 
Holdco Board. As amended by the proposed change, Section 8.9 would 
continue to permit the Holdco Board to designate representation on the 
Holdco Market Structure Committee from among the Holdco Nominating 
Class A Members by appointing directors and alternate directors on the 
Holdco Board to such Committee and would additionally provide for the 
specific rights of BlackRock to appoint a representative to serve on 
such Committee and for such representative to serve as the chairperson 
of such Committee, in each case if BlackRock so requests. While these 
specific rights apply only to BlackRock, as noted above, the other 
Holdco Nominating Class A Members will have representation on the 
Holdco Market Structure Committee as designated by the Holdco Board, 
which has generally agreed that each Holdco Nominating Class A Member 
shall have the right to appoint a representative to serve on such 
Committee if such Holdco Nominating Class A Member so requests. Thus, 
each Holdco Nominating Class A Members is presently entitled to have 
representation on the Market Structure Committee and, as noted above, 
the Market Structure Committee only considers matters in a non-binding 
capacity and it is the Holdco Board, with representation from all 
Holdco Nominating Class A Members as provided under the Holdco LLC 
Agreement, that must ultimately take action with respect to such 
matters. Moreover, each Member of Holdco and the Holdco Board has been 
advised of BlackRock's specific rights with respect to representation 
on the Holdco Market Structure Committee, and such rights were approved 
by the Holdco Board on May 5, 2020, without any objection raised by any 
Member of Holdco or the Holdco Board. Accordingly, the proposed change 
would update the corporate documents of Holdco to implement a 
requirement which was already permitted under the Holdco LLC Agreement 
and which the Holdco Board has already agreed to and satisfied by 
action taken on May 5, 2020. The Exchange and the Holdco Board each 
believes that amending the Holdco LLC Agreement to include a 
requirement that the Holdco Market Structure Committee be established 
would ensure that the Holdco Market Structure Committee remains in 
place and further believes that having the Holdco Market Structure 
Committee in place (specifically with BlackRock's representation, 
including as chairperson, if BlackRock so desires) would meaningfully 
aid the Holdco Board in considering market structure-related matters 
and would ultimately help Holdco and the Exchange to promote a fair, 
transparent and efficient experience for all investors.
Holdco Industry Advisory Board
    Section 8.19 of the Holdco LLC Agreement, which contains provisions 
relating to the creation and functioning of the Holdco Industry 
Advisory Board, provides that, if established, the Holdco Industry 
Advisory Board will provide advice and guidance to the Holdco Board and 
the management of Holdco and the Exchange relating to, among other 
things, technical and operational matters relating to the Exchange, but 
it will not be a committee of the Holdco Board. Section 8.19(a) 
contains provisions that specify the compositional requirements of the 
Holdco Industry Advisory Board and presently provides that ``Promptly 
after the Effective Date,'' \11\ the Holdco Board may, upon a 
determination to do so by Supermajority Board Vote,\12\ establish the 
Holdco Industry Advisory Board.
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    \11\ The term ``Effective Date'' refers to the effective date of 
the Holdco LLC Agreement, which is February 19, 2020.
    \12\ The term ``Supermajority Board Vote'' means the affirmative 
vote of at least seventy-seven percent (77%) of the votes of all 
directors of Holdco then entitled to vote on the matter under 
consideration and who have not recused themselves, whether or not 
present at the applicable meeting of the Holdco Board; provided that 
if such affirmative vote threshold results in the necessity of the 
affirmative vote of all such directors of Holdco with respect to 
such matter, an affirmative vote of all but one of such directors of 
Holdco shall be required instead with respect to such matter. See 
Section 1.1 of the Holdco LLC Agreement.

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[[Page 55917]]

    The Exchange now proposes to amend Section 8.19(a) of the Holdco 
LLC Agreement to (i) update the compositional requirements of the 
Holdco Industry Advisory Board to reflect that BlackRock has been 
admitted as a Holdco Class A Member, and as such would be entitled to 
appoint a representative to the Holdco Industry Advisory Board if it so 
desires, and to make other clarifying changes relating to certain terms 
currently used in that section, and (ii) delete the phrase ``Promptly 
after the Effective Date,'' as such phrase is inapplicable and 
confusing in the context given the elective nature of the Holdco 
Board's ability to establish the Holdco Industry Advisory Board.
    Section 8.19(a) presently provides, among other things, that the 
Holdco Industry Advisory Board shall be comprised of: (i) One 
representative of (a) each Market Maker Class A Member \13\ which is a 
Holdco Nominating Class A Member, (b) each Retail Broker Class A Member 
\14\ which is a Holdco Nominating Class A Member, (c) each Bank Class A 
Member which is a Holdco Nominating Class A Member, and (d) the 
Excluded Class A Member so long as it is entitled to appoint an 
observer to the Holdco Board (a ``Holdco Board Observer''), and (ii) 
such members of the Exchange as determined by the Holdco Board. The 
proposed amendment would eliminate the references in this section to 
certain specific categories of Holdco Class A Members, namely, Market 
Maker Class A Member, Retail Broker Class A Member, and Bank Class A 
Member and would replace such references with a single reference to 
Holdco Nominating Class A Members, as all of the Holdco Class A Members 
that make up such categories, together with BlackRock, now comprise all 
of the Holdco Nominating Class A Members.
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    \13\ The term ``Market Maker Class A Member'' refers to each of 
Citadel Securities Principal Investments LLC, Virtu Getco 
Investments, LLC, Jane Street Group, LLC, and any other Member of 
Holdco that is specifically designated as a Market Maker Class A 
Member (of which there are none as of the date of this filing), in 
each case, together with each of their respective Affiliates. See 
Section 1.1 of the Holdco LLC Agreement. On May 12, 2020, Virtu 
Getco Investments, LLC changed its name to Virtu Investments LLC.
    \14\ The term ``Retail Broker Class A Member'' refers to each of 
E*TRADE Financial Corporation, Devonshire Investors (Delaware) LLC, 
The Charles Schwab Corporation, Datek Online Management Corp., and 
any other Member of Holdco that is specifically designated as a 
Retail Broker Class A Member (of which there are none as of the date 
of this filing) and which, or an Affiliate of which, is a broker-
dealer registered with the Financial Industry Regulatory Authority, 
Inc. which provides services to retail customers, in each case, 
together with each of their respective Affiliates. See Section 1.1 
of the Holdco LLC Agreement.
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    The effect of the proposed change is to eliminate unnecessary 
references to specific categories of Holdco Class A Members and replace 
such references with a single reference to Holdco Nominating Class A 
Members, which now includes BlackRock in addition to the Holdco Class A 
Members that comprise the categories of Holdco Class A Members 
presently referenced, and to provide that for so long as each Holdco 
Nominating Class A Member remains a Holdco Nominating Class A Member or 
is entitled to appoint a Holdco Board Observer pursuant to the terms of 
the Holdco LLC Agreement, each such Holdco Nominating Class A Member is 
entitled to appoint a representative to the Holdco Industry Advisory 
Board if it so desires. The proposed change would also update the 
reference to ``the Excluded Class A Member'' in this section to ``each 
Excluded Class A Member'' to reflect Wells Fargo's inclusion in that 
defined term, but it would not in any way affect any Excluded Class A 
Member's right to appoint a representative to the Holdco Industry 
Advisory Board, which are in addition to the rights of each Holdco 
Nominating Class A Member to appoint a representative to the Holdco 
Industry Advisory Board. In short, the proposed amendment would add 
BlackRock to the group of Holdco Class A Members that, together with 
the Excluded Class A Members, each have the right to appoint a 
representative to the Holdco Industry Advisory Board and would simplify 
the language used to reflect this.
    The Exchange also proposes to amend Section 8.19(a) to delete the 
phrase ``Promptly after the Effective Date,'' with respect to the 
Holdco Board's ability to establish the Holdco Industry Advisory Board. 
The ability granted to the Holdco Board by Section 8.19(a) to establish 
the Holdco Industry Advisory Board is elective in nature, as the 
existing language provides that Holdco Board may establish the Holdco 
Industry Advisory Board, and as such was not intended by the Members of 
Holdco to be required to be exercised at any specific time (or at all). 
Instead, the language was intended to, and does in effect, provide that 
this ability may only be exercised if and when the Holdco Board 
determines to do so by Supermajority Board Vote. The phrase ``Promptly 
after the Effective Date,'' is therefore inapplicable and may cause 
confusion in this context as it could be read to imply an unintended 
and undefined durational requirement with respect to the Holdco Board's 
ability and discretion to establish the Holdco Industry Advisory Board. 
Accordingly, deleting this phrase would clarify the provision to more 
accurately reflect the intent of the Members of Holdco for the Holdco 
Board to have the ability to establish the Holdco Industry Advisory 
Board at such time as determined by Supermajority Board Vote (or not at 
all) rather than within any specific amount of time following the 
Effective Date. The Holdco Industry Advisory Board has not been 
established as of the date of this filing.
Holdco Subsidiary Industry Advisory Boards
    The Exchange proposes to amend Section 8.19 of the Holdco LLC 
Agreement to add a new clause (c) to specify the compositional 
requirements of any Holdco Subsidiary Industry Advisory Board. 
Specifically, the proposed new Section 8.19(c) provides that, with 
respect to any committee or advisory board of any Holdco Subsidiary 
which has functions similar to the contemplated functions of the Holdco 
Industry Advisory Board (any such committee or advisory board, a 
``Holdco Subsidiary Industry Advisory Board''), (a) each Holdco Class A 
Member which is a Holdco Nominating Class A Member, for so long as it 
remains a Holdco Nominating Class A Member or is entitled to appoint a 
Holdco Board Observer pursuant to the terms of the Holdco LLC 
Agreement, and (b) each Excluded Class A Member, for so long as it is 
entitled to appoint a Holdco Board Observer pursuant to the terms of 
the Holdco LLC Agreement, would have the right, but not the obligation, 
to appoint a representative to such Holdco Subsidiary Industry Advisory 
Board.
    The Exchange believes that the proposed compositional requirements 
relating to any Holdco Subsidiary Industry Advisory Board are 
consistent with the proposed updated compositional requirements 
relating to the Holdco Industry Advisory Board, and as such would 
provide for a uniform approach by Holdco and the Holdco Subsidiaries to 
considering matters within the scope of such industry advisory boards. 
No Holdco Subsidiary Industry Advisory Board has been established as of 
the date of this filing.
Connection to the Exchange by Certain Members
    Section 11.8 of the Holdco LLC Agreement presently provides that 
each Member of Holdco shall use (or shall ensure that any of its 
Affiliates that it determines are to be members of the Exchange use) 
good faith efforts to take

[[Page 55918]]

such actions as are necessary to enable such Member (or its Affiliates, 
as applicable) to connect to the Exchange prior to the operational date 
of the Exchange in a manner that would permit such Member (or its 
Affiliates, as applicable) to use the Exchange in a fair, equitable and 
non-discriminatory manner.
    The Exchange now proposes to amend Section 11.8 to clarify that 
Members of Holdco which do not operate (or have an Affiliate that 
operates) a U.S.-registered broker-dealer that executes transactions 
directly on U.S. exchanges are not required to use (or cause its 
Affiliates, as applicable, to use) good faith efforts to connect to the 
Exchange, as connection to the Exchange by such persons may not be 
permissible under Exchange Rule 2.3, which requires, among other 
things, that each member of the Exchange be a registered broker or 
dealer. The Exchange believes that the proposed amendment clarifies the 
existing language in Section 11.8, which could be read to require 
Members of Holdco (or their Affiliates, as applicable) that are not 
registered as a broker or dealer to use good faith efforts to connect 
to the Exchange in a manner inconsistent with Exchange Rule 2.3, to 
more accurately reflect the intent of the Members of Holdco to require 
only those Members of Holdco (or their Affiliates, as applicable) which 
operate a U.S.-registered broker-dealer that executes transactions 
directly on U.S. exchanges to use good faith efforts to connect to the 
Exchange in a manner consistent with the Exchange's rules and the Act.
    BlackRock is an asset manager, and its business model does not 
involve acting as a broker-dealer on behalf of third parties on U.S. 
exchanges. For clarity's sake, BlackRock does have Affiliates that are 
U.S.-registered broker-dealers but these Affiliates do not execute 
transactions directly on U.S. exchanges, so out of an abundance of 
caution, the Exchange also proposes to further amend Section 11.8 to 
specifically provide that the requirement to connect to the Exchange 
shall not apply to BlackRock and its Affiliates. If BlackRock were to 
alter its business model so that it or any broker-dealer Affiliate did 
execute transactions directly on a U.S. exchange and, specifically, 
were to connect to the Exchange, the Exchange would require such 
connection to be conducted in a manner that would permit such person to 
use the Exchange in a fair, equitable and non-discriminatory manner 
consistent with the existing requirements of Section 11.8.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act,\15\ in general, and furthers the objectives of 
Section 6(b)(1),\16\ 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 Act and to comply, and to enforce compliance by its 
members, with the provisions of the Act, the rules and regulations 
thereunder, and the rules of the Exchange. The Exchange also believes 
that the proposed rule change is consistent with Section 6(b)(5) of the 
Act,\17\ which requires the rules of an exchange to be designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(1).
    \17\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed amendments to the Holdco LLC 
Agreement to add ``BlackRock'' and ``Wells Fargo'' as defined terms and 
make related conforming changes to certain definitions and other 
provisions, to update and clarify the compositional requirements of, 
and remove inapplicable and confusing language relating to, the Holdco 
Industry Advisory Board, and to add a provision requiring the Holdco 
Board to establish the Holdco Market Structure Committee and providing 
for certain rights of BlackRock relating to its representation on such 
Committee would update and clarify the relevant provisions of the 
Holdco LLC Agreement in a manner consistent with actions already taken 
by the Holdco Board as currently permitted by the Holdco LLC Agreement, 
and as such would enable the Exchange to be so organized as to have the 
capacity to carry out the purposes of the Act, remove impediments to 
and perfect the mechanism of a free and open market, and protect 
investors and the public interest.
    The Exchange believes the proposed amendment to the Holdco LLC 
Agreement to specify compositional requirements for any Holdco 
Subsidiary Industry Advisory Board consistent with the proposed updated 
compositional requirements relating to the Holdco Industry Advisory 
Board would establish a uniform approach by Holdco and the Holdco 
Subsidiaries to the consideration of matters within the scope of such 
industry advisory boards, which include technical and operational 
matters relating to the Exchange, and as such would promote the 
maintenance of a fair and orderly market and the protection of 
investors and the public interest.
    The Exchange believes the proposed amendment to the Holdco LLC 
Agreement to not require Members of Holdco (or their Affiliates, as 
applicable) which do not operate a U.S.-registered broker-dealer that 
executes transactions directly on U.S. exchanges, including BlackRock 
and its Affiliates, to connect to the Exchange would add clarity to the 
Holdco LLC Agreement in a manner that would enable the Exchange to 
comply, and enforce compliance by its members, with the provisions of 
the Act and the rules of the Exchange, which require each member of the 
Exchange to be a registered broker or dealer (or person associated with 
a registered broker or dealer), and as a result would foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and 
enable the Exchange to be so organized as to have the capacity to carry 
out the purposes of the Act. The Exchange also believes that 
specifically stating that BlackRock and its Affiliates are not required 
to connect to the Exchange is consistent with the Act and the rules of 
the Exchange for the reasons set forth above and to avoid potential 
confusion because BlackRock does have Affiliates that are U.S.-
registered broker-dealers but that do not execute transactions directly 
on U.S. exchanges.

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

    Because the proposed rule change relates to: (i) The compositional 
requirements of certain non-binding advisory committees and boards of 
the Exchange and its parent company and (ii) clarifying and other non-
substantive changes to the corporate documents of the Exchange's parent 
company, and not the operations of the Exchange, the Exchange does not 
believe that the proposed rule change will impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act.

[[Page 55919]]

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-
4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \20\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \21\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay. The 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposed rule change does not raise any new issues with 
respect to the Exchange and is concerned solely with updating the 
corporate documents of the Exchange's parent company to reflect and 
accommodate the addition of new investors. Therefore, the Commission 
hereby waives the operative delay and designates the proposal as 
operative upon filing.\22\
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    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
    \22\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-MEMX-2020-05 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-MEMX-2020-05. 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-MEMX-2020-05 and should be submitted on 
or before October 1, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-19943 Filed 9-9-20; 8:45 am]
BILLING CODE 8011-01-P