Document ID: SEC-2008-1098-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: American Stock Exchange LLC
Posted Date: 2008-08-07T04:00Z

[Federal Register: August 7, 2008 (Volume 73, Number 153)]
[Notices]               
[Page 46086-46097]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07au08-108]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58284; File No. SR-Amex-2008-62]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto 
Relating to the Acquisition of the Exchange by NYSE Euronext

August 1, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on July 23, 2008, American Stock Exchange LLC, a Delaware 
limited liability company (``Amex'' or the ``Exchange''), filed with 
the Securities and Exchange Commission (``Commission'' or ``SEC'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been substantially prepared by the Exchange. On July 30, 
2008, the Exchange filed Amendment No. 1 to the proposed rule change. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is submitting the proposed rule change in connection 
with the AMCAS Merger, the Holdings Merger, the LLC Merger and the 
NYSE/Amex Merger (each as defined in Section 1.(a). of Item II.A. below 
and collectively, the ``Mergers'') and related transactions which will 
result in the successor to Amex, to be renamed ``NYSE Alternext U.S. 
LLC'' (``NYSE Alternext U.S.''), becoming an indirect wholly-owned 
subsidiary of NYSE Euronext, a Delaware Corporation (``NYSE 
Euronext'').
    In connection with the Mergers, New York Stock Exchange LLC 
(``NYSE''), an indirect wholly-owned subsidiary of NYSE Euronext, is 
proposing that certain organizational documents of NYSE Euronext and 
its wholly-owned subsidiaries, NYSE Group, Inc. (``NYSE Group'') and 
NYSE Regulation, Inc. (``NYSE Regulation'') and the Independence Policy 
of NYSE Euronext (``NYSE Euronext Independence Policy'') be amended 
substantially concurrently with the Mergers. In addition, Amex is 
proposing to adopt the operating agreement of NYSE Alternext U.S. 
(``NYSE Alternext U.S. Operating Agreement'') and to amend its rules 
(``Amex Rules''), which will become the rules of NYSE Alternext U.S. 
(``NYSE Alternext U.S. Rules''), to reflect the Mergers and related 
transactions. In connection with the Mergers, Amex also proposes that 
the present Constitution of Amex (``Amex Constitution'') will be 
eliminated and relevant provisions thereof will be included in the NYSE 
Alternext U.S. Operating Agreement or the NYSE Alternext U.S. Rules, as 
applicable.
    The text of the proposed rule change is available at Amex, the 
Commission's Public Reference Room, and on Amex's Web site at http://
www.amex.com. The text of Exhibits 5A through 5J is also available on 
the Commission's Web site (http://www.sec.gov/rules/sro.shtml).

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. 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 purpose of the proposed rule change is to permit the Mergers as 
well as certain other changes relating to corporate governance and 
other items to accommodate the transformation of the Exchange from its 
current status as a subsidiary of a not-for-profit member-

[[Page 46087]]

owned corporation into its post-merger status as a U.S. Regulated 
Subsidiary \3\ of NYSE Euronext.
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    \3\ The term ``U.S. Regulated Subsidiary'' is defined under 
Article VII, Section 7.3(G) of the Bylaws of NYSE Euronext.
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(a) Description of the Mergers
    Amex is a wholly-owned subsidiary of The Amex Membership 
Corporation, a New York not-for-profit corporation (``MC'').\4\ MC owns 
99% of Amex's ownership interest directly and owns the remaining 1% 
ownership interest indirectly through MC's direct wholly-owned 
subsidiary, AMC Acquisition Sub, Inc., a Delaware corporation 
(``AMCAS''). To effect the Mergers, MC has established: (i) A new 
direct wholly-owned subsidiary of MC, American Stock Exchange Holdings, 
Inc., a Delaware for-profit, stock corporation (``Holdings''); and (ii) 
a new direct wholly-owned subsidiary of Holdings, American Stock 
Exchange 2, LLC, a Delaware limited liability company (``Amex 2''). 
Consummation of the Mergers, which have been approved by MC members,\5\ 
is conditioned upon satisfaction or waiver (subject to applicable law) 
of the conditions set forth in the terms of the Agreement and Plan of 
Merger, dated as of January 17, 2008 (as may be amended, ``Merger 
Agreement''), by and among NYSE Euronext, Amsterdam Merger Sub, LLC, a 
Delaware limited liability company and a wholly-owned subsidiary of 
NYSE Euronext created by NYSE Euronext in connection with the Mergers 
(``Amsterdam Merger Sub''), MC, AMCAS, Holdings, Amex and Amex 2. The 
proxy statement/prospectus sent to MC members in connection with their 
approval of the Mergers has been filed with the Commission by NYSE 
Euronext. The Mergers were approved by the requisite vote of MC members 
at the special meeting of MC members held on June 17, 2008. In 
addition, the Board of Governors of Amex (``Amex Board'') approved the 
proposed rule change on May 21, 2008.
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    \4\ For a discussion of the current governance structure of MC 
and Amex, see Securities Exchange Act Release No. 50057 (July 22, 
2004) (Notice of filing of proposed rule change relating to the 
NASD's sale of its interest in Amex to MC) and Securities Exchange 
Act Release No. 50927 (December 23, 2004) (Order approving proposed 
rule change relating to the NASD's sale of its interest in Amex to 
MC). SR-Amex-2004-50.
    \5\ The term ``MC members'' herein refers to persons eligible to 
vote on the Mergers.
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    The following transactions are contemplated to effect the Mergers:
    (i) AMCAS Merger. Prior to the Effective Time (as defined below), 
AMCAS will be merged with and into MC (``AMCAS Merger'') and the 
separate corporate existence of AMCAS will thereupon cease. MC will be 
the surviving entity in the AMCAS Merger and will hold 100 percent of 
the ownership interest in Amex. At the effective time of the AMCAS 
Merger, each outstanding share of AMCAS common stock, par value $.01 
per share, will be cancelled and retired without payment of any 
consideration therefor and will cease to exist or be outstanding.
    (ii) Holdings Merger. Following the effective time of the AMCAS 
Merger but prior to the Effective Time (as defined below), MC will be 
merged with and into Holdings (``Holdings Merger'') and the separate 
corporate existence of MC will thereupon cease. Holdings will be the 
surviving entity in the Holdings Merger. At the effective time of the 
Holdings Merger, shares of Holding common stock, par value $0.01 per 
share (``Holdings Common Stock''), will be issued to persons owning MC 
memberships \6\ immediately prior to the Holdings Merger, with each 
Regular Membership and each Options Principal Membership (``OPM'') 
receiving a certain number of shares of Holdings Common Stock, as 
determined in the manner set forth in the Merger Agreement, which, 
among other things, takes into account a $36,000 discount on the 
consideration issued to each OPM vis-a-vis each Regular Membership. 
Upon the Holdings Merger, each Regular Membership and OPM held by MC 
will be cancelled and retired without payment of any consideration 
therefor and will cease to exist or be outstanding.
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    \6\ ``Memberships'' used herein refer to Regular Memberships and 
OPMs (defined below) and not to the membership interests held by 
allied members or associate members, which membership interest 
granted certain limited rights but did not grant voting rights.
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    (iii) LLC Merger. Contemporaneously with the Holdings Merger, Amex 
will be merged with and into Amex 2 (``LLC Merger''), and the separate 
limited liability company existence of Amex will thereupon cease. At 
the effective time of the LLC Merger, each outstanding ownership 
interest in Amex held by MC will be cancelled and retired without 
payment of any consideration therefor and will cease to exist or be 
outstanding. Amex 2 will be renamed NYSE Alternext U.S. LLC.
    (iv) NYSE/Amex Merger. Following the completion of the AMCAS 
Merger, the Holdings Merger and the LLC Merger, Holdings (as the 
surviving corporation of the Holdings Merger) will be merged with and 
into Amsterdam Merger Sub (``NYSE/Amex Merger'') and the separate 
corporate existence of Holdings shall thereupon cease. At the effective 
time of the NYSE/Amex Merger (``Effective Time''), each share of 
Holdings Common Stock issued and outstanding immediately prior to the 
Effective Time will be converted into the right to receive one fully 
paid and nonassessable share of the common stock of NYSE Euronext and 
cash in lieu of fractional shares, if any, into which such shares of 
Holdings Common Stock has been converted. In addition, under the terms 
of the Merger Agreement, persons owning MC memberships immediately 
prior to the Holdings Merger will be entitled to receive additional 
shares of NYSE Euronext common stock measured by reference to the ``Net 
Building Sale Proceeds'' (as defined in the Merger Agreement), if any, 
from the sale of two buildings in New York City currently owned by 
Amex's realty subsidiary, to the extent such sale occurs prior to the 
date that is four years and 240 days following the Effective Time and 
certain other conditions are satisfied, as set forth in the Merger 
Agreement. Immediately following the NYSE/Amex Merger, NYSE Euronext 
will contribute 100% of the limited liability company interest of 
Amsterdam Merger Sub to NYSE Group (such contribution, the 
``Contribution''), causing Amsterdam Merger Sub to become a direct 
wholly-owned subsidiary of NYSE Group. Immediately following the 
Contribution, Amsterdam Merger Sub will merge with and into NYSE 
Alternext U.S. a direct wholly-owned subsidiary of Amsterdam Merger Sub 
(``Internal Merger''). As a result of the Contribution and the Internal 
Merger, NYSE Alternext U.S. will become a direct wholly-owned 
subsidiary of NYSE Group.
    The NYSE Euronext Bylaws, the NYSE Group Charter, the NYSE Group 
Bylaws, the NYSE Regulation Bylaws, the Trust Agreement (each as 
defined in Section 1.(c). of this Item II.A. below) and the NYSE 
Euronext Independence Policy will be amended in connection with the 
Mergers. The NYSE Euronext Bylaws, the NYSE Euronext Independence 
Policy, the NYSE Regulation Bylaws and the Trust Agreement will become 
effective at the Effective Time. The NYSE Group Charter and the NYSE 
Group Bylaws will become effective at or prior to the time of the 
Contribution. In addition, upon the Contribution and the Internal 
Merger, the NYSE Alternext U.S. Operating Agreement will become 
effective.
    Upon completion of the NYSE/Amex Merger, NYSE Alternext U.S. will 
continue to engage in the business of operating a national securities 
exchange

[[Page 46088]]

registered under Section 6 of the Exchange Act,\7\ and will continue to 
have self-regulatory responsibilities over its members. NYSE Alternext 
U.S. will contract for the performance of its regulatory 
responsibilities with NYSE Regulation, an indirect wholly-owned 
subsidiary of NYSE Euronext, pursuant to a regulatory services 
agreement (``NYSE Regulation RSA''), as further described in Section 
1.(c).(E).a. of this Item II.A. below.\8\
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    \7\ 15 U.S.C. 78f.
    \8\ Following the Mergers, NYSE Alternext U.S. will not use any 
regulatory fees, fines or penalties collected by NYSE Regulation for 
commercial purposes. Earnings of NYSE Alternext U.S. not retained in 
its business, other than regulatory fees, fines or penalties will be 
distributed to its parent, NYSE Group, which may in turn distribute 
such earnings to its parent, NYSE Euronext. See Section 4.05 of the 
proposed NYSE Alternext U.S. Operating Agreement. NYSE Euronext, at 
its discretion, may use such distributions from NYSE Alternext U.S. 
to pay dividends to its stockholders.
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    The Mergers will have the effect of ``demutualizing'' MC because 
equity ownership will be separated from the rights to trade on NYSE 
Alternext U.S. As described in greater detail above, in connection with 
the Mergers, persons owning MC memberships immediately prior to the 
Holdings Merger will receive shares and cash in lieu of fractional 
shares, if any, of the common stock of NYSE Euronext. Upon the 
completion of the Holdings Merger, all trading rights appurtenant to 
either Regular Memberships or OPMs existing immediately prior to the 
Holdings Merger will be cancelled. In addition, the lessees will cease 
to have any trading rights under any applicable leases upon the 
completion of the Holdings Merger. Neither NYSE Alternext U.S. nor NYSE 
Euronext will have any obligations under any leases that existed 
immediately prior to the Holdings Merger to any party thereto. Physical 
and electronic access to NYSE Alternext U.S.'s trading facilities will 
be made available to individuals and organizations that obtain an 
equity trading license, an options trading permit (``OTP'') or prior to 
the issuance of the equity trading licenses and OTPs, a temporary 
trading permit (to be known as an ``86 Trinity Permit''), from NYSE 
Alternext U.S. Unless the context otherwise requires, persons or 
entities to whom such trading licenses or permits are issued following 
the Mergers are referred to as ``trading license or permit holders.''
    NYSE Alternext U.S. intends to issue equity trading licenses and 
OTPs upon relocation of the NYSE Alternext U.S. equities and options 
trading facilities to the NYSE trading floor or the electronic trading 
platform of NYSE or NYSE Arca, Inc. (``NYSE Arca''), as applicable.\9\ 
Until such new trading licenses or permits are issued, NYSE Alternext 
U.S. intends to make available to persons and entities that apply and 
meet certain specified requirements \10\ 86 Trinity Permits for which 
certain additional fees \11\ will be waived. 86 Trinity Permits will 
allow the holders to trade products currently traded on the Exchange, 
including equities and options, prior to relocation of the NYSE 
Alternext U.S. equities and options trading facilities. To ensure 
continuity of trading following the Mergers, persons and entities who 
were authorized to trade on the Exchange immediately prior to the LLC 
Merger, including: (i) Owners, lessees or nominees of Regular 
Memberships or OPMs; (ii) limited trading permit holders; and (iii) 
associate members, in each case who were authorized to trade on the 
Exchange immediately prior to the LLC Merger, will be deemed to have 
satisfied applicable requirements necessary to receive an 86 Trinity 
Permit. 86 Trinity Permits will authorize owners, lessees or nominees 
of Regular Memberships, OPMs, limited trading permit holders and 
associate members who were authorized to trade on the Exchange 
immediately prior to the LLC Merger, to trade the products which they 
were previously authorized to trade and, subject to meeting the 
qualifications currently in place for trading products which they 
previously were not authorized to trade, to trade such other products.
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    \9\ Separate filings will be made to the Commission relating to 
the rule changes associated with such relocation.
    \10\ The requirements for 86 Trinity Permits in the NYSE 
Alternext U.S. Rules will be the same as the current requirements 
for memberships in the Amex Rules and such requirements may be 
satisfied by persons or entities that were not previously authorized 
to trade on the Exchange immediately prior to the Mergers.
    \11\ Certain application processing fees may be charged for 
persons or entities that were not previously authorized to trade on 
the Exchange immediately prior to the Mergers. In addition, certain 
charges may be applicable to the 86 Trinity Permits once issued. See 
proposed NYSE Alternext U.S. Rule 358.
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    It is currently anticipated that NYSE Alternext U.S. will issue 
equity trading licenses prior to OTPs. Upon the initial effective date 
of the equity trading licenses, only holders of such equity trading 
licenses will have the right to trade equities and any other products 
associated with such equity trading licenses. Therefore, following the 
initial effective date of the equity trading licenses, a holder of an 
86 Trinity Permit shall only be entitled to trade products other than 
those associated with the equity trading licenses. Upon the initial 
effective date of the OTPs, only holders of such OTPs will have the 
right to trade in options, and all 86 Trinity Permits will be 
cancelled.
    Pursuant to the requirements of Section 19 of the Exchange Act, 
NYSE Alternext U.S. intends to set forth in a separate rule filing the 
qualifications for equity trading licenses and OTPs and the application 
process for such trading licenses or permits. The Exchange currently 
expects that the qualifications for trading license or permit holders 
\12\ will be based on the current requirements for memberships on the 
NYSE or NYSE Arca, respectively. Pursuant to the requirements of 
Section 19 of the Exchange Act, NYSE Alternext U.S. also intends to set 
forth in a separate rule filing the fees for a trading license or 
permit that will be assessed. For a more detailed discussion of the 86 
Trinity Permits, the equity trading licenses and OTPs, see Section 
1(c)(C) of this Item II.A. below.
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    \12\ See proposed NYSE Alternext U.S. Rule 353.
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    Finally, in connection with the Mergers, the Board of Directors of 
MC and the Amex Board (collectively, the ``Boards'') have approved the 
termination of the Gratuity Fund.\13\ As a result, the Gratuity Fund 
will be terminated upon the LLC Merger and neither NYSE Euronext nor 
NYSE Alternext U.S. will offer a Gratuity Fund following the Mergers. 
There will be no further payment of gratuities other than those related 
to any deaths that occurred prior to the completion of the Mergers. 
Upon the completion of the NYSE/Amex Merger, NYSE Alternext U.S. 
currently expects to allocate the assets then remaining in the Gratuity 
Fund (net of any administrative expenses incurred in the distribution 
of such amount), first to pay out any death benefits that are accrued 
but unpaid as of the completion of the NYSE/Amex Merger, and then to 
distribute the remaining balance, if any, in a manner as the Boards 
deem appropriate, taking into account the length of time each person 
was a participant in the Gratuity Fund.
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    \13\ Currently, the Amex Constitution provides for a Gratuity 
Fund which makes an assessment on the participants upon the death of 
a participant and provides benefit to the surviving family of the 
deceased participant. Active traders on Amex who may be the owner, 
lessee, or nominee of a membership are eligible to participate in 
the Gratuity Fund. Certain owners of a membership who are not 
currently active are also eligible through the operation of certain 
transition provisions in the Amex Constitution. See Article IX of 
the current Amex Constitution for the provisions relating to the 
Gratuity Fund currently in place.

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[[Page 46089]]

(b) Reasons for the Proposed Mergers
    The Mergers will have the effect of ``demutualizing'' MC and 
causing Amex to become and operate as a for-profit subsidiary market of 
NYSE Euronext (other than with respect to the regulatory 
responsibilities currently conducted by Amex, which will be carried out 
by NYSE Regulation, a not-for-profit entity). The Exchange believes 
that changing its focus to that of a for-profit business and joining 
the group of exchanges operated by NYSE Euronext along with modifying 
its corporate and governance structures to reflect its status as a 
subsidiary of NYSE Euronext will provide the Exchange with greater 
flexibility to respond to the demands of a rapidly changing business 
environment. In addition, the NYSE Euronext common stock issued in the 
NYSE/Amex Merger will provide the MC members with greater liquidity 
than the MC memberships they currently hold. Furthermore, by bringing 
NYSE Euronext's leadership together with Amex's historically strong 
position in options, exchange traded funds, closed-end funds, 
structured products and cash equities, the combined company will be in 
a position to create a diversified business model, ensuring its ability 
to grow into, and compete using, new products and services, such as a 
second U.S. options exchange license, which will enable the combined 
company to operate a compelling dual market structure making available 
to all customers the choice of price-time priority on NYSE Arca and 
Amex's traditional market-maker model and a third, complementary U.S. 
cash equities exchange, in addition to NYSE and NYSE Arca.
    The Exchange remains committed to its role as a national securities 
exchange and does not believe that the Mergers will undermine its 
responsibilities for regulating its marketplace. While it is currently 
contemplated that NYSE Alternext U.S. will contract for the performance 
of its regulatory responsibilities with NYSE Regulation through the 
NYSE Regulation RSA, as further described in Section 1(c)(E) a. of this 
Item II.A. below, NYSE Alternext U.S. will retain ultimate 
responsibility for the fulfillment of its statutory and self-regulatory 
obligations under the Exchange Act. Indeed, as further described below, 
the NYSE Alternext U.S. Operating Agreement and the NYSE Alternext U.S. 
Rules will have specific provisions that reinforce the responsibility 
of NYSE Alternext U.S. for its self-regulatory obligations, including, 
without limitation, the requirement that NYSE Group seek the 
Commission's consent before transferring its limited liability company 
interests in NYSE Alternext U.S.\14\
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    \14\ See Section 3.03 of the proposed NYSE Alternext U.S. 
Operating Agreement.
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(c) Summary of Proposed Rule Change
    The proposed rule change is outlined below. In general, the 
proposed rule change consists of: (i) The Amended and Restated 
Certificate of Incorporation of NYSE Euronext (``NYSE Euronext 
Charter''),\15\ (ii) the adoption of the Amended and Restated Bylaws of 
NYSE Euronext (the ``NYSE Euronext Bylaws''), which will become 
effective at the Effective Time,\16\ (iii) the adoption of the Second 
Amended and Restated Certificate of Incorporation of NYSE Group (the 
``NYSE Group Charter''), which will become effective at or prior to the 
time of the Contribution,\17\ (iv) the adoption of the Second Amended 
and Restated Bylaws of NYSE Group (``NYSE Group Bylaws''), which will 
become effective at or prior to the time of the Contribution,\18\ (v) 
the adoption of the NYSE Euronext Independence Policy, to become 
effective at the Effective Time,\19\ (vi) the adoption of the Third 
Amended and Restated Bylaws of NYSE Regulation (``NYSE Regulation 
Bylaws''), to become effective at the Effective Time,\20\ (vii) the 
adoption of certain amendments to the Trust Agreement of the NYSE Group 
Trust I by and among NYSE Euronext, NYSE Group, Wilmington Trust 
Company, as Delaware Trustee, Jacques de Larosiore de Champfeu, as 
Trustee, Charles K. Gifford, as Trustee and John Shepard Reed, as 
Trustee and the Amendment No. 1 thereto (such Trust Agreement, as 
amended, the ``Trust Agreement''), which will become effective at the 
Effective Time,\21\ (viii) the adoption of the NYSE Alternext U.S. 
Operating Agreement, to become effective upon the Internal Merger,\22\ 
and (ix) the amendment of the Amex Rules, which will become the NYSE 
Alternext U.S. Rules upon the completion of the LLC Merger, necessary 
to issue trading licenses or permits following the Mergers, to 
incorporate certain provisions in the Amex Constitution, which will be 
eliminated in connection with the Mergers and to effect certain other 
changes as described more fully below.\23\ The proposed rule change 
will become operative upon completion of the Internal Merger. The 
proposed NYSE Alternext U.S. Operating Agreement will reflect that Amex 
2, to be renamed ``NYSE Alternext U.S. LLC'' upon the consummation of 
the Mergers, will be a wholly-owned Regulated Subsidiary of NYSE Group 
and a wholly-owned U.S. Regulated Subsidiary of NYSE Euronext.
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    \15\ The NYSE Euronext Charter is not being amended in 
connection with the Mergers.
    \16\ The NYSE Euronext Bylaws are being amended to provide 
similar protections to NYSE Alternext U.S. relating to its self-
regulatory functions as are currently provided to the NYSE and NYSE 
Arca. Please see the proposed rule filing that the NYSE has filed 
with the Commission in connection with the Mergers for more detail.
    \17\ The NYSE Group Charter is being amended to provide similar 
protections to NYSE Alternext U.S. relating to its self-regulatory 
functions as are currently provided to NYSE and NYSE Arca. Please 
see the proposed rule filing that the NYSE has filed with the 
Commission in connection with the Mergers for more detail.
    \18\ The NYSE Group Bylaws are being amended to provide that any 
amendment to or repeal of the bylaws of NYSE Group must either be 
(i) filed with or filed with and approved by the Commission, or (ii) 
submitted to the boards of directors of NYSE Alternext U.S., as well 
as the other Regulated Subsidiaries of NYSE Group, to the extent 
that such entity continues to be controlled by NYSE Group, and if 
any or all of such boards of directors shall determine that such 
amendment or repeal must be filed with or filed with and approved by 
the Commission before such amendment or repeal may be effectuated, 
then such amendment or repeal shall not be effectuated until filed 
with or filed with and approved by the Commission, as the case may 
be. Please see the proposed rule filing that the NYSE has filed with 
the Commission in connection with the Mergers for more detail.
    \19\ The NYSE Euronext Independence Policy is being amended to 
ensure independence of the NYSE Euronext directors from NYSE 
Alternext U.S., similar to the independence from NYSE and NYSE Arca. 
Please see the proposed rule filing that the NYSE has filed with the 
Commission in connection with the Mergers for more detail.
    \20\ NYSE Regulation Bylaws are being amended to provide that 
the Committee for Review be expanded to include certain individuals 
who are associated with member organizations of NYSE Alternext U.S. 
Please see the proposed rule filing that the NYSE has filed with the 
Commission in connection with the Mergers for more detail.
    \21\ The Trust Agreement is being amended to make certain 
technical changes designed to provide NYSE Alternext U.S. with the 
same protections against certain material adverse changes in 
European Law that it currently provides for NYSE and NYSE Arca. 
Please see the proposed rule filing that the NYSE has filed with the 
Commission in connection with the Mergers for more detail.
    \22\ Following the Holdings Merger and the LLC Merger, Holdings 
will be the sole member of Amex 2, as the successor of Amex. Upon 
the effectiveness of the NYSE/Amex Merger, Amsterdam Merger Sub, as 
the successor to Holdings, will become the sole member of Amex 2, 
whose name will then be changed to ``NYSE Alternext U.S. LLC.'' 
Following the Contribution and upon the effectiveness of the 
Internal Merger, NYSE Group will be substituted as the sole member 
of NYSE Alternext U.S. The discussion of the NYSE Alternext U.S. 
Operating Agreement herein refers to the operating agreement that 
will become effective upon the Internal Merger.
    \23\ The Exchange is also proposing, in connection with the 
Mergers, the elimination of the undertakings made by the Exchange to 
the Commission (Securities Exchange Act Release No. 50927 (December 
23, 2004), 69 FR 78494 (December 30, 2004)).

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[[Page 46090]]

A. Governance Structure of NYSE Alternext U.S. Following the Mergers

    Following the Mergers, the governance structure of NYSE Alternext 
U.S. will be substantially similar to that of the NYSE, a New York 
limited liability company and an indirect wholly-owned subsidiary of 
NYSE Euronext.
    a. Board of Directors of NYSE Alternext U.S. Upon the effectiveness 
of the Mergers, the Contribution and the Internal Merger, the Board of 
Directors of NYSE Alternext U.S. (``NYSE Alternext U.S. Board'') will 
consist of a number of directors as determined by NYSE Group from time 
to time; provided that: (i) A majority of the directors of the NYSE 
Alternext U.S. Board shall be U.S. Persons (as defined below) who are 
members of the NYSE Euronext board that satisfy the independence 
requirements of the board of directors of NYSE Euronext (each a ``NYSE 
Euronext Independent Director''); and (ii) at least 20 percent of the 
directors shall be persons who are not members of the board of 
directors of NYSE Euronext and who do not need to be independent under 
the independence policy of the board of directors of NYSE Euronext \24\ 
(``Non-Affiliated Directors'').\25\ Such Non-Affiliated Directors shall 
be appointed and nominated pursuant to the procedures set forth in 
Section 1.(c).(A).c. of this Item II.A. below. For purposes of 
calculation of the minimum number of Non-Affiliated Directors, if 20 
percent of the directors is not a whole number, such number of 
directors to be nominated and selected by NYSE Alternext U.S. members 
\26\ will be rounded up to the next whole number.\27\ A ``U.S. Person'' 
shall mean, as of the date of his or her most recent election or 
appointment as a director any person whose domicile as of such date is 
and for the immediately preceding 24 months shall have been the United 
States.\28\
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    \24\ A copy of the current independence policy of the NYSE 
Euronext board of directors is available at http://www.nyse.com/
pdfs/director_independence_policy.pdf. See also the proposed NYSE 
Euronext Independence Policy. See also Section 3.4 of the proposed 
NYSE Euronext Bylaws for the independence requirements of the board 
of director of NYSE Euronext.
    \25\ See Section 2.03 of the proposed NYSE Alternext U.S. 
Operating Agreement.
    \26\ The term ``NYSE Alternext U.S. members'' refers to the 
persons or entities that trade on Amex after the Mergers, including 
the 86 Trinity Permit Holders, to the extent such permits are 
outstanding.
    \27\ See Section 2.03 of the proposed NYSE Alternext U.S. 
Operating Agreement.
    \28\ Id.
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    Immediately following the Mergers, the Contribution and the 
Internal Merger, the NYSE Alternext U.S. Board will have five 
directors, one of which shall be a Non-Affiliated Director selected by 
NYSE Group from among the Industry Governors serving on the Amex Board 
immediately prior to the NYSE/Amex Merger.
    b. Board Term. Following the Mergers, the Contribution and the 
Internal Merger, the directors of NYSE Alternext U.S. will serve for 
one-year terms and will hold office until their successors are 
elected.\29\ There will be no limit on the number of terms a director 
may serve on the NYSE Alternext U.S. Board.
---------------------------------------------------------------------------

    \29\ Id.
---------------------------------------------------------------------------

    c. Nomination and Election of the NYSE Alternext U.S. Directors. i. 
General. Following the Internal Merger, NYSE Group will effectively 
appoint as directors of NYSE Alternext U.S.: (i) The NYSE Euronext 
Independent Directors designated by it; and (ii) the Non-Affiliated 
Directors nominated by the nominating and governance committee of the 
board of directors of NYSE Euronext (``NYSE Euronext NGC'').\30\ To 
ensure fair representation of NYSE Alternext U.S. members, the NYSE 
Euronext NGC shall be obligated to designate as Non-Affiliated Director 
candidates the persons recommended by the Director Candidate 
Recommendation Committee of NYSE Alternext U.S. (``NYSE Alternext U.S. 
DCRC''), as described more fully under Section 1.(c).(A).e. of this 
Item II.A. below; provided, however, if there are candidates who have 
received a plurality of the votes cast by the NYSE Alternext U.S. 
members in accordance with the provisions set forth in the NYSE 
Alternext U.S. Operating Agreement relating to the petition process and 
described in the paragraph immediately below, the NYSE Euronext NGC 
will be obligated to designate such candidates as Non-Affiliated 
Director candidates.\31\ Notwithstanding the forgoing, as described 
under Section 1(c)(A) a. of this Item II.A. above, one Non-Affiliated 
Director on the initial NYSE Alternext U.S. Board will be selected by 
NYSE Group from among the six Industry Governors serving on the Amex 
Board immediately prior to the Mergers. The initial NYSE Alternext U.S. 
Board will serve one-year terms until their successors are duly 
elected.
---------------------------------------------------------------------------

    \30\ Id.
    \31\ Id.
---------------------------------------------------------------------------

    ii. Petition by the NYSE Alternext U.S. Members. To ensure fair 
representation of members on the NYSE Alternext U.S. Board, at the end 
of the initial one-year term of each of the directors on the NYSE 
Alternext U.S. Board, the Non-Affiliated Directors will be nominated 
and elected in the following manner.\32\ A newly established NYSE 
Alternext U.S. DCRC will announce to the NYSE Euronext NGC on a date in 
each year sufficient to accommodate the process described, the names of 
candidates nominated by the NYSE Alternext U.S. DCRC as Non-Affiliated 
Director candidates.
---------------------------------------------------------------------------

    \32\ Id.
---------------------------------------------------------------------------

    NYSE Alternext U.S. members may nominate candidates for Non-
Affiliated Director by written petition filed with NYSE Alternext U.S. 
within two weeks after the announcement. For any such petition to be 
valid, it must be, among other things, endorsed by at least 10 percent 
of the signatures eligible to endorse a candidate. For purposes of 
determining whether a person has been endorsed by the requisite 10 
percent, each trading license or permit holder in good standing shall 
be entitled to one signature for each trading license or permit held by 
it; provided, however, that no trading license or permit holder, either 
alone or together with its affiliates may account for more than 50 
percent of the signatures endorsing a particular candidate, and any 
signatures of such trading license or permit holder, either alone or 
together with its affiliates, in excess of such 50 percent limitation 
shall be disregarded.
    Each petition must include a completed questionnaire used to gather 
information concerning Non-Affiliated Director candidates. The 
eligibility of any Non-Affiliated Director candidate nominated in any 
such petition will be determined by the NYSE Euronext NGC, in its sole 
discretion.
    If no petitions are submitted within two weeks after the 
dissemination of the report of the NYSE Euronext NGC, the NYSE Euronext 
NGC will nominate the candidates for Non-Affiliated Director that the 
NYSE Alternext U.S. DCRC initially identified. If one or more valid 
petitions are submitted, NYSE Alternext U.S. members will be allowed to 
vote on the entire group of potential candidates. Each trading license 
or permit holder will have one vote per trading license or permit held 
by it; provided, however, that no trading license or permit holder, 
either alone or together with its affiliates, may account for more than 
20 percent of the votes cast for a particular candidate, and any votes 
cast by such trading license or permit holder, either alone or together 
with its affiliates, in excess of such 20 percent limitation will be 
disregarded. The persons with the highest number of votes will be 
nominated.

[[Page 46091]]

    d. Officers of NYSE Alternext U.S. The day-to-day business of NYSE 
Alternext U.S. will be managed by the officers of NYSE Alternext U.S. 
appointed by, and subject to the directions of, the NYSE Alternext U.S. 
Board.\33\ NYSE Alternext U.S. will have such officers as its Board may 
deem advisable. The NYSE Alternext U.S. Operating Agreement provides 
that for so long as NYSE Euronext directly or indirectly owns all of 
the equity interest of NYSE Group and NYSE Group holds 100 percent of 
the limited liability company interest of NYSE Alternext U.S. the Chief 
Executive Officer of NYSE Alternext U.S. shall be a U.S. Person.\34\
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    \33\ See Section 2.04 of the proposed NYSE Alternext U.S. 
Operating Agreement.
    \34\ See Section 2.03 of the proposed NYSE Alternext U.S. 
Operating Agreement.
---------------------------------------------------------------------------

    NYSE Alternext U.S. will also have a Chief Regulatory Officer, who 
will either be the Chief Executive Officer of NYSE Regulation or an 
employee of NYSE Regulation who reports to the Chief Executive Officer 
of NYSE Regulation. Such Chief Regulatory Officer will also be an 
officer of NYSE Alternext U.S. appointed by the NYSE Alternext U.S. 
Board, with reporting obligation to the NYSE Alternext U.S. Board.
    e. Committees of NYSE Alternext U.S. Board of Directors. Following 
the Mergers, the NYSE Alternext U.S. Board may create one or more 
committees comprised of NYSE Alternext U.S. directors.\35\ It is 
expected that the committees of the NYSE Euronext board of directors 
will perform the board committee functions relating to audit, 
governance and compensation. The NYSE Alternext U.S. Board may also 
create committees comprised in whole or in part of individuals who are 
not directors.\36\
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    \35\ See Section 2.03(h) of the proposed NYSE Alternext U.S. 
Operating Agreement.
    \36\ It is currently anticipated that NYSE Alternext U.S. will 
retain the Committee on Securities, but will not retain the 
Committee for Appointment and Approval of Supplemental Registered 
Options Traders and Remote Registered Options Traders, each a non-
board committee of Amex. The Exchange, along with NYSE Euronext, are 
currently evaluating whether other non-board committees of Amex 
should be retained by NYSE Alternext U.S. and what changes to the 
NYSE Alternext U.S. Rules such decision may require. NYSE Alternext 
U.S. will submit a separate rule filing as necessary.\
---------------------------------------------------------------------------

    In addition, as described under Section 1(c)(A)c.i. of this Item 
II.A. above, the NYSE Alternext U.S. Board will, on an annual basis, 
appoint a new standing committee, the NYSE Alternext U.S. DCRC, which 
will be charged with the responsibility of recommending the Non-
Affiliated Director candidates to the NYSE Euronext NGC. The NYSE 
Alternext U.S. Operating Agreement provides that the NYSE Alternext 
U.S. DCRC shall include individuals who are (i) associated with a 
member organization that engages in a business involving substantial 
direct contact with securities customers, (ii) associated with a member 
organization and registered as a specialist and spend a substantial 
part of their time on the NYSE Alternext U.S. trading floor, (iii) 
associated with a member organization and spend a majority of their 
time on the NYSE Alternext U.S. trading floor and have as a substantial 
part of their business the execution of transactions on the NYSE 
Alternext U.S. trading floor for other than their own account or the 
account of their member organization, but are not registered as a 
specialist, or (iv) associated with a member organization and spend a 
majority of their time on the NYSE Alternext U.S. trading floor and 
have as a substantial part of their business the execution of 
transactions on the NYSE Alternext U.S. trading floor for their own 
account or the account of their member organization, but are not 
registered as a specialist. The NYSE Alternext U.S. Board will appoint 
such individuals after appropriate consultation with representatives of 
member organizations.
    f. Floor Officials, Senior Floor Officials, Exchange Officials and 
Senior Supervisory Officer. The Floor Officials, Senior Floor 
Officials, and Exchange Officials in place at Amex immediately prior to 
the Mergers will continue in such capacity for the period prior to the 
relocation of the NYSE Alternext U.S. equities and options trading 
facilities to the NYSE trading floor or the electronic trading platform 
of the NYSE or NYSE Arca, as applicable.\37\ However, the Exchange's 
Rule 21, which provides for the appointment of such officials, is 
proposed to be amended to reflect that such appointments will be made 
by the Chief Executive Officer or the Chief Regulatory Officer of NYSE 
Alternext U.S. or their respective designee rather than the Chairman of 
the Board of Directors or the Chief Executive Officer (if delegated by 
the Chairman) and to allow qualified NYSE Alternext U.S. employees who 
spend a substantial portion of their time on the trading floor to be 
appointed to serve as Floor Officials. Rule 21 will be further amended 
to reflect the elimination of the two Floor Governors, i.e., the 
Industry Governors on the Amex Board who are required to spend a 
substantial portion of their time on the trading floor. Rule 21 
currently provides that Floor Governors are deemed to be Senior Floor 
Officials and if one of the Floor Governors is also the vice chairman 
of the Amex Board, he is the Senior Supervisory Officer on the trading 
floor. Rule 21 further provides that if the vice chairman is not a 
Floor Governor, then one of the Floor Governors is appointed Senior 
Supervisory Officer. Rule 22(a) describes the authority of the Senior 
Supervisory Officer, which includes among other duties, the supervision 
of Floor Officials and Senior Floor Officials in the performance of 
their responsibilities. As described in Section 1(c)(A)a. of this Item 
II.A. above, the NYSE Alternext U.S. Board of Directors will not have a 
category of directors who are required to spend a substantial portion 
of their time on the trading floor. Therefore, Rule 21, which describes 
the appointment of the Senior Supervisory Officer and Floor Officials, 
and other rules referencing Floor Governor are proposed to be amended. 
For the most part when the reference to Floor Governor in a rule 
relates to the approval or review of activities on the trading floor 
and the chairing of certain committees (e.g., the Performance and 
Allocation committees), it is proposed that Senior Floor Officials 
replace the Floor Governors.\38\ Pursuant to current Rule 21(a), a 
Senior Floor Official has the same authority and responsibilities as a 
Floor Governor with respect to matters that arise on the Floor and 
require review or action by a Floor Governor or Senior Floor Official. 
Thus, these changes will not expand the authority or responsibilities 
of Senior Floor Officials, but will simply eliminate the concept of 
Floor Governors. In situations where a rule calls upon the Floor 
Governors to advise the Chief Executive Officer of the Exchange in 
connection with floor facilities and administration, it is proposed 
that the Senior Supervisory Officer replace the Floor Governors.\39\
---------------------------------------------------------------------------

    \37\ Rule 22 describes the authority and responsibilities of 
Floor Officials, Senior Floor Officials, and the Senior Supervisory 
Officer, which responsibilities are to generally promote fair and 
orderly operations on the floor of the Exchange.
    \38\ For example, the proposed Rule 118-AEMI will require the 
approval of a Senior Floor Official for the dissemination of price 
indicators prior to 9:30 a.m. and the proposed Rule 933-ANTE will 
provide for the determination by a Senior Floor Official that quotes 
from another options exchange are not reliable before those quotes 
can be excluded from the National Best Bid and Offer (NBBO).
    \39\ For example, the proposed Rule 27(g) will require the Chief 
Executive Officer to consult the Senior Supervisory Officer prior to 
restoring to a specialist a specialty security previously 
reallocated under emergency circumstances.

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[[Page 46092]]

B. Provisions Relating to, or Arising From, the Self-Regulatory 
Functions of the Exchange

    The NYSE Alternext U.S. Operating Agreement will contain specific 
provisions relating to the self-regulatory function of NYSE Alternext 
U.S. In addition, the NYSE Group Charter and the NYSE Group Bylaws 
currently contain specific provisions relating to the self-regulatory 
functions of its Regulated Subsidiaries, and the definition of 
Regulated Subsidiaries will be amended in connection with the Mergers 
to also include NYSE Alternext U.S.\40\ Furthermore, the ultimate 
parent, NYSE Euronext has provisions in place relating to the self-
regulatory functions of the U.S. Regulated Subsidiaries of NYSE 
Euronext and such provisions will be amended in connection with the 
Mergers to provide that NYSE Alternext U.S. will thereafter be 
considered to be one of the NYSE Euronext's U.S. Regulated 
Subsidiaries.\41\
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    \40\ See Article IV, Section 4(b)(1)(A)(w) of the proposed NYSE 
Group Charter for the definition of Regulated Subsidiaries.
    \41\ See Article VII, Section 7.3(G) of the proposed NYSE 
Euronext Bylaws.
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a. Management of NYSE Alternext U.S.
    As is the case with the Amex Board, the NYSE Alternext U.S. Board 
must consider applicable requirements under Section 6(b) of the 
Exchange Act \42\ in connection with the management of NYSE Alternext 
U.S. The NYSE Alternext U.S. Operating Agreement, for instance, imposes 
obligations on the NYSE Alternext U.S. Board, officers and employees 
relating to the self-regulatory functions of NYSE Alternext U.S. The 
NYSE Alternext U.S. Operating Agreement requires that, in discharging 
his or her responsibilities as a member of the Board of Directors of 
NYSE Alternext U.S., each member of the Board of Directors shall take 
into consideration the effect that his or her actions would have on the 
ability of NYSE Alternext U.S. to carry out its responsibilities under 
the Exchange Act.\43\ In addition, the NYSE Euronext Bylaws \44\ and 
the NYSE Group Charter \45\ also impose obligations on NYSE Euronext's 
and NYSE Group's respective boards, officers and employees relating to 
the self-regulatory functions of their Regulated Subsidiaries, and the 
definition of ``Regulated Subsidiaries'' will be amended in connection 
with the Mergers to also include NYSE Alternext U.S.
---------------------------------------------------------------------------

    \42\ 15 U.S.C. 78f(b). Section 6(b) of the Exchange Act 
requires, among other things, that the Exchange's Rules must be 
designed to protect investors and the public interest. It also 
requires that the Exchange be organized so that it can carry out the 
purposes of the Exchange Act and enforce compliance by its 
participants with the Exchange Act, the rules and regulations under 
that Act, and the Rules of the Exchange.
    \43\ See Section 2.03(k) of the proposed NYSE Alternext U.S. 
Operating Agreement.
    \44\ See Articles VII, VIII and IX of the proposed NYSE Euronext 
Bylaws.
    \45\ See Article XI, Sections 2 and 3 of the proposed NYSE Group 
Charter.
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b. Confidentiality.
    As is the case with the Amex Constitution, under the NYSE Alternext 
U.S. Operating Agreement, all confidential information of NYSE 
Alternext U.S. pertaining to the self-regulatory function of NYSE 
Alternext U.S., including all books and records of NYSE Alternext U.S. 
reflecting such confidential information (including but not limited to 
disciplinary matters, trading data, trading practices and audit 
information) will (i) not be made available to any persons (including, 
without limitation, any NYSE Alternext U.S. members) other than to 
those officers, directors, employees and agents of NYSE Alternext U.S. 
that have a reasonable need to know the contents thereof; (ii) be 
retained in confidence by NYSE Alternext U.S. and the officers, 
directors, employees and agents of NYSE Alternext U.S.; and (iii) not 
be used for any commercial purposes.\46\ The purpose of this provision 
is to help ensure that confidential information relating to NYSE 
Alternext U.S.'s self-regulatory function is accorded appropriate 
confidential treatment and is not misused.
---------------------------------------------------------------------------

    \46\ See Article VII of the proposed NYSE Alternext U.S. 
Operating Agreement.
---------------------------------------------------------------------------

    Notwithstanding the foregoing, such confidential information of 
NYSE Alternext U.S. shall be subject at all times to inspection and 
copying by the Commission at no cost to the Commission. Nothing in the 
NYSE Alternext U.S. Operating Agreement shall be interpreted as to 
limit or impede the rights of the Commission to access and examine such 
confidential information of NYSE Alternext U.S. pursuant to the U.S. 
federal securities laws and the rules thereunder, or to limit or impede 
the ability of a director, NYSE Alternext U.S. and its personnel to 
disclose such confidential information to the Commission. In addition, 
the NYSE Euronext Bylaws and the NYSE Group Charter also currently 
contain similar provisions relating to protecting the confidential 
information of its Regulated Subsidiaries,\47\ and the definition of 
Regulated Subsidiaries will be amended in connection with the Mergers 
to also include NYSE Alternext U.S.
---------------------------------------------------------------------------

    \47\ See Article VIII of the proposed NYSE Euronext Bylaws and 
Article X of the proposed NYSE Group Charter.
---------------------------------------------------------------------------

c. Ownership and Voting Limitations
    General The NYSE Alternext U.S. Operating Agreement will provide 
that NYSE Group, which will be the sole member of NYSE Alternext U.S. 
may not transfer or assign its limited liability company interest in 
NYSE Alternext U.S. in whole or in part, to any person or entity, 
unless such transfer or assignment shall be filed with and approved by 
the Commission under Section 19 of the Exchange Act and the rules 
promulgated thereunder.\48\ In addition, the NYSE Group Charter 
provides that NYSE Euronext, as the owner of all the issued and 
outstanding shares of stock of NYSE Group, may not transfer or assign 
its ownership interest in NYSE Group, in whole or in part, to any 
person or entity, unless such transfer or assignment shall be filed 
with and approved by the Commission under Section 19 of the Exchange 
Act and the rules promulgated thereunder.\49\
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    \48\ See Section 3.03 of the proposed NYSE Alternext U.S. 
Operating Agreement.
    \49\ See Article IV, Section 4 of the proposed NYSE Group 
Charter.
---------------------------------------------------------------------------

    The NYSE Euronext Charter,\50\ in turn, imposes, and the NYSE 
Euronext Bylaws,\51\ which will be amended in connection with the 
Mergers to include NYSE Alternext U.S. in the definition of U.S. 
Regulated Subsidiaries and which will become effective upon the closing 
of the Mergers, will impose, specific limitations on the ability to own 
and vote shares of NYSE Euronext stock, which are designed to protect 
the independence of the self-regulatory function of NYSE Euronext's 
U.S. Regulated Subsidiaries (as defined in the NYSE Euronext 
Bylaws),\52\ including NYSE Alternext U.S. following the Mergers. 
Following the Mergers, for so long as NYSE Euronext shall control, 
directly or indirectly, NYSE Alternext U.S. the board of directors of 
NYSE Euronext shall not adopt any resolution to repeal or amend any 
provision of the NYSE Euronext Charter or the NYSE Euronext Bylaws 
unless such amendment or repeal has been (i) filed with or filed with 
and approved by the Commission, or (ii) submitted to the boards of 
directors of NYSE Alternext U.S. as well as the other U.S. Regulated 
Subsidiaries of NYSE Euronext, and if any or all of such boards of 
directors shall determine that such amendment or repeal must be filed

[[Page 46093]]

with or filed with and approved by the Commission before such amendment 
or repeal may be effectuated, then such amendment or repeal shall not 
be effectuated until filed with or filed with and approved by the 
Commission, as the case may be.
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    \50\ See Article V of NYSE Euronext Charter.
    \51\ See Section 10.12 of the proposed NYSE Euronext Bylaws.
    \52\ See Section 7.3(G) of the proposed NYSE Euronext Bylaws.
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    Finally, the Exchange proposes to adopt Rule 1, which will mirror 
in all material respects NYSE Rule 2B. According to Rule 1(a), without 
prior SEC approval, NYSE Alternext U.S. or any entity with which it is 
affiliated shall not, directly or indirectly, acquire or maintain an 
ownership interest in a member organization. The Exchange notes, 
however, that upon completion of the Mergers, Archipelago Securities, 
LLC (``Arca Securities''), which is a member organization of the 
Exchange, will be an affiliate of NYSE Alternext U.S. Accordingly, the 
Exchange requests that the Commission approve NYSE Alternext U.S.'s 
affiliation with Arca Securities following the Mergers. Arca Securities 
is the approved outbound routing facility of both NYSE Arca and the 
NYSE. In its Order approving the merger of the Archipelago Exchange 
(``ArcaEx'') with the Pacific Exchange (``PCX''),\53\ the Commission 
permitted ArcaEx's holding company, Archipelago Holdings, Inc. 
(``Archipelago''), to own and operate Arca Securities, in its capacity 
as a facility of the PCX that routes orders from ArcaEx to other market 
centers.\54\ This approval remains in effect insofar as Arca Securities 
acts in the capacity of a facility of NYSE Arca for the routing of 
orders from NYSE Arca to other market centers, including the NYSE and 
NYSE Alternext U.S. subject to the applicable conditions.\55\
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    \53\ Following the ArcaEx-PCX merger, Archipelago merged with 
the NYSE and the PCX was later renamed NYSE Arca.
    \54\ See Securities Exchange Act Release No. 52497 (Sept. 22, 
2005), 70 FR 56949 (Sept. 29, 2005) (order approving SR-PCX-2005-
90). The Commission's approval was subject to several conditions and 
undertakings which remain in effect, specifically that: (1) Arca 
Securities would continue to operate and be regulated as a facility 
of the PCX; (2) the scope of the exception would be limited to 
outbound routing; (3) the primary regulatory responsibility for Arca 
Securities would lie with an unaffiliated SRO; and (4) the use of 
Arca Securities for outbound routing is only available to--and 
optional for--other PCX members.
    \55\ Id.
---------------------------------------------------------------------------

    Arca Securities performs a similar outbound routing function on 
behalf of the NYSE. On April 5, 2007, in a notice of immediate 
effectiveness, the Commission published the NYSE's rule change that 
established Arca Securities as a facility of the NYSE for purposes of 
routing orders to away market centers for execution in compliance with 
NYSE Rules and Regulation NMS.\56\ Pursuant to NYSE Rule 17, Arca 
Securities receives its routing instructions from the NYSE and reports 
any such executions back to the NYSE.\57\ Arca Securities has no 
discretion and cannot change the terms of an order or the routing 
instructions.\58\ Moreover, each type of order is subject to the same 
principles governing the NYSE's authority to route orders to away 
market centers, namely: use of Arca Securities for outbound routing is 
only available to--and is optional for--NYSE members, the primary 
regulatory responsibility for Arca Securities lies with an unaffiliated 
self-regulatory organization (``SRO''), and, as clarified herein, 
appropriate procedures are in place to manage any conflicts of interest 
or potential information advantages. In this capacity as a facility of 
the NYSE, Arca Securities receives the routing instructions from the 
NYSE and routes the orders to various away market centers, including 
NYSE Arca and NYSE Alternext U.S. for execution.
---------------------------------------------------------------------------

    \56\ See Securities Exchange Act Release No. 55590 (April 5, 
2007), 72 FR 18707 (April 13, 2007) (notice of immediate 
effectiveness of SR-NYSE-2007-29).
    \57\ See Rule 17(b)(1) of the NYSE.
    \58\ Id.
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    Policy and Procedure Regarding Affiliation
    In the past, the Commission has noted the potential for 
informational advantages that could place an affiliated member of an 
exchange at a competitive advantage vis-[agrave]-vis other non-
affiliated members.\59\ As a result, the Exchange proposes to adopt 
Rule 1(b), which mirrors in all material respects NYSE Rule 2B(2). 
Specifically, NYSE Alternext U.S. Rule 1(b) will provide as follows: 
``The holding company owning both the Exchange and Archipelago 
Securities LLC shall establish and maintain procedures and internal 
controls reasonably designed to ensure that Archipelago Securities, LLC 
does not develop or implement changes to its system on the basis of 
non-public information regarding planned changes to Exchange systems, 
obtained as a result of its affiliation with the Exchange, until such 
information is available generally to similarly situated members of the 
Exchange in connection with the provision of inbound order routing to 
the Exchange.'' The Exchange believes these measures will effectively 
address the concerns the Commission may have regarding the potential 
for informational advantages favoring Arca Securities vis-a-vis other 
non-affiliated NYSE Alternext U.S. members.
---------------------------------------------------------------------------

    \59\ See Securities Exchange Act Release No. 57648 (April 11, 
2008), 73 FR 20981 (April 17, 2008) (order abrogating NYSE Arca Rule 
7.31(x)).
---------------------------------------------------------------------------

    There is no member organization which is an affiliate of NYSE 
Alternext U.S. or an entity with which NYSE Alternext U.S. is 
affiliated or in which NYSE Alternext U.S. or an entity with which NYSE 
Alternext U.S. is affiliated holds ownership interest other than Arca 
Securities.\60\
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    \60\ Neither Seamount Trading LLC, a wholly-owned subsidiary of 
the Exchange, nor Seamount Execution Services LLC, a wholly-owned 
subsidiary of Seamount Trading LLC, is currently operational. If, in 
the future, one or both entities, neither of which is an Amex 
member, become(s) operational, NYSE Alternext U.S. will provide the 
Commission with the details relating to the function performed by 
such entity or entities for NYSE Alternext U.S. and the conditions 
relating to the provision by such entity of such services.
---------------------------------------------------------------------------

    Record Keeping Procedure
    The Exchange notes that the Commission has previously expressed 
concern regarding the potential for conflicts of interest in instances 
where a member firm is affiliated with an exchange to which it is 
routing orders.\61\
---------------------------------------------------------------------------

    \61\ See supra note 59.
---------------------------------------------------------------------------

    In order to manage these concerns, with respect to orders routed to 
NYSE Alternext U.S. by Arca Securities, an NYSE Alternext U.S. member, 
in its capacity as a facility of either NYSE Arca or the NYSE, the 
Exchange notes that Arca Securities is subject to independent oversight 
and enforcement by the Financial Industry Regulatory Authority 
(``FINRA''), an unaffiliated SRO that is Arca Securities' designated 
examining authority. In this capacity, FINRA is responsible for 
examining Arca Securities with respect to its books and records and 
capital obligations, and shares with NYSE Regulation the responsibility 
for reviewing Arca Securities' compliance with intermarket trading 
rules such as SEC Regulation NMS. In addition, through an agreement by 
and among NYSE, FINRA and NYSE Alternext U.S. pursuant to the 
provisions of SEC Rule 17d-2 under the Exchange Act (``Umbrella 17d-2 
Agreement''), FINRA's staff will review for Arca Securities' compliance 
with other NYSE Alternext U.S. Rules through FINRA's examination 
program \62.\ NYSE Regulation will monitor Arca Securities for 
compliance with NYSE Alternext U.S. trading rules, subject, of course, 
to SEC oversight of NYSE Regulation's regulatory program.
---------------------------------------------------------------------------

    \62\ In the event the Umbrella 17d-2 Agreement is not entered 
into at the Effective Time, Arca Securities will be subject to the 
regulation of FINRA with respect to its obligations as a member 
organization of NYSE Alternext U.S. pursuant to the New Multi-Party 
FINRA RSA (defined below).
---------------------------------------------------------------------------

    In order to alleviate any residual concerns the Commission may have 
regarding the potential for conflicts of

[[Page 46094]]

interest, the Exchange notes that NYSE Regulation has agreed with NYSE 
Alternext U.S. that it will collect and maintain the following 
information of which NYSE Regulation staff becomes aware--namely, all 
alerts, complaints, investigations and enforcement actions where Arca 
Securities (in its capacity as a facility of NYSE Arca or the NYSE, 
routing orders to NYSE Alternext U.S.) is identified as a participant 
that has potentially violated NYSE Alternext U.S. or applicable SEC 
rules--in an easily accessible manner, so as to facilitate any review 
conducted by the SEC's Office of Compliance Inspections and 
Examinations.
    Pilot Period
    The Exchange proposes that the Commission authorize NYSE Alternext 
U.S. to receive inbound routes from Arca Securities (in its capacity as 
a facility of both NYSE Arca and the NYSE, routing orders to NYSE 
Alternext U.S.), for a pilot period of twelve months from the date of 
the approval of this rule filing. The Exchange believes that this pilot 
period is of sufficient length to permit both NYSE Alternext U.S. and 
the Commission to assess the impact of the rule change described 
herein.

C. Trading Licenses or Permits

    Upon the completion of the Holdings Merger, all trading rights 
appurtenant to either Regular Memberships or OPMs existing immediately 
prior to the Holdings Merger will be cancelled. In addition, the 
lessees will cease to have any trading rights under any applicable 
leases upon the completion of the Holdings Merger. Neither NYSE 
Alternext U.S. nor NYSE Euronext will have any obligations under the 
leases that existed immediately prior to the Holdings Merger to any 
party thereto. Physical and electronic access to NYSE Alternext U.S.'s 
trading facilities will be made available to individuals and 
organizations that obtain an 86 Trinity Permit, an equity trading 
license or an OTP from NYSE Alternext U.S.
    For a period of one year following the Effective Time, as long as 
the market structure of NYSE Alternext U.S. remains substantially the 
same as it was on the date of the Merger Agreement, the Exchange 
expects to make equity trading licenses available at a price no greater 
than the cost of licenses to trade on the NYSE and to make NYSE 
Alternext U.S. OTPs available at a price no greater than the price of 
NYSE Arca options trading permits. Only persons or entities that are 
registered broker-dealers may be granted trading licenses or permits by 
NYSE Alternext U.S. through an application process and payment of 
applicable fees to be set forth in a separate rule filing. Pursuant to 
the requirements of Section 19 of the Exchange Act, NYSE Alternext U.S. 
intends to set forth in a separate rule filing the qualifications for 
trading license or permit holders and the application process for 
trading licenses or permits. The Exchange currently expects that the 
qualifications for trading license or permit holders \63\ will be based 
on the current requirements for memberships on the NYSE or NYSE Arca, 
respectively. Pursuant to the requirements of Section 19 of the 
Exchange Act, NYSE Alternext U.S. also intends to set forth in a 
separate rule filing the fees for a trading license or permit that will 
be assessed.
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    \63\ See proposed NYSE Alternext U.S. Rule 353.
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    Until such new trading licenses or permits are issued, NYSE 
Alternext U.S. intends to make available to persons and entities that 
apply and meet certain specified requirements \64\ 86 Trinity Permits 
for which certain additional fees \65\ will be waived. 86 Trinity 
Permits will allow the holders to trade products currently traded on 
the Exchange, including equities and options, prior to relocation of 
the NYSE Alternext U.S. equities and options trading facilities to the 
NYSE trading floor or the electronic trading platform of the NYSE or 
NYSE Arca, as applicable. To ensure continuity of trading following the 
Mergers, persons and entities who were authorized to trade on the 
Exchange immediately prior to the LLC Merger, including (i) owners, 
lessees or nominees of Regular Memberships or OPMs, (ii) limited 
trading permit holders, and (iii) associate members, in each case who 
were authorized to trade on the Exchange immediately prior to the LLC 
Merger, will be deemed to have satisfied applicable requirements 
necessary to receive an 86 Trinity Permit. 86 Trinity Permits will 
authorize owners, lessees or nominees of Regular Memberships, OPMs, 
limited trading permit holders and associate members who were 
authorized to trade on the Exchange immediately prior to the LLC 
Merger, to trade the products which they were previously authorized to 
trade and, subject to meeting the qualifications currently in place for 
trading products which they previously were not authorized to trade, to 
trade such other products.
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    \64\ The requirements for 86 Trinity Permits will be the same as 
the current requirements for memberships in the Amex Rules and such 
requirements may be satisfied by persons or entities that were not 
previously authorized to trade on the Exchange immediately prior to 
the Mergers.
    \65\ Certain application processing fees may be charged for 
persons or entities that were not previously authorized to trade on 
the Exchange immediately prior to the Mergers. See proposed NYSE 
Alternext U.S. Rule 358.
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    It is currently anticipated that NYSE Alternext U.S. will issue the 
equity trading licenses prior to the OTPs. Upon the initial effective 
date of the equity trading licenses, only holders of such equity 
trading licenses will have the right to trade equities and any other 
products associated with such equity trading licenses. Therefore, 
following the initial effective date of the equity trading licenses, a 
holder of an 86 Trinity Permit shall only be entitled to trade products 
other than those associated with the equity trading licenses. Upon the 
initial effective date of the OTPs, only holders of such OTPs will have 
the right to trade in options, and all 86 Trinity Permits will be 
cancelled.

D. Amendment of the Amex Rules

    The Amex Rules, which will become the NYSE Alternext U.S. Rules 
upon the completion of the LLC Merger, will be amended to incorporate 
certain provisions in the Amex Constitution, which will be eliminated 
in connection with the Mergers, and to reflect that following the 
Mergers, among others, (i) access to NYSE Alternext U.S.'s trading 
facilities will be granted through the issuance of 86 Trinity Permits, 
as described in Section 1(c)(C) of this Item II.A. above, until the 
equity trading licenses and OTPs are issued by NYSE Alternext U.S. (ii) 
the associate member concept will be deleted and the term ``member'' 
shall mean the 86 Trinity Permit Holders who are natural persons and 
allied members \66\ and the term ``member organization'' shall mean a 
partnership, corporation or such other entity as NYSE Alternext U.S. 
may, by Rule, permit to become a member organization, and which meets 
the requirements specified in the Rules \67\, (iii) an owner, lessee or 
nominee of regular membership or OPM, a limited trading permit holder 
or an associate member that was authorized to trade on the Exchange 
immediately prior to the LLC Merger will be deemed to satisfy the 
requirements for receiving an 86 Trinity Permit, (iv) the procedures 
for the re-allocation of equity securities to specialists will be 
simplified with the elimination of the mediation process currently 
required when a listed company requests a change of its specialist 
firm, (v) the procedures for the allocation of options will be

[[Page 46095]]

streamlined, (vi) the Gratuity Fund will be terminated, (vii) the 
responsibilities of the Adjudicatory Council will be transferred to the 
Committee for Review of NYSE Regulation since NYSE Regulation will be 
handling disciplinary matters for NYSE Alternext U.S.\68\ through the 
replacement of Amex Rule 345 and the Rules of Procedure in Disciplinary 
Matters with proposed Rules 475, 476 and 477, which are substantially 
identical to the disciplinary rules of the NYSE with certain changes 
necessary to apply such rules to NYSE Alternext U.S. and to reflect the 
application of the American Stock Exchange Sanctions Guidelines,\69\ 
(viii) the concept of Floor Governors will be eliminated and the 
functions of the Floor Governors will be performed by Senior Floor 
Officials or the Senior Supervisory Officer, as the case may be, as 
described in greater detail under Section 1.(c).(A).f of this Item 
II.A. above, (ix) the administrative decisions regarding the approval 
of applications to become a supplemental registered options trader and 
determinations regarding remote quoting rights for remote registered 
options traders will be handled by designated staff of NYSE Alternext 
U.S. rather than by a committee of members as set forth in Rules 993--
ANTE and 994--ANTE and (x) members and member organizations will be 
required to notify NYSE Alternext U.S. of their branch offices, but 
will not be required to seek approval from NYSE Alternext U.S. to 
establish such branch offices \70\. In addition, certain obsolete 
rules, including the rules relating to the Intermarket Trading System 
Plan, certain rules which have been replaced by Auction and Electronic 
Market Integration Rules and certain arbitration rules will be deleted.
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    \66\ See proposed definition of ``member'' in the NYSE Alternext 
U.S. Rules.
    \67\ See proposed definition of ``member organization'' in the 
NYSE Alternext U.S. Rules.
    \68\ The Committee for Review will be charged, in the discretion 
of the NYSE Alternext U.S. Board of Directors, with hearing appeals 
of disciplinary decisions and advising the NYSE Alternext U.S. Board 
of Directors thereof. With or without the advice of the Committee 
for Review, the NYSE Alternext U.S. Board of Directors, may affirm, 
modify, reverse, or remand a hearing panel's or a hearing officer's 
determination, penalty, or both. Unless the NYSE Alternext U.S. 
Board of Directors otherwise specifically directs further action, 
the determination and penalty, if any, of the NYSE Alternext U.S. 
Board of Directors after review shall be final and conclusive 
subject to the provisions for review under the Exchange Act.
    \69\ Amex anticipates that a certain number of Exchange 
disciplinary cases arising prior to the closing of the Mergers will 
be pending at the time of the closing of the Mergers. With respect 
to such cases which have been formally commenced at or prior to the 
time of the Effective Time, Amex Rule 345, the Rules of Procedure in 
Disciplinary Matters and the disciplinary rules in the current Amex 
Constitution (``Legacy Disciplinary Procedural Rules'') will govern 
such pending disciplinary cases. The Exchange will advise its 
members and member organizations of changes to the disciplinary 
procedures that will be implemented, including application of the 
Legacy Disciplinary Procedural Rules, through an Information 
Memorandum. Please see the proposed rule filing that the Exchange 
expects to file with the Commission in connection with the Legacy 
Disciplinary Procedural Rules for more detail.
    \70\ See proposed NYSE Alternext U.S. Rule 320. Currently, under 
Article IV, Section 2(m) of the Amex Constitution, members and 
member organizations are allowed to establish branch offices with 
the consent of the Exchange; provided, however, that the Exchange's 
consent is not required for members and member organizations of the 
Exchange that are members or member organizations of another 
exchange, which exchange has comparable rules or regulations, unless 
the Amex Board shall so direct. The change to Rule 320 to require 
notice without adopting the provision from Article IV, Section 2(m) 
of the Amex Constitution is consistent with the rules of other SROs 
including NYSE Arca, Chicago Board Options Exchange and Philadelphia 
Stock Exchange.
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E. Other Proposed Changes Relating to the Mergers

    a. Regulatory Service Agreement. The Exchange is currently a party 
to a regulatory services agreement with FINRA, dated as of April 30, 
2004, as amended (``FINRA RSA''). Under the FINRA RSA, FINRA performs 
market and trade practice surveillance and analysis, financial and 
operational regulation, options sales practice regulation, enforcement 
investigations and disciplinary processes and dispute resolution 
services for the Exchange. Upon the consummation of the Mergers, it is 
contemplated that NYSE Alternext U.S. will contract with NYSE 
Regulation for the performance of all of its regulatory functions. NYSE 
Euronext has agreed to provide adequate funding to NYSE Regulation to 
conduct its regulatory activities with respect to NYSE, NYSE Arca and, 
from and after closing of the transaction, NYSE Alternext U.S. In 
addition, it is contemplated that NYSE Alternext U.S. will participate 
in a multi-party regulatory services agreement by and among NYSE 
Regulation, NYSE Arca, FINRA and NYSE Alternext U.S. (``New Multi-Party 
FINRA RSA''), pursuant to which FINRA will in turn perform some of NYSE 
Alternext U.S.'s regulatory functions on an ongoing basis. NYSE 
Regulation together with NYSE Alternext U.S. may from time to time 
contract out to a third party other than FINRA certain of NYSE 
Alternext U.S.'s regulatory functions. In doing so, NYSE Regulation and 
NYSE Alternext U.S. must comply with proposed Rule 1B, which requires 
regulatory services agreements may only be entered into by NYSE 
Alternext U.S. with another SRO. In addition, regardless of the fact 
that NYSE Alternext U.S. will contract for the provision of regulatory 
services from NYSE Regulation, FINRA and/or other SROs, NYSE Alternext 
U.S. will retain ultimate responsibility for the fulfillment of its 
statutory and self-regulatory obligations under the Exchange Act. In 
connection with such responsibility, NYSE Alternext U.S. will retain 
the authority to direct NYSE Regulation, FINRA and any other SROs that 
provide regulatory service to take any action necessary to fulfill its 
statutory and self-regulatory obligations, consistent with the 
independence of the regulatory functions performed by NYSE Regulation, 
the NYSE Alternext U.S. rules, policies and procedures and the federal 
securities laws.
    b. Gratuity Fund. In connection with the Mergers, the Boards have 
approved the termination of the Gratuity Fund. As a result, the 
Gratuity Fund will be terminated upon the LLC Merger and neither NYSE 
Euronext nor NYSE Alternext U.S. will offer a Gratuity Fund following 
the Mergers. There will be no further payment of gratuities other than 
those related to any deaths that occurred prior to the completion of 
the Mergers. Upon the completion of the NYSE/Amex Merger, NYSE 
Alternext U.S. currently expects to allocate the assets then remaining 
in the Gratuity Fund (net of any administrative expenses incurred in 
the distribution of such amount), first to pay out any death benefits 
that are accrued but unpaid as of the completion of the NYSE/Amex 
Merger, and then to distribute the remaining balance, if any, in a 
manner as the Boards deem appropriate, taking into account the length 
of time each person was a participant in the Gratuity Fund.
    c. Relief from the Exchange's Periodic Financial Reporting 
Undertaking. The Exchange requests to be relieved from the undertakings 
adopted by the Amex Board on December 4, 2004 and approved by the 
Commission as part of an Amex proposed rule change filed under Section 
19 of the Exchange Act (``Undertakings'').\71\ Section 1 of the 
Undertakings prohibits Amex from terminating the FINRA RSA unless on or 
prior to the date of such termination, Amex has entered into an 
alternative arrangement relating to the provision of regulatory 
services that has been approved by the Commission pursuant to the rule 
filing procedures of Rule 19b-4 under the Exchange Act and requires 
Amex to use its best efforts to comply in all material respects with 
its obligations under the FINRA RSA. Under Section 2 of the 
Undertakings,

[[Page 46096]]

Amex's Chief Regulatory Officer is required, and Amex is required to 
use its reasonable efforts to cause the staff of FINRA responsible for 
providing services under the FINRA RSA, to periodically confer with 
staff of the Division of Trading and Markets and the Office of 
Compliance Inspections and Examinations regarding the status of Amex's 
regulatory program.
---------------------------------------------------------------------------

    \71\ See Securities Exchange Act Release No. 50927 (December 23, 
2004), 69 FR 78494 (December 30, 2004) (order approving SR-Amex-
2004-50).
---------------------------------------------------------------------------

    The reason for the request to be relieved from Sections 1 and 2 of 
the Undertakings is that the Exchange believes that it has demonstrated 
that Amex's regulatory program has been maintained consistent with the 
guidelines of the Commission Staff since the Exchange adopted such 
undertaking and that the new arrangements for contracting out 
regulatory services through the NYSE Regulation RSA, the New Multi-
Party FINRA RSA and the Umbrella 17d-2 agreement among NYSE, FINRA and 
NYSE Alternext U.S. would ensure that NYSE Alternext U.S.'s regulatory 
program continues to be maintained consistent with the guidelines of 
the Commission Staff. In addition, following the Mergers, NYSE 
Alternext U.S. will be a wholly-owned U.S. Regulated Subsidiary of NYSE 
Euronext and other U.S. Regulated Subsidiaries of NYSE Euronext are not 
subject to such obligation.
    The Exchange also requests to be permanently relieved from Sections 
3 of the Undertakings.\72\ Section 3 of the Undertakings mandates Amex 
to provide to the Director of the Division of Trading and Markets (i) 
within 75 days after the end of each fiscal year of Amex (unless 
otherwise directed in writing by the Director of the Division of 
Trading and Markets), financial statements certified by Amex's chief 
financial officer and reviewed by Amex's independent accountants, 
together with evidence of such review, (ii) within 40 days after the 
end of each fiscal quarter of Amex (unless otherwise directed in 
writing by the Director of the Division of Trading and Markets), 
unaudited financial statements certified by Amex's chief financial 
officer and reviewed by Amex's independent accountants, together with 
evidence of such review, (iii) within 30 days after the end of each 
fiscal month of Amex (unless otherwise directed in writing by the 
Director of the Division of Trading and Markets), (a) financial data of 
Amex certified by Amex's chief financial officer, together with 
projected and budget financial information concerning Amex, (b) a 
schedule reflecting the available borrowings under each of Amex's 
credit facilities, together with computations of compliance with all 
financial covenants contained therein, certified by Amex's chief 
financial officer, (c) a schedule of projected cash and working capital 
trends, including calculations of Amex's working capital and current 
ratio, (d) a schedule of actual year-to-date and inception-to-date 
expenditures in connection with any material trading technology system 
or platform being implemented by Amex, certified by Amex's chief 
financial officer, together with a narrative summary of the status of 
such implementation, (e) a schedule of material off-balance sheet 
liabilities, if any, certified by Amex's chief financial officer and 
(f) a narrative summary of Amex's financial results for such month and 
for then year-to-date, certified by Amex's chief financial officer, and 
(iv) such other financial information as may be reasonably requested by 
the Director of the Division of Trading and Markets. The reason for the 
request is that following the Mergers, NYSE Alternext U.S. will be a 
wholly-owned subsidiary of NYSE Euronext. As such, NYSE Alternext 
U.S.'s financial results will be consolidated with those of NYSE 
Euronext. Furthermore, NYSE Euronext is a reporting company under the 
Exchange Act with obligations to report its financial results.
---------------------------------------------------------------------------

    \72\ Id. In addition, Amex has separately submitted a letter to 
the staff of Division of Trading and Markets to request temporary 
waiver of Section 3(ii) of the Undertakings for the calendar year 
2008.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the requirements of the Exchange Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6(b) of the Exchange 
Act.\73\ The Exchange believes the proposal is consistent with Section 
6(b)(3) of the Exchange Act \74\ in that it would assure a fair 
representation of its members in the selection of the Non-Affiliated 
Directors of NYSE Alternext U.S. and administration of its affairs. The 
candidates for directors that will serve on the NYSE Alternext U.S. 
Board will include at least one person intended to allow the NYSE 
Alternext U.S. Board to meet the requirements of Section 6(b)(3) of the 
Exchange Act concerning issuers and at least one person intended to 
allow the NYSE Alternext U.S. Board to meet the requirements of Section 
6(b)(3) of the Exchange Act concerning investors.
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    \73\ 15 U.S.C. 78f(b).
    \74\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes the proposal is also consistent with Section 
6(b)(5) of the Exchange Act \75\ in that it would create a governance 
and regulatory structure of NYSE Alternext U.S. that is designed to 
promote just and equitable principles of trade, to remove impediments, 
and to perfect the mechanism of, a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest. The Exchange represents that it remains committed to its role 
as a national securities exchange and does not believe that the 
proposed change to a for-profit institution will undermine its 
responsibilities for regulating its marketplace. Indeed, as described 
above, following the Mergers, the regulatory functions of NYSE 
Alternext U.S. will be carried out by NYSE Regulation, whose status as 
a New York Type A not-for-profit entity will facilitate NYSE Alternext 
U.S. in managing conflicts between its business and regulatory 
objectives, maintaining regulatory standards and complying with its 
obligations as a registered national securities exchange and SRO. 
Further, the Exchange believes that it has proposed specific provisions 
in the NYSE Alternext U.S. Operating Agreement that reinforce the 
responsibility of NYSE Alternext U.S. for its self-regulatory 
obligations.
---------------------------------------------------------------------------

    \75\ Id.
---------------------------------------------------------------------------

    The Exchange also believes that the proposed rule change is 
consistent with Section 6(b)(8) of the Exchange Act \76\ which requires 
that the rules of the Exchange do not impose any burden on competition 
not necessary or appropriate in furtherance of the purposes of the 
Exchange Act. With a new corporate and governance structure, NYSE 
Alternext U.S. will be better positioned to improve its technology and 
engage in value-enhancing transactions designed to facilitate its long-
term success.
---------------------------------------------------------------------------

    \76\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from

[[Page 46097]]

persons or entities that trade on the Exchange or other interested 
parties.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which Amex consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.
    The Exchange is targeting a closing date of August 29, 2008 for the 
Mergers. In the event that it is necessary in order to facilitate that 
timetable, the Exchange requests that the Commission accelerate 
effectiveness of the filing pursuant to Section 19(b)(2) to a date no 
later than August 29, 2008.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-Amex-2008-62 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549.
All submissions should refer to File Number SR-Amex-2008-62. This file 
number should be included on the subject line if e-mail 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 inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Amex-2008-62 and should be 
submitted on or before August 28, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\77\
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    \77\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-18145 Filed 8-6-08; 8:45 am]

BILLING CODE 8010-01-P