Document ID: SEC-2016-1782-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC; NYSE MKT LLC; NYSE Arca, Inc.
Posted Date: 2016-10-05T04:00Z

[Federal Register Volume 81, Number 193 (Wednesday, October 5, 2016)]
[Notices]
[Pages 69092-69093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-24016]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78992; File Nos. SR-NYSE-2016-57; SR-NYSEMKT-2016-80; 
SR-NYSEArca-2016-119]

Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE 
MKT LLC; NYSE Arca, Inc.; Order Approving Proposed Rule Change, as 
Modified by Amendment No. 2 Thereto, Amending and Restating the Second 
Amended and Restated Certificate of Incorporation of the Exchanges' 
Ultimate Parent Company, Intercontinental Exchange, Inc.

September 29, 2016.

I. Introduction

    On August 17, 2016, each of New York Stock Exchange LLC (``NYSE''), 
NYSE MKT LLC (``NYSE MKT''), and NYSE Arca, Inc. (``NYSE Arca'' and, 
with NYSE and NYSE MKT, the ``Exchanges'') filed with the Securities 
and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) 
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend and restate the Second 
Amended and Restated Certificate of Incorporation (``ICE Certificate'') 
of the Exchanges' ultimate parent company, Intercontinental Exchange, 
Inc. (``ICE''), to increase ICE's authorized share capital and to make 
other, non-substantive changes. The proposed rule changes were 
published for comment in the Federal Register on August 30, 2016.\3\ On 
August 25, 2016, the Exchanges each filed Amendment No. 1 to its 
respective proposed rule change.\4\ On August 29, 2016, the Exchanges 
each filed Amendment No. 2 to its respective proposed rule change.\5\ 
The Commission received no comments on the proposed rule changes, as 
amended. This order approves the proposed rule changes, as modified by 
Amendment No. 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release Nos. 78661 (August 24, 
2016), 81 FR 59699 (August 30, 2016) (``NYSE Notice''); 78663 
(August 24, 2016), 81 FR 59696 (August 30, 2016); and 78662 (August 
24, 2016), 81 FR 59674 (August 30, 2016).
    \4\ On August 26, 2016, the Exchanges withdrew Amendment No. 1.
    \5\ Amendment No. 2 made technical, non-substantive changes to 
the ICE Certificate to remove unnecessary underlining and to 
italicize a comma. Because Amendment No. 2 adds clarification and 
does not materially alter the substance of the proposed rule changes 
or raise unique or novel regulatory issues, Amendment No. 2 is not 
subject to notice and comment.
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II. Description of the Proposed Rule Change

    The Exchanges propose to revise the ICE Certificate \6\ to increase 
the total number of authorized shares of ICE common stock, par value 
$0.01 per share (``Common Stock''), and to make other, non-substantive 
changes. More specifically, the Exchanges propose to make the following 
amendments to the ICE Certificate:
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    \6\ ICE owns 100% of the equity interest of Intercontinental 
Exchange Holdings, Inc., which in turn owns 100% of the equity 
interest of NYSE Holdings LLC. NYSE Holdings LLC owns 100% of the 
equity interest of NYSE Group, Inc., which in turn directly owns 
100% of the equity interest of each Exchange. ICE is a publicly 
traded company listed on the NYSE.
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     In Article IV, Section A, the total number of shares of 
stock that ICE is authorized to issue would be changed from 600,000,000 
to 1,600,000,000 shares, and the portion of that total constituting 
Common Stock would be changed from 500,000,000 to 1,500,000,000 shares.
     In Article V, Section A.5, the reference to ``this Section 
A of ARTICLE VI'' would be corrected to refer to ``this Section A of 
ARTICLE V''.
     References to the ``Second Amended and Restated 
Certificate of Incorporation'' would be changed throughout to refer to 
the ``Third Amended and Restated Certificate of Incorporation,'' and 
related technical and conforming changes would be made to the recitals 
and signature page of the ICE Certificate.
    The Exchanges state that the proposed amendments to the ICE 
Certificate were approved by the board of directors of ICE (``ICE 
Board'') on August 1, 2016.\7\ The Exchanges further state that the 
amendments to the ICE Certificate would be effective when filed with 
the Department of State of Delaware, which would not occur until 
approval of the amendments by the stockholders of ICE is obtained at a 
Special Meeting of Stockholders on October 12, 2016.\8\
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    \7\ See, e.g., NYSE Notice, supra note 3.
    \8\ See id.
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    According to the Exchanges, the trading price of ICE's Common Stock 
has risen significantly since ICE's initial public offering in 2005, 
and the ICE Board believes that such price appreciation may impact the 
liquidity of ICE's Common Stock, making it more difficult to 
efficiently trade and potentially less attractive to certain 
investors.\9\ Accordingly, the ICE Board approved pursuing a 5-for-1 
stock split by way of a stock dividend, pursuant to which the holders 
of record of shares of Common Stock would receive, by way of a 
dividend, four shares of Common Stock for each share of Common Stock 
held by such holder (``Stock Dividend''). The Exchanges state that the 
ICE Board's approval of the Stock Dividend was contingent upon 
Commission and ICE stockholder approval of the proposed amendments to 
the ICE Certificate.
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    \9\ See id.
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    Further, the Exchanges state that the number of shares of Common 
Stock proposed to be issued in the Stock Dividend exceeds ICE's 
authorized but unissued shares of Common Stock. The proposed rule 
changes would increase ICE's authorized shares of Common Stock and 
shares of capital stock to allow ICE to effectuate the Stock Dividend.
    According to the Exchanges, the proposed changes to the ICE 
Certificate would not alter the limitations on voting and ownership set 
forth in Section V of the ICE Certificate.\10\ Such limitations were 
introduced at the time of ICE's acquisition of the Exchanges, to 
``minimize the potential that a person could improperly interfere with 
or restrict the ability of the Commission, the Exchange, or its 
subsidiaries to effectively carry out their regulatory oversight 
responsibilities under the Act.'' \11\
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    \10\ See id.
    \11\ See Securities Exchange Act Release No. 70210 (August 15, 
2013), 78 FR 51758 (August 21, 2013) (SR-NYSE-2013-42; SR-NYSEMKT-
2013-50; and SR-NYSEArca-2013-62), at 51760.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
changes, as modified by Amendment No. 2, are consistent with the Act 
and the rules and regulations thereunder applicable to a national 
securities exchange.\12\
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    \12\ In approving the proposed rule changes, the Commission has 
considered their impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
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    The Commission finds that the proposed rule changes by the 
Exchanges to modify the ICE Certificate are consistent with the 
requirements of Section 6 of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\13\ In

[[Page 69093]]

particular, the Commission finds that the proposed rule changes are 
consistent with Section 6(b)(1) of the Act, which, among other things, 
requires a national securities exchange to be so organized and have the 
capacity to carry out the purposes of the Act and to enforce compliance 
by its members with the provisions of the Act, the rule and regulations 
thereunder, and the rules of the exchange.\14\ The proposed revisions 
to the ICE Certificate are intended to increase ICE's authorized shares 
of Common Stock and shares of capital stock and thus would allow ICE to 
effectuate the Stock Dividend. The Exchanges represent that the 
proposed rule changes would not alter the limitations on voting and 
ownership set forth in Section V of the ICE Certificate, which are 
designed to ``minimize the potential that a person could improperly 
interfere with or restrict the ability of the Commission, the Exchange, 
or its subsidiaries to effectively carry out their regulatory oversight 
responsibilities under the Act.'' \15\
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    \13\ Certain provisions of the ICE Certificate are considered 
rules of NYSE, NYSE MKT, and NYSE Arca if they are stated policies, 
practices, or interpretations, as defined in Rule 19b-4 under the 
Act, of NYSE, NYSE MKT, and NYSE Arca, and must be filed with the 
Commission pursuant to Section 19(b)(4) of the Act and Rule 19b-4 
thereunder. See 15 U.S.C. 78c(a)(27); 15 U.S.C. 78s(b); and 17 CFR 
240.19b-4.
    \14\ 15 U.S.C. 78f(b)(1).
    \15\ See supra note 11.
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    In addition, the Commission finds that the proposed rule changes 
are consistent with Section 6(b)(5) of the Act,\16\ which requires, 
among other things, that the rules of an exchange be designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. As noted above, the proposed 
rule changes would revise the ICE Certificate to increase ICE's 
authorized share capital and thus would facilitate ICE's proposed Stock 
Dividend. In addition, the proposed rule changes would correct an 
erroneous reference, which may reduce potential confusion and enhance 
the clarity of the ICE Certificate.
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    \16\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule changes (SR-NYSE-2016-57; SR-NYSEMKT-
2016-80; SR-NYSEArca-2016-119), as modified by Amendment No. 2, be, and 
hereby are, approved.
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    \17\ 15 U.S.C. 78s(b)(2).
    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-24016 Filed 10-4-16; 8:45 am]
 BILLING CODE 8011-01-P