Document ID: SEC-2011-1617-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC
Posted Date: 2011-10-20T04:00Z

[Federal Register Volume 76, Number 203 (Thursday, October 20, 2011)]
[Notices]
[Pages 65247-65255]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-27195]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65566; File No. SR-ISE-2011-69]

Self-Regulatory Organizations; International Securities Exchange, 
LLC; Notice of Filing of Proposed Rule Change Relating to a Corporate 
Transaction in which Its Indirect Parent, Deutsche B[ouml]rse AG, Will 
Become a Wholly Owned Subsidiary of Alpha Beta Netherlands Holding N.V.

October 14, 2011.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Exchange Act''), and Rule 19b-4 thereunder,\2\ notice is 
hereby given that on October 12, 2011, International Securities 
Exchange, LLC (the ``Exchange'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II below, which Items have been prepared substantially 
by the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

A. Overview of the Proposed Combination

    The Exchange, a Delaware limited liability company, registered 
national securities exchange and self-regulatory organization, is 
submitting this rule filing (the ``Proposed Rule Change'') to the 
Commission in connection with the proposed business combination (the 
``Combination'') of NYSE Euronext, a Delaware corporation, and Deutsche 
B[ouml]rse AG, an Aktiengesellschaft organized under the laws of the 
Federal Republic of Germany (``Deutsche B[ouml]rse'').
    NYSE Euronext owns 100% of the equity interest of NYSE Group, Inc., 
a Delaware corporation (``NYSE Group''), which in turn directly or 
indirectly owns (1) 100% of the equity interest of three registered 
national securities exchanges and self-regulatory organizations 
(together, the ``NYSE Exchanges'')--the New York Stock Exchange, LLC 
(``NYSE''), NYSE Arca, Inc. (``NYSE Arca'') and NYSE Amex LLC (``NYSE 
Amex'')--and (2) 100% of the equity interest of NYSE Market, Inc. 
(``NYSE Market''), NYSE Regulation, Inc. (``NYSE Regulation''), NYSE 
Arca L.L.C. (``NYSE Arca LLC'') and NYSE Arca Equities, Inc. (``NYSE 
Arca Equities'') (the NYSE Exchanges, together with NYSE Market, NYSE 
Regulation, NYSE Arca LLC and NYSE Arca Equities, the ``NYSE U.S. 
Regulated Subsidiaries'' and each, a ``NYSE U.S. Regulated 
Subsidiary''). NYSE, NYSE Arca and NYSE Amex will be separately filing 
a proposed rule change in connection with the Combination.
    Deutsche B[ouml]rse indirectly owns 50% of the equity interest of 
International Securities Exchange Holdings, Inc. (``ISE Holdings''), 
which in turn holds 100% of the equity interest of the Exchange. ISE 
Holdings also holds 31.54% of the equity interest of Direct Edge 
Holdings, LLC (``Direct Edge Holdings''), which in turn indirectly 
holds 100% of the equity interest of two registered national securities 
exchanges and self-regulatory organizations--EDGA Exchange, Inc. 
(``EDGA'') and EDGX Exchange, Inc. (``EDGX'') (each of the Exchange, 
EDGA and EDGX, a ``DB Exchange'' and a ``DB U.S. Regulated Subsidiary'' 
and together, the ``DB Exchanges'' and the ``DB U.S. Regulated 
Subsidiaries''). EDGA and EDGX will be separately filing a proposed 
rule change in connection with the Combination that will be the 
substantially the same as the Proposed Rule Change.
    If the Combination is completed, the businesses of NYSE Euronext 
and Deutsche B[ouml]rse, including the NYSE U.S. Regulated Subsidiaries 
and the DB U.S. Regulated Subsidiaries (together, the ``U.S. Regulated 
Subsidiaries'' and each, a ``U.S. Regulated Subsidiary''), will be held 
under a single, publicly traded holding company organized under the 
laws of the Netherlands (``Holdco'').\3\ The Proposed Rule Change, if 
approved by the Commission, will not be operative until the 
consummation of the Combination.
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    \3\ Holdco is currently named ``Alpha Beta Netherlands Holding 
N.V.,'' but it is expected that Holdco will be renamed prior to the 
completion of the Combination to a name agreed between NYSE Euronext 
and Deutsche B[ouml]rse.
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B. Summary of Proposed Rule Change

    The Exchange is proposing that, pursuant to the Combination, its 
indirect parent, Deutsche B[ouml]rse, will become a wholly owned 
subsidiary of Holdco. In addition, the Exchange is proposing that, in 
connection with the Combination, the Commission approve certain 
amendments to the organizational and other governance documents of 
Holdco and ISE Holdings. The Proposed Rule Change is summarized as 
follows:
     Proposed Approval of Waiver of Ownership and Voting 
Restrictions of ISE Holdings. The Amended and Restated Certificate of 
Incorporation of ISE Holdings (the ``ISE Holdings Certificate'') 
currently restricts any person, either alone or together with its 
related persons, from having voting control over more than 20% of the 
outstanding capital stock of ISE Holdings and from owning of record or 
beneficially more than 40% of the outstanding capital stock of ISE 
Holdings (or in the case of any Exchange member, acting alone or 
together with its related persons, from owning of record or 
beneficially more than 20% of the outstanding capital stock of ISE 
Holdings).\4\ If a person were to obtain a voting or ownership interest 
in excess of the voting or ownership restrictions without obtaining the 
approval of the Commission, the shares of ISE Holdings would 
automatically transfer to a statutory trust established under and 
pursuant to the provisions of the Delaware Statutory Trust Act, 12 Del. 
C. Sec. Sec.  3801 et seq. (``ISE Trust''). The ISE Holdings 
Certificate and the Amended and Restated Bylaws of ISE Holdings (the 
``ISE Holdings Bylaws'') provide that the board of directors of ISE 
Holdings may waive these voting and ownership restrictions in an 
amendment to the ISE Holdings Bylaws if it makes certain findings and 
the amendment to the ISE Holdings Bylaws has been filed with, and 
approved by, the Commission under Section 19(b) of the Exchange Act.\5\ 
Acting pursuant to this waiver provision, the board of directors of ISE 
Holdings has approved the amendment

[[Page 65248]]

to the ISE Holdings Bylaws set forth in Exhibit 5A (the ``ISE Holdings 
Bylaws Amendment'') in order to permit Holdco to indirectly own 50% of 
the outstanding common stock of ISE Holdings as of and after the 
Combination. The Exchange is requesting approval by the Commission of 
the ISE Holdings Bylaws Amendment in order to allow the Combination to 
take place.
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    \4\ See Amended and Restated Certificate of Incorporation of ISE 
Holdings, Article FOURTH, Section III.
    \5\ 15 U.S.C. 78s(b).
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    Under the Proposed Rule Change, Holdco would take appropriate steps 
to incorporate voting and ownership restrictions, requirements relating 
to submission to jurisdiction, access to books and records and other 
requirements related to its control of the U.S. Regulated Subsidiaries. 
Specifically, the Articles of Association of Holdco in effect as of the 
completion of the Combination (the ``Holdco Articles'') would contain 
provisions \6\ to incorporate these concepts with respect to itself, as 
well as its directors, officers, employees and agents (as applicable):
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    \6\ The text of the proposed Holdco Articles is attached to the 
Proposed Rule Change as Exhibit 5B.
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     Voting and Ownership Restrictions in the Holdco Articles. 
The Holdco Articles would contain voting and ownership restrictions 
that will restrict any person, either alone or together with its 
related persons, from having voting control over Holdco shares 
entitling the holder thereof to cast more than 20% of the then 
outstanding votes entitled to be cast on a matter or beneficially 
owning Holdco shares representing more than 40% of the outstanding 
votes entitled to be cast on a matter (except that a 20% ownership 
restriction would apply to any person who is a Member of NYSE \7\ (a 
``NYSE Member''), a Member \8\ of NYSE Amex (including any person who 
is a related person of such member, an ``Amex Member''), an ETP Holder 
of NYSE Arca Equities \9\ (an ``ETP Holder'') an OTP Holder or OTP Firm 
of NYSE Arca \10\ (an ``OTP Holder'' and ``OTP Firm,'' respectively), a 
Member (as such term is defined in Section 3(a)(3)(A) of the Exchange 
Act) of ISE (an ``ISE Member''), or a member of EDGA or EDGX (as such 
terms are defined in the rules of EDGA and EDGX, respectively, an 
``EDGA Member'' and ``EDGX Member,'' respectively)). The Holdco 
Articles would provide that Holdco will be required to disregard any 
votes purported to be cast in excess of the voting restriction. In the 
event that any such person(s) exceeds the ownership restriction, it 
will be required to offer for sale and transfer the number of Holdco 
shares required to comply with the ownership restriction, and the 
rights to vote, attend general meetings of Holdco shareholders and 
receive dividends or other distributions attached to shares held in 
excess of the 40% threshold (or 20% threshold, if applicable) will be 
suspended for so long as such threshold is exceeded. If such person(s) 
fails to comply with the transfer obligation within two weeks, then the 
Holdco Articles would provide that Holdco will be irrevocably 
authorized to take actions on behalf of such person(s) in order to 
cause it to comply with such obligations. The Holdco board of directors 
may waive the voting and ownership restrictions if it makes certain 
determinations (which will be subject to the same requirements which 
are currently required to be made by the board of directors of NYSE 
Euronext and ISE Holdings in order to waive the voting and ownership 
restrictions in the current NYSE Euronext Certificate and the ISE 
Holdings Certificate, as applicable) and resolves to expressly permit 
the voting and ownership that is subject to such restrictions, and such 
resolutions have been filed with, and approved by, the Commission under 
Section 19(b) of the Exchange Act and filed with, and approved by, the 
relevant European Regulators \11\ having appropriate jurisdiction and 
authority.
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    \7\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 34.3(c).
    \8\ See id.
    \9\ See id.
    \10\ See id.
    \11\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 1.1.
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     Jurisdiction. The Holdco Articles will provide that Holdco 
and its directors, and to the extent they are involved in the 
activities of the U.S. Regulated Subsidiaries, (x) Holdco's officers, 
and (y) those of its employees whose principal place of business and 
residence is outside the United States, will be deemed to irrevocably 
submit to the jurisdiction of the U.S. federal courts and the 
Commission for the purposes of any suit, action or proceeding pursuant 
to the U.S. federal securities laws and the rules or regulations 
thereunder, arising out of, or relating to, the activities of the U.S. 
Regulated Subsidiaries. In addition, the Holdco Articles would provide 
that so long as Holdco directly or indirectly controls any U.S. 
Regulated Subsidiary, the directors, officers and employees will be 
deemed to be directors, officers and employees of such U.S. Regulated 
Subsidiaries for purposes of, and subject to oversight pursuant to, the 
Exchange Act. The Holdco Articles would provide that Holdco will take 
reasonable steps necessary to cause its officers, directors and 
employees, prior to accepting a position as an officer, director or 
employee, as applicable, to agree and consent in writing to the 
applicability to them of these jurisdictional and oversight provisions 
with respect to their activities related to any U.S. Regulated 
Subsidiary. Furthermore, the Holdco Articles would provide that no 
person may be a director of Holdco unless he or she has agreed and 
consented in writing to the applicability to him or her of these 
jurisdictional and oversight provisions with respect to his or her 
activities related to any U.S. Regulated Subsidiary. Holdco would sign 
an irrevocable agreement and consent for the benefit of each U.S. 
Regulated Subsidiary \12\ that it will comply with these provisions of 
the Holdco Articles.
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    \12\ The form of Holdco's agreement and consent is attached as 
Exhibit 5C to this Proposed Rule Change.
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     Books and Records. The Holdco Articles would provide that 
for so long as Holdco directly or indirectly controls any U.S. 
Regulated Subsidiary, the books, records and premises of Holdco will be 
deemed to be the books, records and premises of such U.S. Regulated 
Subsidiaries for purposes of, and subject to oversight pursuant to, the 
Exchange Act, and that Holdco's books and records will at all times be 
made available for inspection and copying by the Commission, and by any 
U.S. Regulated Subsidiary to the extent they are related to the 
activities of such U.S. Regulated Subsidiary or any other U.S. 
Regulated Subsidiary over which such U.S. Regulated Subsidiary has 
regulatory authority or oversight. In addition, Holdco's books and 
records related to the U.S. Regulated Subsidiaries will be maintained 
within the United States, except that to the extent that books and 
records may relate to both European subsidiaries and U.S. Regulated 
Subsidiaries, Holdco may maintain such books and records either in the 
home jurisdiction of one or more European subsidiaries or in the United 
States.
     Amendments to Holdco Articles. The Holdco Articles would 
provide that before any amendment to the Holdco Articles may be 
effectuated by execution of a notarial deed of amendment, such 
amendment would need to be submitted to the board of directors of each 
U.S. Regulated Subsidiary and, if so determined by any such board, 
would need to be filed with, or filed with and approved by, the 
Commission before such amendment may become effective.
     Additional Matters. The Holdco Articles would include 
provisions regarding cooperation with the Commission and the U.S. 
Regulated

[[Page 65249]]

Subsidiaries, compliance with U.S. federal securities laws, 
confidentiality of information regarding the U.S. Regulated 
Subsidiaries' self-regulatory function, preservation of the 
independence of the U.S. Regulated Subsidiaries' self-regulatory 
function, and directors' consideration of the effect of Holdco's 
actions on the U.S. Regulated Subsidiaries' ability to carry out their 
respective responsibilities under the Exchange Act. In addition, the 
Holdco Articles would provide that Holdco will take reasonable steps 
necessary to cause its officers, directors and employees, prior to 
accepting a position as an officer, director or employee, as 
applicable, of Holdco to agree and consent in writing to the 
applicability to them of these provisions of the Holdco Articles with 
respect to their activities related to any U.S. Regulated Subsidiary. 
The Holdco Articles would also provide that no person may be a director 
of Holdco unless he or she has agreed and consented in writing to the 
applicability to him or her of these provisions with respect to his or 
her activities related to any U.S. Regulated Subsidiary. Holdco will 
sign an irrevocable agreement and consent for the benefit of each U.S. 
Regulated Subsidiary \13\ that it will comply with these provisions of 
the Holdco Articles.\14\
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    \13\ The form of Holdco's agreement and consent is attached as 
Exhibit 5C to this Proposed Rule Change.
    \14\ The Holdco Articles will also set forth certain 
restrictions and requirements relating to Holdco's European 
subsidiaries and applicable European regulatory matters, which will 
be substantially consistent with the analogous restrictions and 
requirements applicable with respect to Holdco's U.S. Regulated 
Subsidiaries and U.S. regulatory matters.
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    In addition, Holdco would adopt a Director Independence Policy in 
the form attached hereto as Exhibit 5D (the ``Holdco Independence 
Policy''), which would be substantially similar to the current 
Independence Policy of the NYSE Euronext board of directors. The 
Proposed Rule Change filed by the NYSE in connection with the 
combination describes the Holdco Independence Policy as it relates to 
the current Independence Policy of the NYSE Euronext board of 
directors.\15\
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    \15\ See File No. SR-NYSE-2011-51.
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    The text of the Proposed Rule Change is available at the Exchange, 
the Commission's Public Reference Room, and on the Web site of the 
Exchange (http://www.ise.com). The text of Exhibits 5A through 5D of 
the Proposed Rule Change are also available on the Exchange's Web site 
and on the Commission's Web site (http://www.sec.gov/rules/sro.shtml).
    Other than as described herein and set forth in the attached 
Exhibits 5A through 5D, the Exchange will continue to conduct its 
regulated activities in the manner currently conducted and will not 
make any changes to its regulated activities in connection with the 
Combination. If the Exchange determines to make any such changes, it 
will seek approval of the Commission.

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 has 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. Purpose [sic]

    The purpose of this rule filing is to adopt the rules necessary to 
permit Deutsche B[ouml]rse to effect the Combination and to amend the 
ISE Holdings Bylaws and certain provisions of the Holdco Articles.
1. Overview of the Combination
    The Exchange is submitting this Proposed Rule Change to the 
Commission in connection with the Combination of NYSE Euronext and 
Deutsche B[ouml]rse. The Combination will create a holding company, 
Holdco, which will hold the businesses of NYSE Euronext and Deutsche 
B[ouml]rse. Following the Combination, each of NYSE Euronext and 
Deutsche B[ouml]rse will be a separate subsidiary of Holdco. Holdco 
expects the Combination will create a group that will be both a world 
leader in derivatives and risk management and the premier global venue 
for capital raising, with a truly global franchise and presence in many 
of the world's financial centers including New York, London, Frankfurt, 
Paris and Luxembourg. This global presence should facilitate providing 
world-class services to global and local customers worldwide.
    Other than as described herein, Holdco and the Exchange will not 
make any changes to the regulated activities of the DB Exchanges in 
connection with the Combination, and, other than as described in the 
separate proposed rule changes filed by each of the NYSE Exchanges in 
connection with the Combination, Holdco and the NYSE Exchanges will not 
make any changes to the regulated activities of the NYSE U.S. Regulated 
Subsidiaries in connection with the Combination. If Holdco determines 
to make any such changes to the regulated activities of any U.S. 
Regulated Subsidiary, it will seek the approval of the Commission. The 
Proposed Rule Change, if approved by the Commission, will not be 
operative until the consummation of the Combination.
    The Combination will occur pursuant to the terms of the Business 
Combination Agreement, dated as of February 15, 2011, as amended by 
Amendment No. 1 dated as of May 2, 2011 and by Amendment No. 2 dated as 
of June 16, 2011 (as it may be further amended from time to time, the 
``Combination Agreement''), by and among NYSE Euronext, Deutsche 
B[ouml]rse, Holdco and Pomme Merger Corporation, a Delaware corporation 
and newly formed wholly owned subsidiary of Holdco (``Merger Sub''). 
Subject to the terms and conditions set forth in the Combination 
Agreement and in compliance with applicable law, Holdco has conducted a 
public exchange offer (the ``Exchange Offer''), in which shareholders 
of Deutsche B[ouml]rse have been afforded the opportunity to tender 
each share of Deutsche B[ouml]rse for one ordinary share of Holdco 
(each, a ``Holdco Share'').
    Immediately after the time that Holdco accepts for exchange, and 
exchanges, the Deutsche B[ouml]rse shares that are validly tendered and 
not withdrawn in the Exchange Offer, Merger Sub will merge with and 
into NYSE Euronext, as a result of which NYSE Euronext will become a 
wholly owned subsidiary of Holdco (the ``Merger''). In the Merger, each 
outstanding share of NYSE Euronext common stock will be converted into 
the right to receive 0.47 of a fully paid and non-assessable Holdco 
Share. NYSE Euronext's obligation to complete the Merger is subject to 
the completion of the Exchange Offer and the acquisition by Holdco of 
all of the Deutsche B[ouml]rse shares validly tendered and not 
withdrawn in the Exchange Offer. The completion of the Exchange Offer 
(and, therefore, the completion of the Merger) is subject to the 
satisfaction of a number of conditions, including that Deutsche 
B[ouml]rse shares representing at least 75% of the Deutsche B[ouml]rse 
shares outstanding, on a fully diluted basis, must be validly tendered 
and not withdrawn in the Exchange Offer, and that holders of a majority 
of the outstanding shares of NYSE Euronext shall have adopted the 
Combination Agreement. Both of these conditions have been satisfied.

[[Page 65250]]

    Following the completion of the Exchange Offer, and depending on 
the percentage of Deutsche B[ouml]rse shares acquired by Holdco in the 
Exchange Offer, Deutsche B[ouml]rse and Holdco intend to complete a 
post-completion reorganization pursuant to which Holdco will enter into 
a domination agreement or a combination of a domination agreement and a 
profit and loss transfer agreement, pursuant to which the remaining 
shareholders of Deutsche B[ouml]rse will have limited rights, including 
a limited ability to participate in the profits of Deutsche B[ouml]rse.
    Holdco expects the Combination will create a group that will be 
both a world leader in derivatives and risk management and the premier 
global venue for capital raising, with a truly global franchise and 
presence in many of the world's financial centers including New York, 
London, Frankfurt, Paris and Luxembourg. This global presence should 
facilitate providing world-class services to global and local customers 
worldwide. Following the Combination, Holdco and its subsidiaries 
(together, the ``Holdco Group'') expect to serve as a benchmark 
regulatory model, facilitating transparency and harmonization of 
capital markets globally, while continuing to operate all national 
exchanges under local regulatory frameworks and their respective brand 
names.
2. Overview of the Holdco Group Following the Combination
    Following the Combination, Holdco will be a for-profit, publicly 
traded corporation formed under the laws of The Netherlands and will 
act as the holding company for the businesses of NYSE Euronext and 
Deutsche B[ouml]rse. Holdco will hold all of the equity interests in 
NYSE Euronext, which holds (1) 100% of the equity interest of NYSE 
Group (which, in turn, directly or indirectly holds 100% of the equity 
interests of the NYSE U.S. Regulated Subsidiaries) and (2) 100% of the 
equity interest of Euronext N.V. (which, in turn, directly or 
indirectly holds 100% of the equity interests of trading markets in 
Belgium, France, the Netherlands, Portugal and the United Kingdom). 
Holdco will also hold a majority of the equity interests in Deutsche 
B[ouml]rse, which indirectly holds 50% of the equity interest of ISE 
Holdings (which, in turn, holds (1) 100% of the equity interest of the 
Exchange and (2) 31.54% of the equity interest of Direct Edge 
Holdings). Direct Edge Holdings indirectly holds 100% of the equity 
interest of EDGA and EDGX. Holdco intends to list its ordinary shares 
on the New York Stock Exchange, the Frankfurt Stock Exchange and 
Euronext Paris. The Holdco Group will have dual headquarters in 
Frankfurt and New York.
    After the Combination, NYSE Group will continue to be directly 
wholly owned by NYSE Euronext and will continue to directly or 
indirectly own the three NYSE Exchanges--NYSE, NYSE Arca and NYSE 
Amex--which provide marketplaces where investors buy and sell listed 
companies' common stock and other securities as well as equity options 
and securities traded on the basis of unlisted trading privileges. NYSE 
Regulation, Inc., an indirect not-for-profit subsidiary of NYSE Group, 
oversees FINRA's performance of certain market surveillance and 
enforcement functions for NYSE Euronext's U.S. securities exchanges, 
enforces listed company compliance with applicable standards, and 
oversees regulatory policy determinations, rule interpretation and 
regulation related rule development.
    In Europe, NYSE Euronext, Deutsche B[ouml]rse and their respective 
subsidiaries own several European exchanges, including trading 
operations on regulated and non-regulated markets for cash products in 
Germany, France, Belgium, The Netherlands, and Portugal and derivatives 
in the United Kingdom and in the five above-mentioned locations. As a 
result, the activities of the NYSE Euronext and Deutsche B[ouml]rse 
European markets are or may be subject to the jurisdiction and 
authority of a number of European regulators, including the German 
Federal Financial Supervisory Authority (Bundesanstalt f[uuml]r 
Finanzdienstleistungsaufsicht), the Hessian Exchange Supervisory 
Authority, the Dutch Minister of Finance, the French Minister of the 
Economy, the French Financial Market Authority (Autorit[eacute] des 
March[eacute]s Financiers), the French Prudential Supervisory Authority 
(Autorit[eacute] de Contr[ocirc]le Prudentiel), the Netherlands 
Authority for the Financial Markets (Autoriteit Financi[euml]le 
Markten), the Belgian Financial Services and Markets Authority 
(Autorit[eacute] des Services et March[eacute]s Financiers), the 
Portuguese Securities Market Commission (Comiss[atilde]o do Mercado de 
Valores Mobili[aacute]rios--CMVM) and the U.K. Financial Services 
Authority (FSA).
    Other than certain modifications described herein, the current 
corporate structure, governance and self-regulatory independence and 
separation of the Exchange will be preserved. Specifically, after the 
Combination, ISE Holdings' businesses and assets will continue to be 
structured as follows:
     The Exchange will remain a direct wholly owned subsidiary 
of ISE Holdings and an indirect 50% owned subsidiary of Deutsche 
B[ouml]rse.
     The Combination will have no effect on the ability of any 
party to trade securities on the Exchange, EDGX or EDGA.
    Similarly, Deutsche B[ouml]rse and its subsidiaries, and NYSE 
Euronext and its subsidiaries, will continue to conduct their regulated 
activities in the same manner as they are currently conducted, with any 
changes subject to the relevant approvals of their respective European 
regulators and, in the case of the U.S. Regulated Subsidiaries, with 
any changes subject to the approval of the Commission.
    Holdco acknowledges that to the extent it becomes aware of possible 
violations of the rules of the Exchange, it will be responsible for 
referring such possible violations to the Exchange. In addition, Holdco 
will become a party to the agreement among Deutsche B[ouml]rse, Eurex 
Frankfurt, Eurex Z[uuml]rich, SIX (formerly SWX), SIX Group (formerly 
SWX Group), Verein SIX Swiss Exchange (formerly SWX Swiss Exchange), 
U.S. Exchange Holdings, Inc., ISE Holdings and the Exchange to provide 
for adequate funding for the Exchange's regulatory responsibilities.
3. Proposed Approval of Waiver of Voting and Ownership Restrictions of 
ISE Holdings
    Article FOURTH, Section III of the current ISE Holdings Certificate 
provides that (1) No person, either alone or together with its 
``related persons'' (as defined in the ISE Holdings Certificate), may 
be entitled to vote or cause the voting of shares of ISE Holdings at 
any time, directly, indirectly or pursuant to any voting trust, 
agreement, plan or other arrangement, to the extent that such shares 
represent more than 20% of the voting power of the then outstanding 
votes entitled to be cast on such matter; and (2) no person, either 
alone or together with its related persons, at any time, directly, 
indirectly or pursuant to any voting trust, may enter into any 
agreement, plan or other arrangement with any other person, either 
alone or together with its related persons, under circumstances which 
would result in the voting shares that shall be subject to such 
agreement, plan or other arrangement not being voted on any matter or 
matters or the withholding of any proxy relating thereto, where the 
effect of such agreement, plan or arrangement would be to enable any 
person, either alone or together with its related persons, to possess 
more than 20% of the voting power of the then

[[Page 65251]]

outstanding votes entitled to be cast on any such matter (the ``ISE 
Holdings Voting Restriction'').\16\ If any person, either alone or 
together with its related persons, acquires voting power in excess of 
the ISE Holdings Voting Restriction, the ISE Holdings board of 
directors must notify the ISE Trust and such ISE Holdings Voting 
Restriction shall result in the automatic transfer to the ISE Trust of 
a majority of the voting shares then outstanding pro rata from the 
holders thereof.
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    \16\ See Amended and Restated Certificate of Incorporation of 
ISE Holdings, Article FOURTH, Section III.
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    In addition, the ISE Holdings Certificate provides that no person, 
either alone or together with its related persons, may at any time of 
record or beneficially own, directly or indirectly, shares of ISE 
Holdings representing more than 40% of the then outstanding votes 
entitled to be cast on any matter and no person who is a member of the 
Exchange, either alone or together with its related person, may at any 
time of record or beneficially own, directly or indirectly, shares of 
ISE Holdings representing in the more than 20% of the then outstanding 
votes entitled to be cast on any matter (the ``ISE Holdings Ownership 
Restriction'').\17\ If any person, either alone or together with its 
related persons, owns shares of ISE Holdings in excess of the ISE 
Holdings Ownership Restriction, then the ISE Holdings board of 
directors must notify the ISE Trust and such ISE Holdings Ownership 
Restriction shall result in the automatic transfer to the ISE Trust of 
a majority of the voting shares then outstanding pro rata from the 
holders thereof.\18\
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    \17\ See Amended and Restated Certificate of Incorporation of 
ISE Holdings, Article FOURTH, Section III.
    \18\ See Amended and Restated Certificate of Incorporation of 
ISE Holdings, Article Fourth, Section III.
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    The ISE Holdings board of directors may waive the ISE Holdings 
Voting Restriction and the ISE Holdings Ownership Restriction pursuant 
to an amendment to the ISE Holdings Bylaws adopted by the ISE Holdings 
board of directors, if in connection with the adoption of such 
amendment, the board of directors in its sole discretion adopts a 
resolution stating that it is the determination of the board of 
directors that such amendment:
     Will not impair the ability of ISE Holdings and any of the 
DB U.S. Regulated Subsidiaries, or facility thereof, to carry out their 
respective responsibilities under the Exchange Act and the rules and 
regulations thereunder;
     is otherwise in the best interest of ISE Holdings, its 
stockholders and the DB U.S. Regulated Subsidiaries;
     will not impair the Commission's ability to enforce the 
Exchange Act;
     for so long as ISE Holdings directly or indirectly 
controls the Exchange, neither such person nor any of its related 
persons is an ISE Member, EDGA Member or EDGX Member; and
     neither such person nor any of its related persons is 
subject to any ``statutory disqualification'' (as such term is defined 
in Section 3(a)(39) of the Exchange Act).\19\
---------------------------------------------------------------------------

    \19\ See Amended and Restated Certificate of Incorporation of 
ISE Holdings, Article Fourth, Section III, and Amended and Restated 
Bylaws of ISE Holdings, Article XI.
---------------------------------------------------------------------------

    Such amendment shall not be effective unless it has been filed with 
and approved by the Commission under Section 19(b) of the Exchange Act 
\20\ and has become effective thereunder.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b).
---------------------------------------------------------------------------

    In order to allow Holdco to indirectly own 50% of the outstanding 
common stock of ISE Holdings upon consummation of the Combination, 
Holdco has delivered written notice to the board of directors of ISE 
Holdings pursuant to the procedures set forth in the ISE Holdings 
Certificate requesting approval of its voting and ownership of ISE 
Holdings shares in excess of the ISE Holdings Voting Restriction and 
the ISE Holdings Ownership Restriction. Among other things, in this 
notice, Holdco represented to the board of directors of ISE Holdings 
that neither it, nor any of its related persons, is (1) An ISE Member; 
(2) EDGA Member; (3) EDGX Member; or (4) subject to any ``statutory 
disqualification.''
    At a meeting duly convened on September 16, 2011, the board of 
directors of ISE Holdings adopted the ISE Holdings Bylaws Amendment to 
permit Holdco, either alone or together with its related persons, to 
exceed the ISE Holdings Ownership Restriction and the ISE Holdings 
Voting Restriction. In adopting such amendment, the board of directors 
of ISE Holdings made the necessary determinations set forth above and 
approved the submission of this Proposed Rule Change to the Commission. 
The Exchange will continue to operate and regulate its market and 
members exactly as it has done prior to the Combination. Except as set 
forth in this Proposed Rule Change, the Exchange is not proposing any 
amendments to its trading or regulatory rules.
    With respect to the ability of the Commission to enforce the 
Exchange Act as it applies to the Exchange after the Combination, the 
Exchange will operate in the same manner following the Combination as 
it operates today.\21\ Thus, the Commission will continue to have 
plenary regulatory authority over the Exchange, as is the case 
currently with the Exchange. As described in the following sections of 
this filing, the Exchange is proposing certain provisions of the Holdco 
Articles that will create an ownership structure that will provide the 
Commission with appropriate oversight tools to ensure that the 
Commission will have the ability to enforce the Exchange Act with 
respect to each U.S. Regulated Subsidiary, its direct and indirect 
parent entities and its directors, officers, employees and agents to 
the extent they are involved in the activities of such U.S. Regulated 
Subsidiary.
---------------------------------------------------------------------------

    \21\ The Exchange has been informed by NYSE Euronext, EDGA and 
EDGX that the NYSE U.S. Regulated Subsidiaries, EDGA and EDGX, 
respectively, are also expected to operate in the same manner 
following the Combination as they operate today. This is addressed 
in the separate proposed rule change filed by each of the NYSE 
Exchanges, EDGA and EDGX.
---------------------------------------------------------------------------

    The ISE Holdings board of directors also determined that ownership 
of ISE Holdings by Holdco is in the best interests of ISE Holdings, its 
shareholders and the DB U.S. Regulated Subsidiaries. With respect to 
the interests of the DB U.S. Regulated Subsidiaries, the board of 
directors of ISE Holdings has noted, among other things, its 
expectation that the Combination would over time create substantial 
incremental efficiency and growth opportunities and that the Holdco 
Group is expected to be a leader in a diverse set of large and growing 
businesses, including derivatives, listings, cash equities, post-trade 
settlement and asset servicing, market data and technology servicing.
    In addition, neither Holdco, nor any of its related persons, is (1) 
An ISE Member; (2) an EDGA Member; (3) an EDGX Member; or (4) subject 
to any ``statutory disqualification.''
    An extract with the relevant provisions of the ISE Holdings Bylaws 
Amendment is attached as Exhibit 5A to the Proposed Rule Change and can 
be found on the Exchange's Web site and the Commission's Web site.
    The Exchange hereby requests that the Commission approve the ISE 
Holdings Bylaws Amendment and allow Holdco, either alone or with its 
related persons, to indirectly own 50% of the outstanding common stock 
of ISE Holdings upon and following the consummation of the Combination.

[[Page 65252]]

4. Proposed Amendments to Ownership and Voting Restrictions After the 
Combination
Overview
    The Exchange is proposing that, effective as of the completion of 
the Combination, the Holdco Articles would contain voting and ownership 
restrictions that restrict any person, either alone or together with 
its related persons, from having voting control over Holdco shares 
entitling the holder thereof to cast more than 20% of the votes 
entitled to be cast on any matter or beneficially owning Holdco shares 
representing more than 40% of the outstanding votes that may be cast on 
any matter (except that a 20% ownership restriction would apply to any 
person who is a NYSE Member, an Amex Member, an ETP Holder, an OTP 
Holder, an OTP Firm, an ISE Member, an EDGA Member or an EDGX Member).
    In addition, the Exchange is proposing that, effective as of the 
Combination, the voting and ownership restrictions currently in the ISE 
Holdings Certificate and the ISE Holdings Bylaws, as well as the 
related waiver provisions set forth therein, would remain in effect, 
except that they would be modified in certain respects as described 
herein.\22\
---------------------------------------------------------------------------

    \22\ The current voting and ownership restrictions contained in 
the certificate of incorporation of ISE Holdings, as well as the 
related provisions contained in the amended and restated bylaws of 
U.S. Exchange Holdings and the board resolutions of Deutsche 
B[ouml]rse, Eurex Frankfurt AG and other indirect parent entities of 
the Exchange, would remain in effect. The ISE Trust would also 
remain unaltered and would continue to have rights to enforce these 
restrictions.
---------------------------------------------------------------------------

Voting and Ownership Restrictions in Holdco Articles
    Under the Proposed Rule Change, the Holdco Articles would provide 
that no person, either alone or together with its related persons, will 
be entitled to vote or cause the voting of a number of shares of 
Holdco, in person or by proxy or through any voting agreement or other 
arrangement, which represent in the aggregate (1) More than 20% of the 
then outstanding votes entitled to be cast on such matter; or (2) more 
than 20% of the then outstanding votes entitled to be cast on any such 
matter by virtue of agreements or arrangements entered into with other 
persons to refrain from voting shares of Holdco (the ``Holdco Voting 
Restriction'').\23\ The Holdco Articles would provide that Holdco will 
be required to disregard any votes purported to be cast in excess of 
the Holdco Voting Restriction.
---------------------------------------------------------------------------

    \23\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 34.1.
---------------------------------------------------------------------------

    In addition, the Holdco Articles would provide that any person who, 
either alone or together with its related persons, beneficially owns 
Holdco shares which represent in the aggregate more than 40% of the 
outstanding votes entitled to be cast on any matter (except that a 20% 
restriction would apply to any person who is a NYSE Member, an Amex 
Member, an ETP Holder, an OTP Holder, an OTP Firm, an ISE Member, an 
EDGA Member or an EDGX Member) (the ``Holdco Ownership Restriction''), 
will be obligated to offer for sale and to transfer a number of Holdco 
shares necessary so that such person, together with its related 
persons, beneficially owns a number of Holdco shares that complies with 
the Holdco Ownership Restriction (the ``Holdco Transfer 
Obligation'').\24\ If such person(s) fails to comply with the Holdco 
Transfer Obligation within two weeks, Holdco will be irrevocably 
authorized to act on behalf of such person(s) in order to ensure 
compliance with the Holdco Transfer Obligation.\25\
---------------------------------------------------------------------------

    \24\ See Form of Deed of Amendment to Holdco Articles of 
Association, Articles 35.1 and 35.4.
    \25\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 35.7.
---------------------------------------------------------------------------

    Furthermore, the Holdco Articles would provide that in the event 
any person, either alone or together with its related persons, exceeds 
the Holdco Ownership Restriction (any such person(s), a ``Non-Compliant 
Owner''), the Non-Compliant Owner would cease to have certain rights to 
the extent that its shareholding exceeds the Holdco Ownership 
Restriction. Specifically, the Non-Compliant Owner's rights to vote, to 
attend general meetings of Holdco shareholders and to receive dividends 
or other distributions attached to such shares in excess of the Holdco 
Ownership Restriction would be suspended for so long as the Holdco 
Ownership Restriction is exceeded.\26\
---------------------------------------------------------------------------

    \26\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 35.6.
---------------------------------------------------------------------------

    Pursuant to Section 2:87a of the Dutch Civil Code, the Non-
Compliant Owner may request that an independent expert be appointed to 
determine the value of the Holdco shares, but such expert will have 
discretion to determine that the value of the shares is equal to the 
price received for the shares by the Non-Compliant Owner on any stock 
exchange where the Holdco shares are listed.\27\
---------------------------------------------------------------------------

    \27\ See Form of Deed of Amendment to Holdco Articles of 
Association, Articles 35.5.
---------------------------------------------------------------------------

    The voting and ownership restrictions will apply to each person 
unless it (1) Delivers to the Holdco board of directors a written 
notice of its intention to acquire voting power or ownership in excess 
of the relevant limitation, and such notice is delivered at least 45 
days (or such shorter period as the Holdco board of directors expressly 
consents to) prior to acquiring Holdco shares in excess of the Holdco 
Voting Restriction or Holdco Ownership Restriction, and (2) obtains a 
written confirmation from the Holdco board of directors that the board 
has expressly resolved to permit such voting or ownership, and (3) such 
resolution has been filed with, and approved by, the Commission under 
Section 19(b) of the Exchange Act and filed with, and approved by, the 
relevant European regulators having appropriate jurisdiction and 
authority.\28\ The Holdco board of directors may waive the Holdco 
Voting Restriction and Holdco Ownership Restriction if it makes certain 
determinations, which will be consistent with the determinations 
currently required to be made by the board of directors of NYSE 
Euronext and ISE Holdings in order to waive the voting and ownership 
restrictions in the NYSE Euronext Certificate and the ISE Holdings 
Certificate, respectively.\29\
---------------------------------------------------------------------------

    \28\ See Form of Deed of Amendment to Holdco Articles of 
Association, Articles 34.2 and 35.2.
    \29\ See Form of Deed of Amendment to Holdco Articles of 
Association, Articles 34.3 and 35.3.
---------------------------------------------------------------------------

5. Additional Matters To Be Addressed in the Holdco Articles \30\
---------------------------------------------------------------------------

    \30\ The Holdco Articles will set forth certain restrictions and 
requirements relating to Holdco's European subsidiaries and 
applicable European regulatory matters, which will be substantially 
consistent with the analogous restrictions and requirements 
applicable with respect to Holdco's U.S. Regulated Subsidiaries and 
U.S. regulatory matters.
---------------------------------------------------------------------------

Jurisdiction Over Individuals
    Under the Proposed Rule Change, the Holdco Articles would provide 
that Holdco and its directors, and to the extent that they are involved 
in the activities of the U.S. Regulated Subsidiaries, (x) Holdco's 
officers, and (y) those of its employees whose principal place of 
business and residence is outside the United States, would be deemed to 
irrevocably submit to the jurisdiction of the U.S. federal courts and 
the Commission for the purposes of any suit, action or proceeding 
pursuant to the U.S. federal securities laws, and the rules and 
regulations thereunder, commenced or initiated by the Commission 
arising out of, or relating to, the activities of the U.S. Regulated 
Subsidiaries.\31\ The Holdco Articles would also provide that, with 
respect to any such suit,

[[Page 65253]]

action, or proceeding brought by the Commission, Holdco and its 
directors, officers and employees would (1) Be deemed to agree that 
NYSE Group may serve as U.S. agent for purposes of service of process 
in such suit, action, or proceeding relating to NYSE Group or any of 
its subsidiaries, and ISE Holdings may serve as the U.S. agent for 
proceedings relating to ISE Holdings or any of its subsidiaries; and 
(2) be deemed to waive, and agree not to assert by way of motion, as a 
defense or otherwise, in any such suit, action, or proceeding, any 
claims that it or they are not personally subject to the jurisdiction 
of the Commission, that the suit, action, or proceeding is an 
inconvenient forum or that the venue of the suit, action, or proceeding 
is improper, or that the subject matter thereof may not be enforced in 
or by the U.S. federal courts or the Commission.\32\
---------------------------------------------------------------------------

    \31\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(c).
    \32\ See id.
---------------------------------------------------------------------------

    In addition, the Holdco Articles would provide that, so long as 
Holdco directly or indirectly controls any U.S. Regulated Subsidiary, 
the directors, officers and employees of Holdco will be deemed to be 
directors, officers and employees of such U.S. Regulated Subsidiaries 
for purposes of, and subject to oversight pursuant to, the Exchange 
Act.\33\
---------------------------------------------------------------------------

    \33\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(f).
---------------------------------------------------------------------------

    The Holdco Articles would provide that Holdco will take reasonable 
steps necessary to cause its directors, officers and employees, prior 
to accepting a position as an officer, director or employee, as 
applicable, of Holdco to agree and consent in writing to the 
applicability to them of these jurisdictional and oversight provisions 
with respect to their activities related to any U.S. Regulated 
Subsidiary.\34\ The Holdco Articles would also provide that no person 
may be a director of Holdco unless he or she has agreed and consented 
in writing to the applicability to him or her of these jurisdictional 
and oversight provisions with respect to his or her activities related 
to any U.S. Regulated Subsidiary.\35\ Furthermore, Holdco would sign an 
irrevocable agreement and consent for the benefit of each U.S. 
Regulated Subsidiary \36\ that it will comply with these provisions in 
the Holdco Articles.
---------------------------------------------------------------------------

    \34\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(m).
    \35\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 14.11.
    \36\ The form of Holdco's agreement and consent is attached as 
Exhibit 5C to this Proposed Rule Change.
---------------------------------------------------------------------------

    The Exchange anticipates that the functions and activities of each 
U.S. Regulated Subsidiary generally will be carried out by the officers 
and directors of such U.S. Regulated Subsidiary, each of whom the 
Commission has direct authority over pursuant to Section 19(h)(4) of 
the Exchange Act.\37\
---------------------------------------------------------------------------

    \37\ 15 U.S.C. 78s(h)(4).
---------------------------------------------------------------------------

Access to Books and Records
    Under the Proposed Rule Change, the Holdco Articles would provide 
that for so long as Holdco directly or indirectly controls any U.S. 
Regulated Subsidiary, the books, records and premises of Holdco will be 
deemed to be the books, records and premises of such U.S. Regulated 
Subsidiaries for purposes of, and subject to oversight pursuant to, the 
Exchange Act.\38\ In addition, the Holdco Articles would provide that 
Holdco's books and records will at all times be made available for 
inspection and copying by the Commission, and any U.S. Regulated 
Subsidiary to the extent they are related to the activities of such 
U.S. Regulated Subsidiary or any other U.S. Regulated Subsidiary over 
which such U.S. Regulated Subsidiary has regulatory authority or 
oversight.\39\ In addition, Holdco's books and records related to the 
U.S. Regulated Subsidiaries will be maintained within the United 
States, except that to the extent that books and records may relate to 
both European subsidiaries and U.S. Regulated Subsidiaries, Holdco may 
maintain such books and records either in the home jurisdiction of one 
or more European subsidiaries or in the United States.\40\
---------------------------------------------------------------------------

    \38\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(f).
    \39\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(e).
    \40\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(g).
---------------------------------------------------------------------------

Additional Matters
    Under the Proposed Rule Change, the Holdco Articles would provide 
that Holdco will comply with the U.S. federal securities laws and the 
rules and regulations thereunder, and will cooperate with the 
Commission and with the U.S. Regulated Subsidiaries pursuant to and to 
the extent of their respective regulatory authority.\41\ In addition, 
Holdco would be required to take reasonable steps necessary to cause 
its agents to cooperate with the Commission and, where applicable, the 
U.S. Regulated Subsidiaries pursuant to their regulatory authority.\42\ 
The Holdco Articles would also provide that, in discharging his or her 
responsibilities as a member of the Holdco board of directors or as an 
officer or employee of Holdco, each such director, officer or employee 
will (a) comply with the U.S. federal securities laws and the rules and 
regulations thereunder; (b) cooperate with the Commission; and (c) 
cooperate with the U.S. Regulated Subsidiaries pursuant to and to the 
extent of their regulatory authority (but this provision will not 
create any duty owed by any director, officer or employee of Holdco to 
any person to consider, or afford any particular weight to, any such 
matters or to limit his or her consideration to such matters).\43\
---------------------------------------------------------------------------

    \41\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(a).
    \42\ See id.
    \43\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(l).
---------------------------------------------------------------------------

    The Holdco Articles would also provide that all confidential 
information that comes into the possession of Holdco pertaining to the 
self-regulatory function of any U.S. Regulated Subsidiary will (a) not 
be made available to any persons other than to those officers, 
directors, employees and agents of Holdco that have a reasonable need 
to know the contents thereof; (b) be retained in confidence by Holdco 
and the officers, directors, employees and agents of Holdco; and (c) 
not be used for any commercial purposes.\44\ In addition, the Holdco 
Articles would provide that these obligations regarding such 
confidential information will not be interpreted so as to limit or 
impede (i) the rights of the Commission or the relevant U.S. Regulated 
Subsidiary to have access to and examine such confidential information 
pursuant to the U.S. federal securities laws and the rules and 
regulations thereunder; or (ii) the ability of any officers, directors, 
employees or agents of Holdco to disclose such confidential information 
to the Commission or any U.S. Regulated Subsidiary.\45\
---------------------------------------------------------------------------

    \44\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(h).
    \45\ See id.
---------------------------------------------------------------------------

    Additionally, the Holdco Articles would provide that, for so long 
as Holdco directly or indirectly controls any U.S. Regulated 
Subsidiary, Holdco and its directors, officers and employees will give 
due regard to the preservation of the independence of the self-
regulatory function of such U.S. Regulated Subsidiary and to its 
obligations to investors and the general public, and will not take any 
actions that would interfere with the effectuation of any decisions by 
the board of directors or managers of such U.S. Regulated Subsidiary 
relating to its regulatory responsibilities (including enforcement and 
disciplinary matters) or that would interfere with the ability of such 
U.S. Regulated Subsidiary to

[[Page 65254]]

carry out its responsibilities under the Exchange Act.\46\
---------------------------------------------------------------------------

    \46\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(i).
---------------------------------------------------------------------------

    Finally, the Holdco Articles would provide that each director of 
Holdco would, in discharging his or her responsibilities, to the 
fullest extent permitted by applicable law, take into consideration the 
effect that Holdco's actions would have on the ability of (a) the U.S. 
Regulated Subsidiaries to carry out their responsibilities under the 
Exchange Act; and (b) the U.S. Regulated Subsidiaries, NYSE Group, ISE 
Holdings and Holdco to (1) Engage in conduct that fosters and does not 
interfere with the ability of the U.S. Regulated Subsidiaries, NYSE 
Group, ISE Holdings and Holdco to prevent fraudulent and manipulative 
acts and practices in the securities markets; (2) promote just and 
equitable principles of trade in the securities markets; (3) foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities; (4) remove impediments to and 
perfect the mechanisms of a free and open market in securities and a 
U.S. national securities market system; and (5) in general, protect 
investors and the public interest.\47\ This requirement would not, 
however, create any duty owed by any director, officer or employee of 
Holdco to any person to consider, or afford any particular weight to, 
any of the foregoing matters or to limit his or her consideration to 
such matters.\48\
---------------------------------------------------------------------------

    \47\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(k).
    \48\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(k).
---------------------------------------------------------------------------

    In addition, the Holdco Articles would provide that Holdco will 
take reasonable steps necessary to cause its officers, directors and 
employees, prior to accepting a position as an officer, director or 
employee, as applicable, of Holdco to agree and consent in writing to 
the applicability to them of these provisions of the Holdco Articles 
with respect to their activities related to any U.S. Regulated 
Subsidiary.\49\ The Holdco Articles would also provide that no person 
may be a director of Holdco unless he or she has agreed and consented 
in writing to the applicability to him or her of these provisions with 
respect to his or her activities related to any U.S. Regulated 
Subsidiary.\50\
---------------------------------------------------------------------------

    \49\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 3.2(m).
    \50\ See Form of Deed of Amendment to Holdco Articles of 
Association, Article 14.11.
---------------------------------------------------------------------------

    Holdco would also sign an irrevocable agreement and consent for the 
benefit of each U.S. Regulated Subsidiary that it will comply with 
provisions in the Holdco Articles regarding (1) Cooperation with the 
Commission and such U.S. Regulated Subsidiaries; (2) compliance with 
U.S. federal securities laws; (3) inspection and copying of Holdco's 
books, records and premises; (4) Holdco's books, records, premises, 
officers, directors and employees being deemed to be those of U.S. 
Regulated Subsidiaries; (5) maintenance of books and records in the 
United States; (6) confidentiality of information regarding the U.S. 
Regulated Subsidiaries' self-regulatory function; (7) preservation of 
the independence of the self-regulatory function of the U.S. Regulated 
Subsidiaries; and (8) taking reasonable steps to cause Holdco's 
officers, directors and employees to consent to the applicability to 
them of the Holdco Articles. The form of Holdco's agreement and consent 
is attached as Exhibit 5C to this Proposed Rule Change.
Amendments to the Holdco Articles
    Under the Proposed Rule Change, the Holdco Articles would provide 
that, before any amendment to or repeal of any provision of the Holdco 
Articles may become effectuated by means of a notarial deed of 
amendment, the same will be submitted to the board of directors of each 
U.S. Regulated Subsidiary (or the boards of directors of their 
successors) and if any or all of such boards of directors determine 
that the same must be filed with, or filed with and approved by, the 
Commission before the same may be effective under Section 19 of the 
Exchange Act and the rules promulgated thereunder, then the same will 
not be effective until filed with, or filed with and approved by, the 
Commission, as the case may be. These requirements would also apply to 
any action by Holdco that would have the effect of amending or 
repealing any provision of the Holdco Articles.
Holdco Director Independence Policy
    Under the Proposed Rule Change, Holdco would adopt the Holdco 
Independence Policy in the form attached hereto as Exhibit 5D, which 
would be substantially similar to the current Independence Policy of 
the NYSE Euronext board of directors. The Proposed Rule Change filed by 
the NYSE in connection with the combination describes the Holdco 
Independence Policy as it relates to the current Independence Policy of 
the NYSE Euronext board of directors.\51\
---------------------------------------------------------------------------

    \51\ See File No. SR-NYSE-2011-51.
---------------------------------------------------------------------------

6. Statutory Basis
    The Exchange believes that this filing is consistent with Section 
6(b) \52\ of the Exchange Act in general, and furthers the objectives 
of Section 6(b)(1) \53\ in particular, in that it enables the Exchange 
to be so organized as to have the capacity to be able to carry out the 
purposes of the Exchange Act and to comply, and to enforce compliance 
by its exchange members and persons associated with its exchange 
members, with the provisions of the Exchange Act, the rules and 
regulations thereunder, and the rules of the Exchange. With respect to 
the ability of the Commission to enforce the Exchange Act as it applies 
to the Exchange after the Combination, the Exchange will operate in the 
same manner following the Combination as it operates today. Thus, the 
Commission will continue to have plenary regulatory authority over the 
Exchange, as is the case currently with the Exchange. The Proposed Rule 
Change is consistent with and will facilitate an ownership structure 
that will provide the Commission with appropriate oversight tools to 
ensure that the Commission will have the ability to enforce the 
Exchange Act with respect to each U.S. Regulated Subsidiary, its direct 
and indirect parent entities and its directors, officers, employees and 
agents to the extent they are involved in the activities of such U.S. 
Regulated Subsidiary.
---------------------------------------------------------------------------

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

    The Exchange also believes that this filing furthers the objectives 
of Section 6(b)(5) \54\of the Exchange Act because the Proposed Rule 
Change summarized herein would be consistent with and facilitate a 
governance and regulatory structure that is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to, and perfect the mechanism of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest. The Exchange expects that 
the Combination will position the Holdco Group to be a leader in a 
diverse set of large and growing businesses, including derivatives, 
listings, cash equities, post-trade settlement and asset servicing, 
market data and technology servicing. The Exchange believes this will 
enable the Holdco Group to leverage

[[Page 65255]]

technology and a unique collection of markets to create a mutually 
reinforcing capital markets community driving efficiencies and 
innovation for clients and efficient, transparent and well-regulated 
markets for issuers and clients. As a true pacesetter across the 
spectrum of capital markets services, the Holdco Group would be 
positioned to offer clients global scale, product innovation, 
operational and capital efficiencies and an enhanced range of 
technology and market information solutions.
---------------------------------------------------------------------------

    \54\ 15 U.S.C. 78(f)(b)(5).
---------------------------------------------------------------------------

    In addition, the Exchange expects that the Holdco Group would be 
positioned to serve as a benchmark regulatory model, facilitating 
transparency and standardization in capital markets globally, while 
continuing to operate all national exchanges under local regulatory 
frameworks.

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

    The Exchange does not believe that the Proposed Rule Change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act.

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

    The Exchange has neither solicited nor received written comments on 
the Proposed Rule Change.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (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 the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change 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-ISE-2011-69 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-ISE-2011-69. 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You 
shouldsubmit only information that you wish to make available publicly. 
All submissions should refer to File Number SR-ISE-2011-69 and should 
be submitted on or before November 10, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\55\
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    \55\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-27195 Filed 10-19-11; 8:45 am]
BILLING CODE 8011-01-P