Document ID: SEC-2017-0606-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2017-04-14T04:00Z

[Federal Register Volume 82, Number 71 (Friday, April 14, 2017)]
[Notices]
[Pages 18051-18058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07532]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80419; File No. SR-NYSEMKT-2017-17]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Amending 
the Certificate of Incorporation and Bylaws of Its Ultimate Parent 
Company, Intercontinental Exchange, Inc.

April 10, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 28, 2017, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. On April 6,

[[Page 18052]]

2017, the Exchange filed Amendment No. 1 to the proposal.\4\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as modified by Amendment No. 1, from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ Amendment No. 1 clarifies that ICE is a public company 
listed on the NYSE and that the word ``indirect'' is proposed to be 
deleted from clause (iii)(y) of the first sentence of Section 
2.13(b) of ICE's bylaws.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the certificate of incorporation and 
bylaws of its ultimate parent company, Intercontinental Exchange, Inc. 
(``ICE''), to (1) update and streamline references to ICE subsidiaries 
that either are or control national securities exchanges and delete 
references to other subsidiaries of ICE; (2) eliminate an obsolete 
cross-reference in ICE's certificate of incorporation to its bylaws and 
make a technical correction to a cross-reference within the bylaws; (3) 
make certain simplifying or clarifying changes in ICE's bylaws relating 
to the location of stockholder meetings, quorum requirements, and 
requirements applicable to persons entitled to nominate directors or 
make proposals at a meeting of ICE's stockholders; and (4) replace 
obsolete references in the bylaws to the Vice Chair with references to 
the lead independent director. The proposed rule change is available on 
the Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend ICE's Third Amended and Restated 
Certificate of Incorporation (the ``ICE Certificate'') and Seventh 
Amended and Restated Bylaws (the ``ICE Bylaws'') to (1) update and 
streamline references to ICE subsidiaries that either are or control 
national securities exchanges and delete references to other 
subsidiaries of ICE; (2) eliminate an obsolete cross-reference in the 
ICE Certificate to the ICE Bylaws and make a technical correction to a 
cross-reference within the ICE Bylaws; (3) make certain simplifying or 
clarifying changes in the ICE Bylaws relating to the location of 
stockholder meetings, quorum requirements, and requirements applicable 
to persons entitled to nominate directors or make proposals at a 
meeting of ICE's stockholders; and (4) replace obsolete references in 
the ICE Bylaws to the Vice Chair with references to the lead 
independent director.
    ICE owns 100% of the equity interest in Intercontinental Exchange 
Holdings, Inc. (``ICE Holdings''), which in turn owns 100% of the 
equity interest in NYSE Holdings LLC (``NYSE Holdings''). NYSE Holdings 
owns 100% of the equity interest of NYSE Group, Inc. (``NYSE Group''), 
which in turn directly owns 100% of the equity interest of the Exchange 
and its national securities exchange affiliates, the New York Stock 
Exchange LLC (``NYSE''), NYSE Arca, Inc. (``NYSE Arca'') and NYSE 
National, Inc. (``NYSE National'').\5\
---------------------------------------------------------------------------

    \5\ ICE is a publicly traded company listed on the NYSE. The 
Exchange's affiliates NYSE, NYSE Arca, and NYSE National have each 
submitted substantially the same proposed rule change to propose the 
changes described herein. See SR-NYSE-2017-13, SR-NYSEArca-2017-29, 
and SR-NYSENAT-2017-01.
---------------------------------------------------------------------------

ICE Certificate
    The Exchange proposes to amend the limitations on voting and 
ownership in Article V of the ICE Certificate to update and streamline 
references to ICE subsidiaries that are national securities exchanges 
or that control national securities exchanges, as well as to delete 
references to other subsidiaries of ICE. In addition, it proposes to 
revise the amendment provision in Article X of the ICE Certificate to 
remove an obsolete reference.
Limitations on Voting and Ownership
    Article V of the ICE Certificate establishes voting limitations and 
ownership concentration limitations on owners of ICE common stock above 
certain thresholds for so long as ICE owns any U.S. Regulated 
Subsidiary. By reference to the ICE Bylaws, ``U.S. Regulated 
Subsidiaries'' is defined to mean the four national securities 
exchanges owned by ICE (the Exchange, NYSE, NYSE Arca, and NYSE 
National), NYSE Arca, LLC, and NYSE Arca Equities, Inc. (``NYSE Arca 
Equities''), or their successors, in each case to the extent that such 
entities continue to be controlled, directly or indirectly, by ICE.\6\
---------------------------------------------------------------------------

    \6\ ICE Certificate, Article V, Section A.10; ICE Bylaws, 
Article III, Section 3.15. NYSE Arca, LLC, is a subsidiary of NYSE 
Group, and NYSE Arca Equities is a subsidiary of NYSE Arca.
---------------------------------------------------------------------------

    Article V of the ICE Certificate also authorizes ICE's Board of 
Directors to grant exceptions to the voting and ownership concentration 
limitations if the Board of Directors makes certain determinations. 
Those include determinations that such an exception would not impair 
the ability of ICE, the U.S. Regulated Subsidiaries, ICE Holdings, NYSE 
Holdings, and NYSE Group to perform their respective responsibilities 
under the Exchange Act and the rules and regulations thereunder, and 
that such an exception is otherwise in the best interests of ICE, its 
stockholders and the U.S. Regulated Subsidiaries.
    NYSE MKT proposes to amend Article V to replace references to the 
U.S. Regulated Subsidiaries with references to the ``Exchanges.'' An 
``Exchange'' would be defined as a national securities exchange 
registered under Section 6 of the Exchange Act \7\ that is directly or 
indirectly controlled by ICE.\8\ Accordingly, Article V would no longer 
include references to NYSE Arca, LLC or NYSE Arca Equities. NYSE MKT 
believes omitting such entities is appropriate because the Exchange Act 
definition of ``exchange'' states that ``exchange'' ``includes the 
market place and the market facilities maintained by such exchange.'' 
\9\ In addition, NYSE Arca, as the national securities exchange, has 
the regulatory and self-regulatory responsibility for the NYSE Arca 
options and equities markets.\10\ Moreover, the proposed change would 
align Article V with voting and ownership concentration limits in the 
certificates of incorporation of other publicly traded companies that 
own one or more national securities exchanges,

[[Page 18053]]

which do not include references to subsidiaries other than national 
securities exchanges.\11\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ See proposed Fourth Amended and Restated Certificate of 
Incorporation of Intercontinental Exchange, Inc. (``Proposed ICE 
Certificate''), Article V, Section A.3(a).
    \9\ 15 U.S.C. 78c(a)(1).
    \10\ See NYSE Arca Equities Rule 3.4 (``The NYSE Arca, Inc. 
(`NYSE Arca Parent'), as a self-regulatory organization registered 
with the Securities and Exchange Commission pursuant to Section 6 of 
the Exchange Act, shall have ultimate responsibility in the 
administration and enforcement of rules governing the operation of 
its subsidiary, NYSE Arca Equities, Inc. (`Corporation')''). See 
also NYSE Arca Equities Rule 14.1.
    \11\ See Second Amended and Restated Certificate of 
Incorporation of CBOE Holdings, Inc. (``CBOE Certificate''), Article 
Sixth, Sections (a)(ii)(A) and (b)(ii)(A) (referencing ``Regulated 
Securities Exchange Subsidiaries''); and Amended and Restated 
Certificate of Incorporation of Bats Global Markets, Inc. (``Bats 
Certificate''), Article Fifth, Section (b)(i) and (ii) (referencing 
``Exchanges'').
---------------------------------------------------------------------------

    As noted above, Article V of the ICE Certificate authorizes ICE's 
Board of Directors to grant exceptions to the voting and ownership 
concentration limitations if it makes certain determinations. Such 
determinations include that the proposed exception would not impair the 
ability of ICE Holdings, NYSE Holdings and NYSE Group to perform their 
respective responsibilities under the Exchange Act and the rules and 
regulations thereunder.\12\ NYSE MKT proposes to amend Article V to 
replace the references to ICE Holdings, NYSE Holdings and NYSE Group 
with the defined term ``Intermediate Holding Companies.''
---------------------------------------------------------------------------

    \12\ ICE Certificate, Article V, Sections A.3(a)(i) and 
B.3(a)(i).
---------------------------------------------------------------------------

    Finally, Article V includes lengthy provisions listing the 
different categories of members and permit holders of each of the NYSE, 
NYSE MKT and NYSE Arca.\13\ NYSE MKT proposes to use a new defined 
term, ``Member,'' to mean a person that is a ``member'' of an Exchange 
within the meaning of Section 3(a)(3)(A) of the Exchange Act.\14\ NYSE 
MKT believes that using ``Member'' in place of the list of categories 
of members and permit holders would simplify the provisions and avoid 
Exchange-by-Exchange descriptions without substantive change. Each of 
the categories listed--an ETP Holder of NYSE Arca Equities (as defined 
in the NYSE Arca Equities rules of NYSE Arca); an OTP Holder or OTP 
Firm of NYSE Arca (each as defined in the rules of NYSE Arca); a 
``member'' or ``member organization'' of NYSE (as defined in the rules 
of the NYSE) and NYSE MKT \15\--is a ``member'' of an exchange within 
the meaning of Section 3(a)(3)(A) of the Exchange Act.\16\
---------------------------------------------------------------------------

    \13\ See ICE Certificate, Article V, Section A.3(c)(ii) and 
(d)(ii) and Section A.9.
    \14\ 15 U.S.C. 78c(a)(3)(A).
    \15\ See id.
    \16\ 15 U.S.C. 78c(a)(3)(A).
---------------------------------------------------------------------------

    More specifically, the revised ICE Certificate would require, in 
the case of a person seeking approval to exercise voting rights in 
excess of 20% of the outstanding votes, that neither such person nor 
any of its related persons be a Member of an Exchange, instead of 
referring to the different categories of membership recognized by each 
Exchange.\17\ Similarly, the conditions relating to a person seeking 
approval to exceed the ownership concentration limitation would be 
rephrased in the same way.\18\ Use of ``Member'' would permit a 
simplification, without substantive change, of the portion of the 
definition of the term ``Related Persons'' relating to members and 
trading permit holders.\19\
---------------------------------------------------------------------------

    \17\ See Proposed ICE Certificate, Article V, Section A.3(c)(ii) 
and (d)(ii).
    \18\ See Proposed ICE Certificate, Article V, Section B.3(d).
    \19\ See Proposed ICE Certificate, Article V, Section A.10. For 
the current definition of ``Related Persons,'' see ICE Certificate, 
Article V, Section A.9.
---------------------------------------------------------------------------

    NYSE MKT believes that the use of ``Member'' and the changes to 
remove the Exchange-by-Exchange lists of categories of Members would be 
appropriate because it would align the provision in the ICE Certificate 
with voting and ownership concentration limits in the certificates of 
incorporation of other publicly traded companies that own one or more 
national securities exchanges, which use a similar description of 
membership.\20\
---------------------------------------------------------------------------

    \20\ See Bats Certificate, Article Fifth, Sections (a)(ii)(D) 
and (E) (defining an ``Exchange Member'' as ``a Person that is a 
registered broker or dealer that has been admitted to membership in 
any national securities exchange registered under Section 6 of the 
Act with the Securities and Exchange Commission . . . that is a 
direct or indirect subsidiary of'' Bats Global Markets, Inc.); and 
CBOE Certificate, Article Sixth, Sections (a)(ii)(C)(y) and 
(b)(ii)(D) (defining a ``Trading Permit Holder'' ``as defined in the 
Bylaws of any Regulated Securities Exchange Subsidiary as they may 
be amended from time to time'').
---------------------------------------------------------------------------

    To implement the proposed changes, NYSE MKT proposes the following 
amendments to Article V of the ICE Certificate:
     In Article V, Section A.1, the text ``any U.S. Regulated 
Subsidiary (as defined below)'' would be replaced with ``a national 
securities exchange registered under Section 6 of the Securities 
Exchange Act of 1934, as amended (the `Exchange Act').''
     In Article V, Section A.2, the text ``Securities Exchange 
Act of 1934, as amended (the `Exchange Act'),'' would be replaced with 
``Exchange Act.''
     In Article V, Section A.3(a), the text ``U.S. Regulated 
Subsidiary'' would be replaced with the text ``national securities 
exchange registered under Section 6 of the Exchange Act that is 
directly or indirectly controlled by the Corporation (each such 
national securities exchange so controlled, an `Exchange'), any entity 
controlled by the Corporation that is not itself an Exchange but that 
directly or indirectly controls an Exchange (each such controlling 
entity, an `Intermediate Holding Company') or''; the text ``, 
Intercontinental Exchange Holdings, Inc. (`ICE Holdings'), NYSE 
Holdings LLC (`NYSE Holdings') or NYSE Group, Inc. (`NYSE Group') (if 
and to the extent that NYSE Group continues to exist as a separate 
entity)'' would be deleted; and ``the U.S. Regulated Subsidiaries'' 
would be replaced with ``each Exchange.''
     In Article V, Section A.3(c), ``and'' would be added 
between (i) and (ii); the text ``NYSE Arca, Inc. (`NYSE Arca') or NYSE 
Arca Equities, Inc. (`NYSE Arca Equities') or any facility of NYSE 
Arca'' would be replaced with ``one or more Exchanges''; and the text 
``a Member (as defined below) of any Exchange'' would replace the text 
from ``an ETP Holder (as defined in the NYSE Arca Equities rules of 
NYSE Arca'' through the end of the paragraph.
     In Article V, Section A.3(d), ``and'' would be added 
between (i) and (ii); the text ``NYSE Arca or NYSE Arca Equities or any 
facility of NYSE Arca'' would be replaced with ``one or more 
Exchanges''; and the text ``a Member of any Exchange'' would replace 
the text from ``an ETP Holder'' through the end of the paragraph.
     The definition of ``Member'' would be added as new Article 
V, Section A.8, defined to ``mean a Person that is a `member' of an 
Exchange within the meaning of Section 3(a)(3)(A) of the Exchange 
Act.'' Article V, Sections A.8 and A.9 would be renumbered as Sections 
A.9 and A.10, respectively.
     In Article V, Section A.9 (which would be renumbered 
A.10), the definition of the term ``Related Person'' would be 
simplified to eliminate the Exchange-by-Exchange definition, as 
follows:
     In Section A.10(d), the text `` `member organization' (as 
defined in the rules of New York Stock Exchange, as such rules may be 
in effect from time to time), any `member' (as defined in the rules of 
New York Stock Exchange, as such rules may be in effect from time to 
time)'' would be replaced with ``Member, any Person'';
     In Section A.10(e), the text ``an OTP Firm, any OTP Holder 
that is associated with such Person'' would be replaced with ``natural 
person and is a Member, any broker or dealer that is also a Member with 
which such Person is associated'';
     ``and'' would be added between Sections A.10(g) and (h); 
and
     Sections A.10(i) through (l) would be deleted.
     The definition of ``U.S. Regulated Subsidiary'' and ``U.S. 
Regulated Subsidiaries'' in Article V, Section A.10 would be deleted.

[[Page 18054]]

     In Article V, Section B.1, the term ``Exchange'' would 
replace the term ``U.S. Regulated Subsidiary.''
     In Article V, Section B.3(a), the text ``Exchange, 
Intermediate Holding Company or'' would replace the text ``U.S. 
Regulated Subsidiaries,''; the text ``ICE Holdings, NYSE Holdings or 
NYSE Group (if and to the extent that NYSE Group continues to exist as 
a separate entity)'' would be deleted; and ``each Exchange'' would 
replace ``the U.S. Regulated Subsidiaries.''
     In Article V, Section B.3(d), the text ``NYSE Arca or NYSE 
Arca Equities or any facility of NYSE Arca'' would be replaced with 
``any Exchange''; and the text ``an ETP Holder'' through the end of the 
paragraph would be replaced with ``a Member of any Exchange.''
     The word ``and'' would be added between Article V, Section 
B.3(c) and (d); and Article V, Section B.3(e) and (f) would be deleted.
Amendments
    In addition to the amendments to Article V, NYSE MKT proposes to 
amend Article X (Amendments) of the ICE Certificate.
    Clause (A) of Article X requires the vote of 80% of all outstanding 
shares entitled to vote in order to reduce the voting requirement set 
forth in Section 11.2(b) of the ICE Bylaws. However, Section 11.2(b) of 
the ICE Bylaws was deleted in 2015 after the sale by ICE of the 
Euronext business.\21\ Accordingly, NYSE MKT proposes to delete the 
requirement.
---------------------------------------------------------------------------

    \21\ See Securities Exchange Act Release No. 74930 (May 12, 
2015), 80 FR 28315 (May 18, 2015) (SR-NYSEMKT-2015-32).
---------------------------------------------------------------------------

    Clause (B) of Article X currently requires that, so long as ICE 
controls any of the U.S. Regulated Subsidiaries, any proposed amendment 
or repeal of any provision of the ICE Certificate must be submitted to 
the boards of the NYSE, NYSE Market, NYSE Regulation, NYSE Arca, NYSE 
Arca Equities, and NYSE MKT for a determination as to whether such 
amendment or repeal must be filed with the Commission under Section 19 
of the Exchange Act.\22\ NYSE MKT proposes that, in Clause (B) of 
Article X, the text ``of the U.S. Regulated Subsidiaries'' would be 
replaced with ``Exchange''; and ``New York Stock Exchange, NYSE Market, 
NYSE Regulation, Inc., NYSE Arca, NYSE Arca Equities and NYSE MKT'' 
would be replaced with ``each Exchange.'' NYSE MKT believes that the 
use of ``Exchange'' is appropriate for the reasons discussed above.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78s.
---------------------------------------------------------------------------

Additional Changes
    The ICE Certificate includes references to NYSE Market (DE), Inc., 
defined as ``NYSE Market,'' and NYSE Regulation, Inc. (``NYSE 
Regulation''). NYSE Market and NYSE Regulation were previously parties 
to a Delegation Agreement whereby the NYSE delegated certain regulatory 
functions to NYSE Regulation and certain market functions to NYSE 
Market. The Delegation Agreement was terminated when the NYSE re-
integrated its regulatory and market functions. As a result, the two 
entities ceased being regulated subsidiaries.\23\ NYSE Regulation was 
subsequently merged out of existence. The proposed changes described 
above would delete all references to NYSE Market and NYSE Regulation 
from the ICE Certificate.\24\
---------------------------------------------------------------------------

    \23\ See Securities Exchange Act Release No. 75991 (September 
28, 2015), 80 FR 59837 (October 2, 2015 (SR-NYSE-2015-27).
    \24\ See ICE Certificate Article V, Sections A.3(c)(iii) and 
(d)(iii) and Section B.3(e), and Article X, clause (B).
---------------------------------------------------------------------------

    Finally, conforming changes would be made to the title, recitals 
and signature line of the ICE Certificate.
ICE Bylaws
    The Exchange proposes to make certain amendments to the ICE Bylaws 
to correspond to the proposed amendments to the ICE Certificate. In 
addition, the Exchange proposes to amend the ICE Bylaws to make certain 
changes relating to the location of stockholder meetings, quorum 
requirements, and requirements applicable to persons entitled to 
nominate directors or make proposals at a meeting of ICE's 
stockholders. Finally, it proposes to replace obsolete references to 
the Vice Chair with references to the lead independent director.
Changes Corresponding to the Proposed Amendments to the ICE Certificate
    The Exchange proposes to make changes to the ICE Bylaws 
corresponding to the proposed amendments to the ICE Certificate, as 
described above.
    First, NYSE MKT proposes to use ``Exchanges'' in place of ``U.S. 
Regulated Subsidiaries,'' as in the proposed changes to the ICE 
Certificate. Accordingly, it proposes to make the following changes:
     The definition of ``U.S. Regulated Subsidiary'' in Section 
3.15 would be deleted and replaced with a definition of ``Exchange'' 
that is the same as the definition in the proposed amended ICE 
Certificate.
     In Section 3.14(a)(2), the text ``U.S. Regulated 
Subsidiaries, NYSE Group, Inc. (``NYSE Group'') (if and to the extent 
that NYSE Group continues to exist as a separate entity), NYSE Holdings 
LLC (``NYSE Holdings''), Intercontinental Exchange Holdings, Inc. (`ICE 
Holdings')'' would be replaced with ``Exchanges, any entity controlled 
by the Corporation that is not itself an Exchange but that directly or 
indirectly controls an Exchange (each such controlling entity, an 
`Intermediate Holding Company')''; and the text ``U.S. Regulated 
Subsidiaries, NYSE Group (if and to the extent that NYSE Group 
continues to exist as a separate entity), NYSE Holdings, ICE Holdings'' 
would be replaced with ``Exchanges, Intermediate Holding Companies.''
     In Section 3.14(b)(3), the text ``the U.S. Regulated 
Subsidiaries'' and ``their'' would be replaced with ``each Exchange'' 
and ``its,'' respectively.
     In Article VII, ``the U.S. Regulated Subsidiaries'' would 
be replaced with ``any Exchange.''
     In Sections 3.14(a)(1), 8.1, 8.2, 8.3(b), 8.4, 9.1, 9.2, 
9.3 and 11.3, the text ``U.S. Regulated Subsidiary'' and ``of the U.S. 
Regulated Subsidiaries'' would be replaced with ``Exchange'' and the 
text ``U.S. Regulated Subsidiaries'' would be replaced with 
``Exchanges.''
     In Sections 8.2(b), 8.4, 9.1, and 9.3, the text ``the U.S. 
Regulated Subsidiaries'' and ``U.S. Regulated Subsidiaries'' would be 
replaced with ``an Exchange.''
     In Section 9.3, the text ``the U.S. Regulated 
Subsidiaries'' would be replaced with ``each Exchange''; ``U.S. 
Regulated Subsidiary's'' would be replaced with ``Exchange's''; and 
``their respective'' would be replaced with ``its.''
     In Section 8.1, the text ``New York Stock Exchange LLC, 
NYSE Arca, Inc., NYSE Arca Equities, Inc., NYSE MKT LLC and NYSE 
National, Inc. or their successors'' would be replaced with ``any 
Exchange.'' Similarly, in Section 11.3, the text ``New York Stock 
Exchange LLC, NYSE Arca, Inc., NYSE Arca Equities, Inc., NYSE MKT LLC 
and NYSE National, Inc. or the boards of directors of their 
successors'' would be replaced with ``each Exchange.''
     In Sections 8.1 and 8.2, the defined term ``U.S. 
Subsidiaries' Confidential Information'' would be replaced with 
``Exchange Confidential Information,'' with the same meaning except 
limited to Exchanges.
     In Section 8.3(b), the text ``U.S. Regulated Subsidiary or 
any other U.S. Regulated Subsidiary over which such U.S. Regulated 
Subsidiary has regulatory authority or oversight'' would

[[Page 18055]]

be replaced with ``Exchange.'' The proposed change would remove the 
current provision that allows any U.S. Regulated Subsidiary to inspect 
the books and records of another U.S. Regulated Subsidiary over which 
the first has regulatory authority or oversight. As a result, the ICE 
Bylaws would no longer provide that NYSE Arca may inspect the books and 
records of NYSE Arca Equities or NYSE Arca, LLC. However, the proposed 
change would have no substantive effect, because NYSE Arca would retain 
its authority pursuant to NYSE Arca Equities Rules 14.1 and 14.3.\25\ 
The national securities exchanges NYSE, NYSE MKT, NYSE Arca and NYSE 
National do not have regulatory authority or oversight over each other.
---------------------------------------------------------------------------

    \25\ NYSE Arca Equities Rule 14.1(b) provides, among other 
things, that the books and records of NYSE Arca Equities are subject 
to the oversight of the NYSE Arca pursuant to the Act, and that the 
books and records of NYSE Arca Equities shall be subject at all 
times to inspection and copying by NYSE Arca. NYSE Arca Equities 
Rule 14.3(a) provides, among other things, that the books and 
records of NYSE Arca, LLC are deemed to be the books and records of 
NYSE Arca and NYSE Arca Equities for purposes of and subject to 
oversight pursuant to the Exchange Act. See also CBOE Holdings, Inc. 
Certificate of Incorporation, Article Fifteenth (providing that the 
books and records of a Regulated Securities Exchange Subsidiary 
shall be subject at all times to inspection by such subsidiary).
---------------------------------------------------------------------------

    Article XII of the ICE Bylaws was added in connection with the 
acquisition of NYSE National, previously National Stock Exchange, Inc., 
in 2016.\26\ The Exchange proposes to delete Article XII of the ICE 
Bylaws in its entirety. Because the substance of Article XII would be 
addressed by the proposed amendments to the ICE Certificate, Article 
XII would no longer be necessary. Specifically,
---------------------------------------------------------------------------

    \26\ See Securities Exchange Act Releases No. 79902 (January 30, 
2017) 82 FR 9258 (February 3, 2017) (SR-NSX-2016-16); and 79901 
(January 30, 2017), 82 FR 9251 (February 3, 2017) (SR-NYSE-2016-90, 
SR-NYSEArca2016-167, SR-NYSEMKT-2016-122).
---------------------------------------------------------------------------

     the substance of Section 12.1(a)(1) of the ICE Bylaws 
would be addressed in revised Article V, Section A.3.(c)(ii) of the ICE 
Certificate;
     the substance of Section 12.1(a)(2) of the ICE Bylaws 
would be addressed in revised Article V, Section A.3.(d)(ii) of the ICE 
Certificate;
     the substance of Section 12.1(b) of the ICE Bylaws would 
be addressed in revised Article V, Section B.3.(d) of the ICE 
Certificate; and
     the substance of Section 12.2 of the ICE Bylaws would be 
addressed in revised Article X(B) of the ICE Certificate.
Meetings of Stockholders
    In addition to the proposed changes corresponding to the proposed 
amendments to the ICE Certificate, the Exchange proposes to amend 
several sections of Article II (Meetings of Stockholders).
    The Exchange proposes to simplify Section 2.1 of the ICE Bylaws, 
which relates to the location of stockholder meetings. The revised 
provision would provide that, as is true now, the location, if any, as 
well as the decision to hold a stockholder meeting solely by remote 
communication, would be determined by the Board of Directors and stated 
in the notice of meeting. The proposed changes are as follow:
     The first sentence would be revised to remove the text 
``for the election of directors'', ``in the City of Atlanta, State of 
Georgia,'' and ``as may be fixed from time to time by the Board of 
Directors, or at such other place.'' The text ``as shall be designated 
from time to time by the Board of Directors and stated in the notice of 
the meeting.'' would be deleted and ``or may'' would be added in its 
place. The second sentence would be deleted in its entirety.
     In the third sentence, the text ``The Board of Directors 
may, in its sole discretion, determine that any meeting of stockholders 
shall'' and ``as authorized by law'' would be deleted. The word 
``solely'' would be added after ``instead be held'' and the text ``, in 
each case as may be designated by the Board of Directors from time to 
time and stated in the notice of meeting'' added to the end of the 
sentence.
    Section 2.7 relates to the quorum for stockholder meetings. The 
Exchange proposes to conform the quorum requirements in the ICE Bylaws 
to those in the ICE Certificate. To do so, it proposes to delete the 
first three sentences of Section 2.7 and replace it with the sentence 
``Section B of Article IX of the certificate of incorporation sets 
forth the requirements for establishing a quorum at meetings of 
stockholders of the Corporation.''
    Section 2.13(b) sets forth the advance notice requirements for 
stockholder proposals. The Exchange proposes to make the following 
changes to Section 2.13(b).
     In addition to stockholders of record, the ICE Bylaws 
permit certain beneficial holders (defined as ``Nominee Holders'') to 
nominate directors or bring other matters for consideration before the 
Board of Directors meeting. The Exchange proposes to make simplifying 
wording changes in clause (iii) of the first sentence of Section 
2.13(b), as follows:
     In clause (x), the text ``stockholder that holds of record 
stock of the Corporation'' would be amended so that it read [sic] 
``stockholder of record.''
     In clause (y), the following text would be deleted: 
``holds such''; `` `street name' ''; ``of such stock and can 
demonstrate to''; ``indirect''; ``of, and such Nominee Holder's''; and 
the comma before ``such stock on such matter.'' The revised clause 
would read as follows: ``is a person (a `Nominee Holder') that 
beneficially owns stock of the Corporation through a nominee or other 
holder of record and provides the Corporation with proof of such 
beneficial ownership, including the entitlement to vote such stock on 
such matter.''
     In the current third and fourth sentences of Section 
2.13(b), the term ``indirect ownership'' would be changed to 
``beneficial ownership'' for consistency.
     The Exchange proposes to add a new defined term, 
``Proponent,'' to capture both stockholders and Nominee Holders. 
Accordingly:
     A new sentence would be added to Section 2.13(b)(iii) 
between the first and second sentences, stating that ``Stockholders and 
Nominee Holders who bring matters before the annual meeting pursuant to 
Section 2.13(b)(iii) are hereinafter referred to as `Proponents'.''
     Throughout Section 2.13(b), ``stockholder,'' 
``stockholders'' and ``stockholder's'' would be replaced with 
``Proponent,'' ``Proponents'' and ``Proponent's,'' respectively.
     Throughout Section 2.13(b), ``Proponent'' would replace 
the phrases ``stockholder or beneficial owner,'' ``stockholder, by such 
beneficial owner,'' ``stockholder, such beneficial owner,'' 
``stockholder and by such beneficial owner, if any,'' and ``stockholder 
or any beneficial owner on whose behalf a nomination or nominations are 
being made or business or matter is being proposed.'' The word 
``Proponent's'' would replace the phrase ``stockholder's or such 
beneficial owner's.''
     Presently, the requirement for disclosing share ownership 
appears three times: In the current third sentence, which sets forth 
the provisions for stockholder notices relating to director 
nominations, the current fourth sentence, which sets forth the 
provisions for stockholder notices relating to other matters, and the 
current fifth sentence, which sets forth the information that a 
shareholder must include in any stockholder notice. Rather than keep 
the duplication, Exchange proposes to remove the

[[Page 18056]]

requirement from the third and fourth sentences and retain the 
requirement in clause (i) of the fifth sentence. Accordingly, the text 
``, the number and class of all shares of each class of stock of the 
Corporation owned of record and beneficially by such stockholder'' 
would be deleted from the current third and fourth sentences.
     In the current fourth sentence, the requirement that a 
stockholder notice include information regarding any material interest 
in the matter proposed ``(other than as a stockholder)'' would be 
clarified by adding ``or beneficial owner of stock'' after 
``stockholder'' within the parenthetical, because a Proponent who is a 
nominee holder is not a stockholder.
     In clause (i) of the current fifth sentence, the text 
``such Proponent or'' would be added before ``any Associated Person.''
     Clause (i) of the current sixth sentence sets forth the 
meaning of ``Associated Person.'' The Exchange proposes to narrow the 
text to eliminate all beneficial owners of stock held of record or 
beneficially by the Proponent from the definition, and instead to cover 
only those beneficial owners on whose behalf the stockholder notice is 
being delivered. Accordingly, the Exchange proposes to replace the text 
``stockholder or any beneficial owner on whose behalf a nomination or 
nominations are being made or business or matter is being proposed,'' 
with ``Proponent'' and, in clause (i)(x), replace the text ``owned of 
record or beneficially by such stockholder or by such beneficial 
owner'' with ``on whose behalf such Proponent is delivering a 
Stockholder Notice.''
Additional Proposed Changes
    In addition to the changes proposed above, the Exchange proposes to 
amend several additional sections of the ICE Bylaws.
    The ICE Bylaws refer to a ``Vice Chairman of the Board.'' However, 
the Board of Directors of ICE has not had a Vice Chairman since the 
sale of the Euronext business in 2014. Accordingly, in Sections 2.9, 
3.6(b) and 3.8, the Exchange proposes to replace ``Vice Chairman of the 
Board'' with ``lead independent director.'' As a result, the lead 
independent director would preside over meetings of stockholders in the 
absence of the Chairman of the Board (Section 2.9), have the authority 
to call a special meeting of the Board of Directors (Section 3.6(b)) 
and would preside over meetings of the Board of Directors in the 
absence of the Chairman of the Board (Section 3.8).
    In Section 3.12, relating to the conduct of meetings of committees 
of the Board of Directors of ICE, a reference to ``Article II of these 
Bylaws'' would be corrected to read ``this Article III of these 
Bylaws.''
    Section 3.14 sets forth considerations directors must take into 
account in discharging their responsibilities as members of the board 
of directors. The Exchange proposes to amend the last sentence of 
Section 3.14(c), which limits claims against directors, officers and 
employees of ICE and against ICE. The revised text would be expanded in 
scope to apply to any ``past or present stockholder, employee, 
beneficiary, agent, customer, creditor, community or regulatory 
authority or member thereof or other person or entity,'' and to protect 
agents of ICE as well as directors, officers and employees. These 
changes would conform the provision to the analogous statement in the 
governing documents of other holding companies of national securities 
exchanges, which are substantially similar.\27\
---------------------------------------------------------------------------

    \27\ See Amended and Restated Bylaws of Bats Global Markets, 
Inc., Article XII, Section 12.01; Amended and Restated Limited 
Liability Company Agreement of BOX Holdings Group LLC, Article 4, 
Section 4.12; Bylaws of IEX Group, Inc., Section 34; and Amended and 
Restated Bylaws of Miami International Holdings, Inc., Article VII, 
Section 1.
---------------------------------------------------------------------------

    Finally, conforming changes would be made to the title and date of 
the ICE Bylaws.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act \28\ in general, and with Section 
6(b)(1) \29\ 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.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f(b).
    \29\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposed amendments 
to replace references to the U.S. Regulated Subsidiaries and to the 
NYSE, NYSE MKT, NYSE Arca, NYSE Arca Equities and NYSE Arca, LLC with 
references to an ``Exchange'' or the ``Exchanges,'' as appropriate, 
would contribute to the orderly operation of the Exchange by adding 
clarity and transparency to the Exchange's rules by eliminating 
references to entities that are not national securities exchanges in 
the ICE Certificate and ICE Bylaws. The Exchange Act definition of 
``exchange'' states that ``exchange'' ``includes the market place and 
the market facilities maintained by such exchange.'' \30\ Accordingly, 
all market places and market facilities maintained by an Exchange would 
fall within the definition of Exchange and therefore would fall within 
the scope of the ICE Certificate and ICE Bylaws. The Exchange notes 
that the proposed change would align Article V of the ICE Certificate 
with voting and ownership concentration limits in the certificates of 
incorporation of other publicly traded companies that own one or more 
national securities exchanges, which do not include references to 
subsidiaries other than national securities exchanges.\31\ NYSE Arca, 
as the national securities exchange, would retain the regulatory and 
self-regulatory responsibility for the NYSE Arca options and equities 
markets.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78c(a)(1).
    \31\ See note 11, supra.
---------------------------------------------------------------------------

    Similarly, as a result of the proposed use of ``Exchanges'' instead 
of ``U.S. Regulated Subsidiaries,'' ICE Bylaws Section 8.3 would no 
longer provide that any U.S. Regulated Subsidiary is authorized to 
inspect the books and records of another U.S. Regulated Subsidiary over 
which the first has regulatory authority or oversight, adding further 
clarity and transparency to the Exchange's rules.\32\
---------------------------------------------------------------------------

    \32\ As noted above, the ICE Bylaws would no longer provide that 
NYSE Arca may inspect the books and records of NYSE Arca Equities or 
NYSE Arca, LLC. However, the proposed change would have no 
substantive effect, because NYSE Arca would retain its authority 
pursuant to NYSE Arca Equities Rules 14.1 and 14.3. NYSE, NYSE MKT, 
NYSE Arca and NYSE National do not have regulatory authority or 
oversight over each other, and so the proposed change would have no 
effect on those entities' rights.
---------------------------------------------------------------------------

    Further, the proposed use of the defined term ``Member'' in place 
of the lists of categories of members and permit holders in Article V 
of the ICE Certificate would simplify the provisions without 
substantive change, thereby further adding clarity and transparency to 
the Exchange's rules and aligning the provision in the ICE Certificate 
with the voting and ownership concentration limits in the certificates 
of incorporation of other publicly traded companies that own one or 
more national securities exchanges, which use a similar description of 
membership.\33\ Similarly, the proposed use of the defined term 
``Intermediate Holding Company'' in place of the list of intermediate 
holding companies in Article V of the ICE Certificate and Section 3.14 
of the ICE Bylaws would

[[Page 18057]]

simplify the provisions without substantive change, thereby further 
adding clarity and transparency to the Exchange's rules.
---------------------------------------------------------------------------

    \33\ See note 20, supra.
---------------------------------------------------------------------------

    For similar reasons, the Exchange also believes that this filing 
furthers the objectives of Section 6(b)(5) of the Exchange Act \34\ 
because the proposed rule change would be consistent with and would 
create 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.
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the proposed amendments (1) replacing references to 
the U.S. Regulated Subsidiaries and to the NYSE, NYSE MKT, NYSE Arca, 
NYSE Arca Equities and NYSE Arca, LLC with references to an 
``Exchange'' or the ``Exchanges,'' as appropriate; (2) using ``Member'' 
in place of the lists of categories of members and permit holders in 
Article V of the ICE Certificate; (3) using ``Intermediate Holding 
Company'' in place of the list of intermediate holding companies in 
Article V of the ICE Certificate and Section 3.14 of the ICE Bylaws; 
and (4) removing the ability of a U.S. Regulated Subsidiary to inspect 
the books and records of other U.S. Regulated Subsidiaries in ICE 
Bylaws Section 8.3 would remove impediments to and perfect the 
mechanism of a free and open market by simplifying and streamlining the 
Exchange's rules, thereby ensuring that persons subject to the 
Exchange's jurisdiction, regulators, and the investing public can more 
easily navigate and understand the ICE governing documents.
    The Exchange believes that the proposed amendments to the last 
sentence of Section 3.14(c) of the ICE Bylaws, which limits claims 
against directors, officers and employees of ICE and against ICE, would 
remove impediments to, and perfect the mechanism of a free and open 
market and a national market system and, in general, protect investors 
and the public interest because the proposed changes would conform the 
provision to the analogous statement in the governing documents of 
other holding companies of national securities exchanges, which are 
substantially similar.\35\
---------------------------------------------------------------------------

    \35\ See Amended and Restated Bylaws of Bats Global Markets, 
Inc., Article XII, Section 12.01; Amended and Restated Limited 
Liability Company Agreement of BOX Holdings Group LLC, Article 4, 
Section 4.12; Bylaws of IEX Group, Inc., Section 34; and Amended and 
Restated Bylaws of Miami International Holdings, Inc., Article VII, 
Section 1.
---------------------------------------------------------------------------

    The Exchange believes that the proposed amendments to remove 
references to NYSE Market, NYSE Regulation and the Vice Chairman and to 
remove the cross reference to Section 11.2(b) of the ICE Bylaws from 
Article X of the ICE Certificate would remove impediments to, and 
perfect the mechanism of a free and open market and a national market 
system and, in general, protect investors and the public interest 
because the changes would eliminate obsolete references, thereby 
reducing potential confusion. Market participants and investors would 
not be harmed and in fact could benefit from the increased clarity and 
transparency in the ICE Certificate and ICE Bylaws. Such increased 
clarity and transparency would ensure that persons subject to the 
Exchange's jurisdiction, regulators, and the investing public can more 
easily navigate and understand the ICE governing documents.
    The Exchange believes that the proposed amendments to Article II of 
the ICE Bylaws, regarding meetings of stockholders, would also remove 
impediments to, and perfect the mechanism of a free and open market and 
a national market system and, in general, protect investors and the 
public interest because the changes would increase the clarity of the 
relevant sections of Article II, thereby reducing potential confusion. 
Market participants and investors would not be harmed and in fact could 
benefit from the increased clarity and transparency regarding the 
location of stockholder meetings and advance notice requirements, and 
the conformance of the quorum requirements with those in the ICE 
Certificate, and so would more easily navigate and understand the ICE 
Bylaws.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act. The proposed rule 
change is not designed to address any competitive issue but rather 
update and streamline the ICE Certificate and Bylaws, delete obsolete 
or unnecessary references and make other simplifying or clarifying 
changes to the ICE governing documents. The Exchange believes that the 
proposed rule change will serve to promote clarity and consistency, 
thereby reducing burdens on the marketplace and facilitating investor 
protection. The proposed rule change would result in no concentration 
or other changes of ownership of exchanges.

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

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

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

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

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as modified by Amendment No. 1, is consistent with the Act. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2017-17 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEMKT-2017-17. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/

[[Page 18058]]

rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street NE., Washington, DC 20549 on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. Copies of the filing 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-
NYSEMKT-2017-17 and should be submitted on or before May 5, 2017.
---------------------------------------------------------------------------

    \36\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-07532 Filed 4-13-17; 8:45 am]
 BILLING CODE 8011-01-P