Document ID: SEC-2015-1097-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2015-07-01T04:00Z

[Federal Register Volume 80, Number 126 (Wednesday, July 1, 2015)]
[Notices]
[Pages 37695-37698]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16089]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75301; File No. SR-NYSEMKT-2015-44]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending the Members' 
Schedule as Defined in the Amended and Restated Limited Liability 
Company Agreement of NYSE Amex Options LLC Dated as of May 14, 2014 in 
Order to Reflect Changes to the Capital Structure of the Company

June 25, 2015.
    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 June 17, 2015, 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 and II 
below, which Items have been prepared by the self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Members' Schedule (as defined in 
the Amended and Restated Limited Liability Company Agreement of NYSE 
Amex Options LLC (the ``Company'') dated as of May 14, 2014 (the ``LLC 
Agreement'')) in order to reflect changes to the capital structure of 
the Company based on two transactions (such amendment, the ``Proposed 
Rule Change''). The first transaction involved the issuance of Annual 
Incentive Shares (as defined in the Members Agreement (as defined 
below)) to the Founding Firms (as defined below) consistent with the 
formula set forth in Section 2.1 of that certain Amended and Restated 
Members Agreement, dated as of May 14, 2014, by and among the Company, 
NYSE MKT, NYSE Holdings LLC (formerly known as NYSE Euronext) (``NYSE 
Holdings''), NYSE Market (DE), Inc. (formerly known as NYSE Market, 
Inc.) (``NYSE Market (DE)''), Banc of America Strategic Investments 
Corporation (``BAML''), Barclays Electronic Commerce Holdings Inc. 
(``Barclays''), Citadel Securities LLC (``Citadel''), Citigroup 
Financial Strategies, Inc. (``Citigroup''), Goldman,

[[Page 37696]]

Sachs & Co. (``Goldman Sachs''), Datek Online Management Corp. (``TD 
Ameritrade'') and UBS Americas Inc. (``UBS'') (collectively, excluding 
the Company, NYSE MKT, NYSE Holdings and NYSE Market (DE), the 
``Founding Firms'') (the ``Members Agreement''). The second transaction 
will involve the transfer of Interests (as defined in the LLC 
Agreement) by the Founding Firms to NYSE Market (DE), an affiliate of 
the Exchange, as soon as reasonably practicable following June 15, 2015 
pursuant to Article XI of the LLC Agreement and Section 3.1 of the 
Members Agreement. The text of 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Members' Schedule as set forth 
herein. The amendment reflects changes to the capital structure of the 
Company due to (i) the issuance of Annual Incentive Shares to the 
Founding Firms pursuant to Section 2.1 of the Members Agreement and 
(ii) the transfer of Interests by the Founding Firms to NYSE Market 
(DE) pursuant to Article XI of the LLC Agreement and Section 3.1 of the 
Members Agreement.
Issuance of Annual Incentive Shares
    Pursuant to Section 2.1 of the Members Agreement, each year until 
this year (unless extended by the board of directors of the Company), 
the Company must issue a number of Class B Common Interests (as defined 
in the LLC Agreement) equal to thirty percent (30%) of the then-
outstanding Class B Common Interests as Annual Incentive Shares. These 
Annual Incentive Shares are allocated among the Members (as defined in 
the LLC Agreement) holding Class B Common Interests (such Members, the 
``Class B Members'') based on each Class B Member's contribution to the 
volume of the Exchange relative to such Class B Member's Individual 
Target (as defined in the Members Agreement). The Annual Incentive 
Shares may change the relative economic and voting rights among the 
Class B Members but have no effect on the relative economic and voting 
rights as between Members holding Class A Common Interests (as defined 
in the LLC Agreement) and Class B Members.
    Effective February 28, 2015, the Company issued 10.5456 Annual 
Incentive Shares in the aggregate to the Founding Firms (the ``Issuance 
of Annual Incentive Shares''). Five of the Founding Firms did not 
achieve their Individual Targets, which reduced the five Founding 
Firms' economic and voting interests in the Company relative to the 
other Founding Firms. In addition, because only two Founding Firms 
exceeded their Individual Targets, 1.0309 unallocated Reallocation 
Shares (as defined in the Members Agreement) were included in an 
Unearned Class B Shares Pool (as defined in the Members Agreement). In 
accordance with Section 2.2 of the Members Agreement, the board of 
directors of the Company allocated such Class B Shares between those 
two Founding Firms that exceeded their Individual Targets, effective 
February 28, 2015. The Exchange proposes to amend the Members' Schedule 
as set forth in Exhibit 5A attached hereto \4\ (marked against the 
Members' Schedule in effect prior to such issuance) to reflect the 
issuance of Annual Incentive Shares, including the allocation of the 
Reallocation Shares included in the Unearned Class B Shares Pool.
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    \4\ The Commission notes that Exhibit 5A is attached to the 
filing, not to this Notice.
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Founding Firm Transfer
    Pursuant to Article XI of the LLC Agreement and Section 3.1 of the 
Members Agreement, a Member may transfer Interests to a third party or 
to another Member in accordance with the conditions and limitations set 
forth therein. The Exchange is filing this Proposed Rule Change, in 
part, to provide notice that the Founding Firms collectively intend to 
transfer an aggregate equity interest [sic] 16.0000% in the Company to 
NYSE Market (DE), an affiliate of the Exchange (the ``Founding Firm 
Transfer''). Upon consummation of the Founding Firm Transfer and the 
acquisition by NYSE Market (DE) of the Class B Common Interests 
transferred by the Founding Firms, such Class B Common Interests will 
automatically convert into an appropriate number of Class A Common 
Interests.
    Immediately following the Founding Firm Transfer, NYSE MKT will own 
an equity interest of 47.2000% in the Company, NYSE Market (DE) will 
own an equity interest of 52.8000%, and the Founding Firms, 
collectively, will no longer have an equity interest in the Company. 
The Exchange proposes, upon consummation of the Founding Firm Transfer, 
to amend the Members' Schedule as set forth in Exhibit 5B attached 
hereto \5\ (marked against the Members' Schedule following the Issuance 
of Annual Incentive Shares) to reflect the Founding Firm Transfer.
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    \5\ The Commission notes that Exhibit 5B is attached to the 
filing, not to this Notice.
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2. Statutory Basis
    The Proposed Rule Change is consistent with Section 6(b) \6\ of the 
Act,\7\ in general, and furthers the objectives of Section 6(b)(1) \8\ 
of the Act, which requires a national securities exchange to be so 
organized and have the capacity to carry out the purposes of the Act 
and to comply, and to enforce compliance by its members and persons 
associated with its members, with the provisions of the Act, the rules 
and regulations promulgated thereunder and the rules of the Exchange. 
The Proposed Rule Change does not modify the Company's trading or 
compliance rules and preserves the existing mechanisms for ensuring the 
Exchange's and the Company's compliance with the Act, the rules and 
regulations promulgated thereunder and the rules of the Exchange. The 
Proposed Rule Change also retains NYSE MKT's regulatory control over 
the Company and the provisions specifically designed to ensure the 
independence of its self-regulatory function and to ensure that any 
regulatory determinations by NYSE MKT, as the Company's SRO, are 
controlling with respect to the actions and decisions of the Company.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78.
    \8\ 15 U.S.C. 78f(b)(1).
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    Additionally, the Proposed Rule Change continues to require the 
Company, its Members and its directors to comply with the federal 
securities laws and the rules and regulations promulgated thereunder 
and to engage in conduct that fosters and does not interfere with the 
Exchange's or the Company's ability to carry out its

[[Page 37697]]

respective responsibilities under the Act.
    The Proposed Rule Change is also consistent with, and furthers the 
objectives of, Section 6(b)(5) \9\ of the Act, in that it preserves all 
of NYSE MKT's existing rules and mechanisms 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 facilitating transactions in securities, to remove 
impediments to and perfect the mechanisms of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
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    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the Proposed Rule Change will 
have any impact on competition. The Proposed Rule Change solely relates 
to changes in the equity interests among the Members of the Company 
pursuant to provisions of the LLC Agreement and Members Agreement that 
have been previously filed and approved by the Commission. In addition, 
neither the Issuance of Annual Incentive Shares nor the Founding Firm 
Transfer implicates the Commission's policies with respect to 
permissible ownership. Furthermore, because the Proposed Rule Change 
does not affect the availability or pricing of any goods or services, 
the Proposed Rule Change will not affect competition either between the 
Exchange and others that provide the same goods and services as the 
Exchange or among market participants.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
Because the proposed rule change does not: (i) significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange stated that 
an immediate operative date is necessary to permit the efficient 
consummation of both the Issuance of Annual Incentive Shares and the 
Founding Firm Transfer. According to the Exchange, accomplishing the 
Founding Firm Transfer requires that the Members have certainty as to 
the amount of Common Interests owned by each, which in turn requires 
timely consummation of the Issuance of Annual Incentive Shares. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because such waiver would allow the Company to consummate the Issuance 
of Annual Incentive Shares and the Founding Firm Transfer in an 
efficient and predictable manner. Accordingly, the Commission hereby 
grants the Exchange's request and designates the proposal operative 
upon filing.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2015-44 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEMKT-2015-44. 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/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 such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make publicly available. All 
submissions should refer to File Number SR-NYSEMKT-2015-44 and should 
be submitted on or before July 22, 2015.
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    \16\ 17 CFR 200.30-3(a)(12).

[[Page 37698]]

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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-16089 Filed 6-30-15; 8:45 am]
BILLING CODE 8011-01-P