Document ID: SEC-2013-0713-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2013-04-11T04:00Z

[Federal Register Volume 78, Number 70 (Thursday, April 11, 2013)]
[Notices]
[Pages 21650-21651]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08472]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69325; File No. SR-NYSEArca-2013-17]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of Proposed Rule Change Amending Its Rules To Reflect the 
Merger of NYSE Arca Holdings, Inc., An Intermediate Holding Company, 
Into and With NYSE Group, Inc., Thereby Eliminating NYSE Arca Holdings, 
Inc. From the Ownership Structure of the Exchange

April 5, 2013.

I. Introduction

    On February 7, 2013, NYSE Arca, Inc. (``NYSE Arca'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ 
proposed rule changes to reflect the merger of NYSE Arca Holdings, Inc. 
(``NYSE Arca Holdings''), an intermediate holding company, into and 
with NYSE Group, Inc. (``NYSE Group''), thereby eliminating NYSE Arca 
Holdings from the ownership structure of the Exchange (the ``Merger''). 
The proposed rule changes were published for comment in the Federal 
Register on February 26, 2013.\3\ The Commission received no comment 
letters on the proposal. The Commission has reviewed carefully the 
proposed rule changes and finds that the proposed rule changes are 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\4\ 
This order approves the proposed rule changes.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 68959 (February 20, 
2013), 78 FR 13103 (``Notice'').
    \4\ In approving the proposed rule changes, the Commission has 
considered their impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
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II. Description

    NYSE Euronext intends to merge NYSE Arca Holdings with and into 
NYSE Group, effective following approval of the proposed rule 
changes.\5\ According to the Exchange, the reason for the Merger is to 
eliminate an unnecessary intermediate holding company.\6\ Following the 
Merger, the Exchange would be wholly-owned by NYSE Group (as its two 
affiliate exchanges, New York Stock Exchange LLC (``NYSE'') and NYSE 
MKT LLC (``NYSE MKT''), are), which in turn would be wholly-owned by 
NYSE Euronext.
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    \5\ Currently, NYSE Arca Holdings, Inc. owns all of the equity 
interest of the Exchange. NYSE Group owns all of the equity interest 
of NYSE Arca Holdings. NYSE Euronext owns all of the equity interest 
of NYSE Group.
    \6\ See Notice, supra note 3, at 13103.
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    The Exchange has submitted its proposal to (i) delete in its 
entirety the Second Amended and Restated Certificate of NYSE Arca 
Holdings (the ``NYSE Arca Holdings Certificate''), (ii) delete in its 
entirety the Amended and Restated Bylaws of NYSE Arca Holdings (``NYSE 
Arca Holdings Bylaws''); (iii) amend the rules of NYSE Arca, Inc. 
(``NYSE Arca''); (iv) amend the Bylaws of NYSE Arca (``NYSE Arca 
Bylaws''); and (v) file the resolution (the ``Resolution'') of the 
Board of Directors of NYSE Arca (the ``NYSE Arca Board'') in connection 
with the Merger.
    Section 19(b) of the Act and Rule 19b-4 thereunder require a self-
regulatory organization (``SRO'') to file proposed rule changes with 
the Commission. Although NYSE Arca Holdings is not an SRO, the NYSE 
Arca Holdings Certificate and NYSE Arca Holdings Bylaws, along with 
other corporate documents, are rules of the Exchange \7\ and must be 
filed with the Commission pursuant to Section 19(b)(4) of the Act and 
Rule 19b-4 thereunder. Accordingly, the Exchange filed the NYSE Arca 
Holdings Certificate and NYSE Arca Holdings Bylaws with the Commission, 
along with other corporate governance documents.\8\
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    \7\ See Section 3(a)(27) of the Act, 15 U.S.C. 78c(a)(27).
    \8\ The Exchange proposes to delete the entirety of the Second 
Amended and Restated Certificate of Incorporation of NYSE Arca 
Holdings and the Amended and Restated Bylaws of NYSE Arca Holdings, 
attached as Exhibit A and Exhibit B, respectively, to the Notice. 
The Exchange also filed the proposed rule changes to its rules as 
the proposed Amended and Restated NYSE Arca Bylaws and rules, 
attached as Exhibit C and Exhibit D, respectively, to the Notice. 
The Exchange also filed the Resolution as Exhibit E to the Notice. 
These exhibits are available on the Commission's Web site (http://www.sec.gov/rules/sro.shtml) and at the Commission's Public 
Reference Room.
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    The proposed rule changes reflect the elimination of NYSE Arca 
Holdings from the Exchange's ownership structure and delete duplicative 
or obsolete text. For example, the Exchange proposes to replace 
references to NYSE Arca Holdings in Sections 2.01 and 3.13 of the NYSE 
Arca Bylaws with references to NYSE Group.\9\ The Exchange also 
proposes to delete Sections 2.02, 2.04 and 2.05 of the NYSE Arca Bylaws 
which relate to scheduling meetings of the Holding Member. The Exchange 
states that the Second Amended and Restated Bylaws of NYSE Group 
already include provisions for meetings of NYSE Group's stockholders 
and Board of Directors.\10\ The Exchange also represents that the 
operating agreements of the Exchange's affiliated SROs, the NYSE and 
NYSE MKT, do not contain provisions relating to annual meetings of NYSE 
Group.\11\
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    \9\ As a result of this change NYSE Group will replace NYSE Arca 
Holdings as the ``Holding Member'' for purposes of the NYSE Arca 
Bylaws.
    \10\ See Notice, supra note 3, at 13104.
    \11\ See id.
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    The Exchange proposes to amend Section 3.02(f) of the NYSE Arca 
Bylaws to provide that, except as otherwise provided in the NYSE Arca 
Bylaws or rules, the Holding Member shall nominate directors for 
election at the Holding Member's annual meeting.\12\ The Exchange notes 
that the NYSE Arca Bylaws and rules do not have any other provisions 
concerning the nomination of non-fair representation directors.\13\ 
Accordingly, this proposed rule change will not have any impact on the 
current process for the nomination and selection of fair representation 
directors of the Exchange and NYSE Arca Equities, Inc. (``NYSE Arca 
Equities'').\14\
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    \12\ Currently, Section 3.02(f) provides that ``[e]xcept as 
otherwise provided in these Bylaws or the Rules, the Nominating 
Committee of NYSE Arca Holdings, Inc. Holding Member shall nominate 
directors for election at the annual meeting of the Holding 
Member.''
    \13\ See Notice, supra note 3, at 13104.
    \14\ See Notice, supra note 3 at 13104.
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III. Discussion

    The Commission finds that the proposed rule changes are consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities

[[Page 21651]]

exchange.\15\ Specifically, the Commission finds that the proposal is 
consistent with Section 6(b)(5) of the Act,\16\ which requires, among 
other things, that the rules of a national securities exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in 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.
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    \15\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \16\ 15 U.S.C. 78f(b)(5).
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    The proposal would accommodate the merger of NYSE Arca Holdings, an 
intermediate holding company, into and with NYSE Group, thereby 
eliminating NYSE Arca Holdings from the ownership structure of the 
Exchange. The Commission notes that the proposed rule changes would 
otherwise have no substantive impact on other rules of the Exchange, 
including those concerning the nomination and selection of fair 
representation directors that currently apply to the Exchange. The 
Exchange would continue as an indirect wholly-owned subsidiary of NYSE 
Euronext. In addition, the Commission notes that the NYSE Arca Board 
made certain findings set forth in the Resolution that the proposed 
rule changes to NYSE Arca's Bylaws are consistent with the restrictions 
on amending NYSE Arca's Bylaws.\17\
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    \17\ See Resolution.
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    In light of these representations and findings, the Commission 
believes that the proposed rule changes are consistent with the Act and 
will not impair the ability of the Commission or the Exchange to 
discharge their respective responsibilities under the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\18\ that the proposed rule change (SR-NYSEArca-2013-17) be, and it 
hereby is, approved.
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    \18\ 15 U.S.C. 78s(b)(2).
    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08472 Filed 4-10-13; 8:45 am]
BILLING CODE 8011-01-P