Document ID: SEC-2012-0851-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-05-31T04:00Z

[Federal Register Volume 77, Number 105 (Thursday, May 31, 2012)]
[Notices]
[Pages 32155-32157]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-13149]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67058; File No. SR-NYSEArca-2012-45]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Amending Its Rules To Reflect the Merger of 
Archipelago Holdings, Inc. (``Archipelago Holdings''), An Intermediate 
Holding Company, Into and With NYSE Group, Inc. (``NYSE Group''), 
Thereby Eliminating Archipelago Holdings From the Ownership Structure 
of the Exchange

May 24, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 14, 2012, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared 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

    The Exchange proposes to proposes to amend its rules to reflect the 
merger of Archipelago Holdings, Inc. (``Archipelago Holdings''), an 
intermediate holding company, into and with NYSE Group, Inc. (``NYSE 
Group''), thereby eliminating Archipelago Holdings from the ownership 
structure of the Exchange. 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 its rules to reflect the merger of 
Archipelago Holdings, an intermediate holding company, into and with 
NYSE Group, thereby eliminating Archipelago Holdings from the ownership 
structure of the Exchange.
    Currently, NYSE Arca Holdings owns 100% of the equity interest of 
the Exchange. Archipelago Holdings owns 100% of the equity interest of 
NYSE Arca Holdings, and NYSE Group owns 100% of the equity interest of 
Archipelago Holdings. NYSE Euronext owns 100% of the equity interest of 
NYSE Group.
    NYSE Euronext intends to merge Archipelago Holdings with and into 
NYSE Group, effective following

[[Page 32156]]

approval of this proposed rule change. The reason for the merger is to 
eliminate an unnecessary intermediate holding company. Following the 
merger, the Exchange would continue to be 100% owned by NYSE Arca 
Holdings, which in turn would be 100% owned by NYSE Group, which in 
turn would be 100% owned by NYSE Euronext.
    The Certificate imposes certain ownership and voting restrictions 
on the shares of NYSE Arca Holdings. Specifically, Article 9, Section 
1(b)(i)(B) of the Certificate provides that for so long as NYSE Arca 
Holdings directly or indirectly controls the Exchange, no Person either 
alone or together with its Related Persons,\3\ may own, directly or 
indirectly, of record or beneficially shares of the capital stock 
(whether common or preferred stock) of NYSE Arca Holdings constituting 
more than 40% of the outstanding shares of any class of capital stock 
of NYSE Arca Holdings unless the Board of Directors of NYSE Arca 
Holdings (the ``Board'') has adopted an amendment to the NYSE Arca 
Holdings Bylaws (the ``Bylaws'') waiving such a restriction. In 
connection with such amendment, the Board must adopt resolutions 
stating that such amendment will not impair the ability of the Exchange 
to carry out its functions and responsibilities under the Securities 
Exchange Act of 1934, as amended (the ``Act''), and the rules 
thereunder; is otherwise in the best interests of NYSE Arca Holdings, 
its stockholders, and the Exchange; and will not impair the ability of 
the Commission to enforce the Act. Such amendment is not effective 
until approved by the Commission. The Board also must find that no such 
Person or Related Person is subject to a statutory disqualification 
under Section 3(a)(39) of the Act. Similarly, Article 9, Section 1(c) 
of the Certificate provides that no Person, either alone or together 
with its Related Persons, may directly or indirectly vote more than 20% 
of the shares of NYSE Arca Holdings unless the Board adopts an 
amendment to its Bylaws waiving such a restriction and, in connection 
with such amendment, adopts resolutions and makes a determination with 
respect to statutory disqualification substantially the same as those 
described above for the ownership restriction. Article 9, Section 4 of 
the Certificate provides certain exceptions to these ownership and 
voting restrictions for Archipelago Holdings.
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    \3\ The terms ``Person'' and ``Related Persons'' are defined in 
the Certificate.
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    The Exchange proposes to amend the Bylaws of NYSE Arca Holdings as 
required by the Certificate; make further amendments to the 
Certificate, Bylaws, and other rules that would reflect the elimination 
of Archipelago Holdings from the Exchange's ownership structure; and 
delete duplicative or obsolete text. The proposed rule change otherwise 
would have no substantive impact on other rules of the Exchange, 
including those concerning the voting and ownership restrictions that 
currently apply to the Exchange and its affiliates.\4\ The Board has 
adopted resolutions approving the proposed changes.\5\
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    \4\ See Securities Exchange Act Release No. 55294 (Feb. 14, 
2007), 72 FR 8046 (Feb. 22, 2007) (SR-NYSEArca-2007-05); see also 
Securities Exchange Act Release No. 55293 (Feb. 14, 2007), 72 FR 
8033 (Feb. 22, 2007) (SR-NYSE-2006-120).
    \5\ See Exhibit 5F.
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    First, the Exchange proposes to replace references to Archipelago 
Holdings in Article 9, Section 4 of the Certificate with references to 
NYSE Group. In addition, the Exchange proposes to delete the last 
sentence of that Section, which relates to certain voting and ownership 
restrictions that were put in place when the Exchange combined with the 
New York Stock Exchange in 2005 but have been superseded by other 
requirements.\6\
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    \6\ See supra note 4.
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    Second, the Exchange proposes to amend the Bylaws by adding a new 
Article 11 that sets forth the waiver of the ownership and voting 
restrictions, as required by the Certificate, solely for purposes of 
the contemplated merger. The Exchange also proposes to amend the Bylaws 
to change references to the Pacific Exchange, Inc. to NYSE Arca, Inc.; 
change references to PCX Holdings, Inc. to NYSE Arca Holdings; and 
delete Section 6.07, which contains an obsolete reference to trading in 
minimum lots.
    Third, the Exchange proposes to delete NYSE Arca Options Rule 
1.1(cc) and (gg), which set forth the definitions for Archipelago 
Holdings and Related Person, and to delete NYSE Arca Options Rule 3.4, 
which sets forth ownership and voting restrictions for Archipelago 
Holdings. Upon the elimination of Archipelago Holdings, NYSE Group 
would be the next holding company, and voting and ownership 
restrictions are currently set forth in its Second Amended and Restated 
Certificate of Incorporation of NYSE Group, Inc. (``NYSE Group 
Certificate'') in Article IV, Section 4(b). The term Related Person is 
not otherwise used in the NYSE Arca Options Rules.
    Fourth, NYSE Arca Equities Rule 14.3(b) provides that all officers 
and directors of Archipelago Holdings shall be deemed to be officers 
and directors of the Exchange and NYSE Arca Equities for purposes of, 
and subject to oversight pursuant to, the Act. NYSE Arca Equities Rule 
14.3(d) provides that Archipelago Holdings must maintain all books and 
records related to the Exchange within the United States. The Exchange 
proposes to delete this text and make a conforming change to NYSE Arca 
Equities Rule 14.3(c). Comparable provisions are already contained in 
NYSE Group's governing documents. Under Article IX of the NYSE Group 
Certificate, NYSE Group's directors and officers already are subject to 
the jurisdiction of the Commission, and under Article X, NYSE Group's 
books and records relating to the Exchange must be maintained within 
the United States.
    Fifth, NYSE Arca Equities Rule 14.3(a), (e), and (f) contain 
references to Archipelago Securities, L.L.C. for which a short form, 
``Archipelago,'' is used. For the avoidance of confusion, the Exchange 
proposes to amend that reference to be ``Arca Securities,'' which is 
the short form used for Archipelago Securities, L.L.C. in NYSE Arca 
Equities Rule 7.45(c).
    Finally, the Exchange proposes to delete in its entirety the text 
of the Amended and Restated Certificate of Incorporation and the Bylaws 
of Archipelago Holdings because the company will no longer exist upon 
consummation of the merger and as such these documents will no longer 
be rules of the Exchange.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\7\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\8\ in particular, in that it 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 facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. Specifically, the proposed rule 
change would result in the Exchange's rules correctly reflecting its 
ownership structure without having any substantive impact on the 
Exchange's rules, including those concerning the voting and ownership 
restrictions that currently apply to the Exchange and its affiliates.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).

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[[Page 32157]]

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 Act.

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 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 email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2012-45 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-NYSEArca-2012-45. 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 
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 should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEArca-2012-45 and should 
be submitted on or before June 21, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-13149 Filed 5-30-12; 8:45 am]
BILLING CODE 8011-01-P