Document ID: SEC-2014-1779-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2014-10-22T04:00Z

[Federal Register Volume 79, Number 204 (Wednesday, October 22, 2014)]
[Notices]
[Pages 63201-63204]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-25078]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73372; File No. SR-NYSEMKT-2014-83]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change in Connection With the Proposed Termination of the 
Amended and Restated Trust Agreement, Dated as of November 13, 2013 and 
Amended on June 2, 2014 By and Among NYSE Holdings LLC, a Delaware 
Limited Liability Company, NYSE Group, Inc., a Delaware Corporation, 
Wilmington Trust Company, as Delaware Trustee, and Each of Jacques de 
Larosi[egrave]re de Champfeu, Alan Trager and John Shepard Reed, as 
Trustees

October 16, 2014.
    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 October 8, 2014, 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 this rule filing in connection with the 
proposed

[[Page 63202]]

termination of the Amended and Restated Trust Agreement, dated as of 
November 13, 2013 and amended on June 2, 2014 (the ``Trust 
Agreement''), by and among NYSE Holdings LLC, a Delaware limited 
liability company (``NYSE Holdings''), NYSE Group, Inc., a Delaware 
corporation (``NYSE Group''), Wilmington Trust Company, as Delaware 
Trustee, and each of Jacques de Larosi[egrave]re de Champfeu, Alan 
Trager and John Shepard Reed, as Trustees. 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
    NYSE MKT seeks approval for its 100% direct parent, NYSE Group, and 
its 100% indirect parent, NYSE Holdings, to terminate the Trust 
Agreement.\4\ NYSE MKT believes that the regulatory considerations that 
led to the implementation of the Trust Agreement in 2007 are now moot 
as a result of the sale by Intercontinental Exchange, Inc., a Delaware 
corporation (``ICE''), of Euronext N.V. (``Euronext'') in June 2014 and 
certain changes in the corporate governance of ICE, ICE Holdings and 
NYSE Holdings that occurred upon such sale.\5\
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    \4\ ICE, a public company listed on the New York Stock Exchange, 
LLC (the ``NYSE''), owns 100% of Intercontinental Exchange Holdings, 
Inc., a Delaware corporation (``ICE Holdings''), which in turn owns 
100% of NYSE Holdings. Through ICE Holdings, NYSE Holdings and NYSE 
Group, ICE indirectly owns (1) 100% of the equity interest of three 
registered national securities exchanges and self-regulatory 
organizations (together, the ``NYSE Exchanges'')--the Exchange, NYSE 
Arca, Inc. (``NYSE Arca'') and the NYSE--and (2) 100% of the equity 
interest of NYSE Market (DE), Inc. (``NYSE Market''), NYSE 
Regulation, Inc. (``NYSE Regulation''), NYSE Arca L.L.C., NYSE Arca 
Equities, Inc. and NYSE Amex Options LLC. See Exchange Act Release 
No. 70210 (August 15, 2013) (SR-NYSEMKT-2013-50), 78 FR 51758 
(August 21, 2013) (approving proposed rule change relating to a 
corporate transaction in which NYSE Euronext will become a wholly 
owned subsidiary of IntercontinentalExchange Group, Inc.).
    \5\ The Exchange's affiliates, the NYSE and NYSE Arca, have also 
submitted the same proposed rule change to terminate the Trust 
Agreement. See SR-NYSEArca-2014-112 and SR-NYSE-2014-53.
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Background
    In 2007, NYSE Group, which is the 100% owner of NYSE MKT, combined 
with Euronext (the ``Combination''). The new parent company formed in 
the Combination, NYSE Euronext, operated several regulated entities in 
the United States and various jurisdictions in Europe. In the 
Commission's notice relating to the proposed Combination, NYSE MKT 
emphasized the importance of continuing to regulate marketplaces 
locally:

    A core aspect of the structure of the Combination is continued 
local regulation of the marketplaces. Accordingly, the Combination 
is premised on the notion that . . . [c]ompanies listing their 
securities only on markets operated by Euronext and its subsidiaries 
will not become newly subject to U.S. laws or regulation by the SEC 
as a result of the Combination, and companies listing their 
securities only on the Exchange or NYSE Arca, will not become newly 
subject to European rules or regulation as a result of the 
Combination.\6\
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    \6\ See Exchange Act Release No. 55026 (Dec. 29, 2006) (SR-NYSE-
2006-120), 72 FR 814, 816-817 (January 8, 2007) (the ``NYSE Euronext 
Notice''). NYSE Euronext acquired NYSE MKT in 2008.

    In connection with obtaining regulatory approval of the 
Combination, NYSE Euronext implemented certain special arrangements 
consisting of two standby structures, one involving a Dutch foundation 
(Stichting) and one involving a Delaware trust. The Dutch foundation 
was empowered to take actions to mitigate the effects of any material 
adverse change in U.S. law that had an ``extraterritorial'' impact on 
non-U.S. issuers listed on Euronext markets, non-U.S. financial 
services firms that were members of Euronext markets or holders of 
exchange licenses with respect to the Euronext markets. The Delaware 
trust was empowered to take actions to mitigate the effects of any 
material adverse change in European law that had an 
``extraterritorial'' impact on the non-European issuers listed on NYSE 
Group securities exchanges, non-European financial services firms that 
were members of any NYSE Group securities market or holders of exchange 
licenses with respect to the NYSE Group securities exchanges.
    The current form of the Trust Agreement is attached as Exhibit 5A, 
and a form of unanimous written consent of all parties to, or otherwise 
bound by, the Trust Agreement resolving that the Delaware trust be 
terminated is attached as Exhibit 5B. The terms of the Dutch foundation 
and the Delaware trust are complex. An explanation of the terms is 
included in the NYSE Euronext Notice. Subsequent modifications to the 
arrangements, to the extent relevant to the proposed rule change, are 
described herein. The Dutch foundation and the Delaware trust remained 
in effect after the merger of ICE Holdings (then known as 
IntercontinentalExchange, Inc.) and NYSE Euronext in 2013 under ICE 
(then known as IntercontinentalExchange Group, Inc.) as a new public 
holding company. However, in connection with ICE's announced plan to 
sell the Euronext securities exchanges in an initial public offering, 
the Dutch Ministry of Finance permitted modifications of the terms of 
the governing document of the Dutch foundation under which the powers 
of the Dutch foundation would cease to apply to ICE and its affiliates 
at such time as ICE ceased to hold a ``controlling interest'' in 
Euronext, with ``controlling interest'' defined by reference to the 
definition of ``control'' under Rule 10 of the International Financial 
Reporting Standards (``IFRS 10'').\7\ In June 2014 ICE announced that 
it had sold all but approximately 6% of the ownership interest in 
Euronext in an underwritten public offering outside the United 
States.\8\ Upon application by ICE, the Dutch Ministry of Finance 
confirmed on July 16, 2014 that the conditions to the cessation of the 
application of the Dutch foundation to ICE had been satisfied or 
waived.\9\ As a result, ICE and its subsidiaries are no longer subject 
to the provisions of the Dutch foundation.
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    \7\ Excerpts from the Further Amended and Restated Governance 
and Option Agreement, dated March 21, 2014, among the Dutch 
foundation, Euronext Group N.V. and ICE are attached as Exhibit 5C.
    \8\ ICE's press release dated June 24, 2014 is available at the 
following link: http://ir.theice.com/investors-and-media/press/press-releases/press-release-details/2014/Intercontinental-Exchange-Announces-Closing-of-Euronext-Initial-Public-Offering/default.aspx.
    \9\ An English translation of the Dutch Ministry of Finance's 
letter is attached as Exhibit 5D.
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    In the 2013 merger, NYSE Euronext was succeeded by the entity now 
known as NYSE Holdings, which is currently a party to the Trust 
Agreement. At that time, references to the nominating and governance 
committee of the board of directors of NYSE Euronext, which selected 
the Trustees of the Delaware trust, were replaced by references to the

[[Page 63203]]

nominating and governance committee of the board of directors of 
ICE.\10\ Other provisions of the Trust Agreement are substantially 
unchanged.\11\
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    \10\ See note 4, supra.
    \11\ See Exchange Act Release No. 72158 (May 13, 2014) (SR-NYSE-
2014-23), 79 FR 28784 (May 19, 2014) (notice of filing and immediate 
effectiveness of proposed rule change relating to name changes of 
the Exchange's ultimate parent) (revising Trust Agreement to reflect 
name changes of ICE and ICE Holdings).
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    In connection with the Combination of NYSE Group and Euronext in 
2007 and the establishment of the Dutch foundation and the Delaware 
trust, the Certificate of Incorporation and Bylaws of NYSE Euronext 
included several provisions relating to representation of European 
interests on the board of directors and other provisions requiring the 
board to give due consideration to European regulatory requirements and 
the interests of identified categories of European stakeholders. These 
provisions are summarized in the NYSE Euronext Notice. Each such 
provision was subject to automatic revocation in the event that NYSE 
Euronext no longer held a controlling interest in Euronext or certain 
of its subsidiaries. For this purpose, ``controlling interest'' was 
defined to mean 50% or more of the outstanding shares of each class of 
voting securities and of the combined voting power of outstanding 
voting securities entitled to vote generally in the election of 
directors. Substantially identical provisions were added to the 
Certificate of Incorporation and Bylaws of ICE and ICE Holdings, and 
were retained in the Operating Agreement of NYSE Holdings, when ICE 
acquired NYSE Euronext in 2013, except that the ``controlling 
interest'' test was modified to become a ``control'' test under IFRS 
10, as described above with respect to the Dutch foundation. As a 
result of the initial public offering of Euronext, ICE has established 
that it no longer controls Euronext within the meaning of IFRS 10, and 
the provisions of the constituent documents of ICE, ICE Holdings and 
NYSE Holdings have automatically and without further action become void 
and are of no further force and effect.
Proposed Rule Change
    NYSE MKT requests approval to terminate the Delaware trust because 
it believes that the regulatory considerations that led to the 
implementation of the Trust Agreement in 2007 have been mooted by the 
sale of Euronext in June 2014, the automatic revocation of corporate 
governance provisions applicable to ICE, ICE Holdings and NYSE Holdings 
that occurred upon such sale, and the fact that the Dutch which 
functioned as a European analog to the Delaware trust, ceased to have 
any authority over ICE and its subsidiaries upon the closing of the 
sale of Euronext.\12\ NYSE MKT believes that the prospect for any 
material adverse change in European law that would have an 
``extraterritorial'' impact on the non-European issuers listed on NYSE 
Group securities exchanges, non-European financial services firms that 
are members of any NYSE Group securities market or holders of exchange 
licenses with respect to the NYSE Group securities exchanges is now 
remote.
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    \12\ As noted above, this has been confirmed by the Dutch 
Ministry of Finance.
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    Continuance of the Trust Agreement when it no longer furthers the 
purposes of Section 6(b) of the Exchange Act \13\ also imposes certain 
administrative burdens and costs upon NYSE MKT and its affiliates, and 
may cause investor uncertainty, that create impediments to a free and 
open market. Specifically, the Trust Agreement imposes administrative 
burdens on ICE and the nominating and governance committee of its board 
of directors, such as the need to periodically consider and vote on 
Trustees; the need to consider whether any proposed action requires 
approval under the Trust Agreement and, if so, the obligation to 
prepare materials for consideration and vote by the Trustees; and the 
need to consider whether any proposed action requires an amendment to 
the Trust Agreement and, if so, the additional obligation to submit 
such amendment to the Commission for approval under Rule 19b-4.\14\ The 
Trust Agreement results in out-of-pocket costs to NYSE MKT and its 
affiliates including the fees of the individual Trustees and the 
Delaware Trustee as well as fees of counsel incurred in connection with 
review of proposed amendments and assistance with the SEC approval 
process. NYSE MKT also believes that some analysts and institutional 
investors may not fully understand the purpose of the Delaware trust 
and may not have appreciated that, even when ICE controlled Euronext 
and European regulatory considerations played a substantial role in 
ICE's corporate governance, the likelihood of the Delaware trust's 
substantive provisions ever being invoked was, by design, extremely 
remote. In light of the sale of Euronext, the revocation of the 
governance provisions relating to European considerations, and the 
cessation of application of the Dutch foundation to ICE and its 
affiliates, ICE believes it is appropriate to terminate the Delaware 
trust in order to avoid any future need to reassure analysts and 
investors that the trust does not impact the daily operations or 
valuations of ICE's national securities exchanges.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 17 CFR 240.19b-4.
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    Termination of the Delaware trust would be implemented through a 
unanimous written consent of all parties to, or otherwise bound by, the 
Trust Agreement in the form attached as Exhibit 5B.
    References to the Delaware trust also would be deleted from, and 
related conforming changes would be made to, the constituent documents 
of NYSE Holdings, NYSE Group, NYSE MKT, the Exchange, NYSE Market and 
NYSE Regulation. In particular:
    NYSE Holdings. The Fifth Amended and Restated Limited Liability 
Company Agreement of NYSE Holdings would be further amended and 
restated to eliminate the definition of the term ``Trust'' in Section 
1.1 and the references to the Delaware trust in Section 7.2. See 
Exhibit 5E.
    NYSE Group. The Third Amended and Restated Certificate of 
Incorporation of NYSE Group would be further amended and restated to 
eliminate references to the Delaware trust in Article IV, Section 4(a) 
and (b). See Exhibit 5F.
    The Exchange. The Sixth Amended and Restated Operating Agreement of 
the Exchange would be further amended and restated to eliminate 
references to the Delaware trust in Section 3.03. See Exhibit 5G.
    NYSE MKT. The Fifth Amended and Restated Operating Agreement of 
NYSE MKT would be further amended and restated to eliminate references 
to the Delaware trust in Section 3.03. See Exhibit 5H.
    NYSE Market. The Second Amended and Restated Certificate of 
Incorporation of NYSE Market would be further amended and restated to 
eliminate references to the Delaware trust in Article IV, Section 2. 
See Exhibit 5I.
    NYSE Regulation. The Restated Certificate of Incorporation of NYSE 
Regulation would be further amended and restated to eliminate 
references to the Delaware trust in Article V. See Exhibit 5J.
2. Statutory Basis
    NYSE MKT believes that the proposed rule change is consistent with 
Section 6(b) of the Exchange Act \15\ in general, and with Section 
6(b)(1) \16\ in particular, in that it enables NYSE MKT to be so 
organized as to have the capacity to be

[[Page 63204]]

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 NYSE MKT. The 
Delaware trust was implemented in response to potential concerns 
arising under non-U.S. law and regulation at a time when NYSE MKT was 
owned by a company with substantial holdings of non-U.S. securities 
exchanges, substantial non-U.S. board representation, and explicit 
obligations on the part of its board to give due consideration to 
matters of non-U.S. law and the interests of non-U.S. stakeholders. In 
light of the elimination of these concerns as discussed above, NYSE MKT 
believes that termination of the Delaware trust is consistent with 
Section 6(b)(1).
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(1).
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    NYSE MKT also believes that this filing furthers the objectives of 
Section 6(b)(5) of the Exchange Act \17\ because the proposed rule 
change would be consistent with and facilitate a governance and 
regulatory structure that is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to, and perfect the mechanism of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest. As discussed above, the 
Exchange believes that termination of the Delaware trust will remove 
impediments to the operation of NYSE MKT by eliminating certain 
expenses and administrative burdens as well as the potential for 
uncertainty among analysts and investors as to the practical 
implications of the Delaware trust on NYSE MKT as a marketplace and as 
a significant asset of ICE. For the same reasons, the proposed rule 
change is also designed to protect investors as well as the public 
interest.
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    \17\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NYSE MKT 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. Indeed, the proposed 
rule change would eliminate an earlier arrangement intended in part to 
address potential competitive issues in the European securities markets 
that have abated as a result of ICE's sale of the Euronext securities 
exchanges in June 2014. The proposed rule change results 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 within such longer period up to 90 days after 
publication (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 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-2014-83 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-2014-83. 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 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-2014-83 and should 
be submitted on or before November 12, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-25078 Filed 10-21-14; 8:45 am]
BILLING CODE 8011-01-P