Document ID: SEC-2013-0767-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2013-04-23T04:00Z

[Federal Register Volume 78, Number 78 (Tuesday, April 23, 2013)]
[Notices]
[Pages 23963-23965]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-09525]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69388; File No. SR-NYSEMKT-2013-34]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending the Members' 
Schedule of NYSE Amex Options LLC (the ``Company'') in Order To Reflect 
Changes to the Capital Structure of the Company

April 17, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on April 9, 2013, NYSE MKT LLC (``NYSE MKT'' or ``Exchange'') 
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 amend the Members' Schedule (as defined in 
the Limited Liability Company Agreement of NYSE Amex Options LLC (the 
``Company'') dated as of June 29, 2011 (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) to the Founding Firms (as defined 
below) pursuant to Section 2.1 of that certain Members Agreement, dated 
as of June 29, 2011, by and among the Company, NYSE MKT, NYSE Euronext, 
Banc of America Strategic Investments Corporation (``BAML''), Barclays 
Electronic Commerce Holdings Inc. (``Barclays''), Citadel Securities 
LLC (``Citadel''), Citigroup Financial Strategies, Inc. 
(``Citigroup''), Goldman, Sachs & Co. (``Goldman Sachs''), Datek Online 
Management Corp. (``TD Ameritrade'') and UBS Americas Inc. (``UBS'') 
(collectively, excluding the Company, NYSE MKT and NYSE Euronext, 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), Inc. (``NYSE 
Market''), an affiliate of the Exchange, as soon as reasonably 
practicable following April 2, 2013 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 effective February 28, 2013 pursuant to Section 2.1 of 
the Members Agreement and (ii) the transfer of Interests by the 
Founding Firms to NYSE Market as soon as reasonably practicable 
following April 2, 2013 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 
2015, unless extended by the Board) 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, 2013, the Company issued 16.4736 Annual 
Incentive Shares in the aggregate to the Founding Firms (the ``Issuance 
of Annual Incentive Shares''). Because each Founding Firm achieved or 
exceeded its Individual Target, the Issuance of Annual Incentive Shares 
did not result in any change to any Member's economic or voting 
interest in the Company. The Exchange proposes to amend the Members' 
Schedule as set forth in Exhibit 5A attached hereto \3\ (marked against 
the Members' Schedule in effect prior to such issuance) to

[[Page 23964]]

reflect the Issuance of Annual Incentive Shares.
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    \3\ 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 of 10.4000% in the Company to 
NYSE Market, an affiliate of the Exchange (the ``Founding Firm 
Transfer''). Upon consummation of the Founding Firm Transfer and the 
acquisition by NYSE Market 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 will own an 
equity interest of 20.9600%, and the Founding Firms, collectively, will 
own the remaining equity interest of 31.8400%. The Exchange proposes, 
upon consummation of the Founding Firm Transfer, to amend the Members' 
Schedule as set forth in Exhibit 5B attached hereto \4\ (marked against 
the Members' Schedule following the Issuance of Annual Incentive 
Shares) to reflect the Founding Firm Transfer.
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    \4\ 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) \5\ of the 
Securities Exchange Act,\6\ as amended (the ``Act''), in general, and 
furthers the objectives of Section 6(b)(1) \7\ 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 preserves the structure of the joint venture which 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78.
    \7\ 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 respective 
responsibilities under the Act.
    The Proposed Rule Change is also consistent with, and furthers the 
objectives of, Section 6(b)(5) \8\ 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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    \8\ 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 relative equity interests among existing 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 \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
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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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 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) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ 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

[[Page 23965]]

would allow the Company to consummate the transactions described in the 
filing in an efficient and predictable manner. Accordingly, the 
Commission hereby grants the Exchange's request and designates the 
proposal operative upon filing. \13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ 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.

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-2013-34 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-NYSEMKT-2013-34. 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-2013-34 and should 
be submitted on or before May 14, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-09525 Filed 4-22-13; 8:45 am]
BILLING CODE 8011-01-P