Federal Register, Volume 78 Issue 38 (Tuesday, February 26, 2013)

[Federal Register Volume 78, Number 38 (Tuesday, February 26, 2013)]
[Notices]
[Pages 13103-13105]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04369]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68959; File No. SR-NYSEArca-2013-17]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
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

February 20, 2013.
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 February 7, 2013, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III 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 its rules 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 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend its rules to reflect 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.
Currently, NYSE Arca Holdings owns 100% of the equity interest of
the Exchange. NYSE Group owns 100% of the equity interest of NYSE Arca
Holdings, as well as 100% of the equity interest of NYSE Arca's
affiliates, New York Stock Exchange LLC (``NYSE'') and NYSE MKT, LLC
(``NYSE MKT''). NYSE Euronext owns 100% of the equity interest of NYSE
Group.
NYSE Euronext intends to merge NYSE Arca Holdings with and into
NYSE Group, effective following 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 be 100% owned
by NYSE Group (as its two affiliate exchanges, NYSE and NYSE MKT, are),
and NYSE Group would continue to be 100% owned by NYSE Euronext.
Article 9 of the Second Amended and Restated Certificate of
Incorporation of NYSE Arca Holdings, Inc. (``NYSE Arca Holdings
Certificate'') imposes certain ownership and voting restrictions on the
shares of NYSE Arca Holdings for so long as it directly or indirectly
controls the Exchange. In addition, Section 3.15 of the Amended and
Restated NYSE Arca Holdings, Inc. Bylaws (``NYSE Arca Holdings
Bylaws'') provides that for so long as NYSE Arca Holdings controls the
Exchange, the Board of Directors, officers, employees and agents of
NYSE Arca Holdings shall give due regard to the preservation of the
independence of the self-regulatory function of the Exchange and all
books and records of the Exchange reflecting confidential information
pertaining to the self-regulatory function of the Exchange shall be
retained in confidence and not be used for any non-regulatory purposes.
Pursuant to Section 7.04 of the NYSE Arca Holdings Bylaws, NYSE Arca
Holdings and its officers, directors, employees, and agents are subject
to the jurisdiction of the Securities and Exchange Commission (the
``Commission'').
NYSE Group's Second Amended and Restated Certificate of
Incorporation of NYSE Group, Inc. (``NYSE Group Certificate'') already
contains

[[Page 13104]]

comparable provisions. Under Article IV, Section 4(b) of the NYSE Group
Certificate, similar ownership and voting restrictions apply to shares
of NYSE Group to the extent that the Exchange and NYSE Arca Equities,
Inc. (``NYSE Arca Equities''), its wholly owned subsidiary, continue to
be controlled directly or indirectly by NYSE Group. In addition,
Article XI, Section 3 of the NYSE Group Certificate provides that NYSE
Group and its directors, officers, and employees shall give due regard
to the preservation of the independence of the self-regulatory function
of the Exchange and NYSE Arca Equities. Under Article X of the NYSE
Group Certificate, NYSE Group's books and records relating to the
Exchange and NYSE Arca Equities must be maintained within the United
States and all confidential information in such books and records must
be retained in confidence,\4\ and under Article IX of the NYSE Group
Certificate, NYSE Group's directors and officers already are subject to
the jurisdiction of the Commission.
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\4\ In addition, Section 6.04 of the NYSE Arca Bylaws requires
that all books and records of the Exchange reflecting confidential
information pertaining to the self-regulatory function of the
Exchange (including but not limited to disciplinary matters, trading
data, trading practices, and audit information) must be retained in
confidence by the Exchange and its personnel and may not be used by
the Exchange for any non-regulatory purposes and may not be made
available to any persons (including, without limitation, any members
of the Exchange) other than to those personnel of the Exchange and
to members of the Board of Directors of the Exchange to the extent
necessary or appropriate to properly discharge the self-regulatory
responsibilities of the Exchange.
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Thus, the Exchange proposes to delete in its entirety the text of
the NYSE Arca Holdings Certificate and the NYSE Arca Holdings
Bylaws.\5\ The Exchange also proposes conforming amendments to its
rules and the NYSE Arca Bylaws. First, the Exchange proposes to delete
the heading for and text of NYSE Arca Rule 1.1(ff), which provides a
definition of NYSE Arca Holdings, and mark it ``Reserved.'' \6\
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\5\ Article 9, Section 1(b)(i)(B) of the NYSE Arca Holdings
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, 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 has adopted an amendment to the NYSE Arca Holdings Bylaws
waiving such a restriction. Such an amendment was already adopted
with respect to NYSE Group in connection with an earlier merger of
an intermediate holding company. See Securities Exchange Act Release
67435 (July 13, 2012), 77 FR 42533 (July 19, 2012) (SR-NYSE 2012-
45).
\6\ The Exchange also proposes to remove the unnecessary heading
for the term ``Related Person,'' which was deleted by SR-NYSE-2012-
45. See supra note 5.
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Second, the Exchange proposes to amend Section 2.01 of the NYSE
Arca Bylaws, which describes the Exchange as a non-stock corporation
with one member, NYSE Arca Holdings, which is defined as the ``Holding
Member.'' Section 2.01 would be amended to replace the reference to
NYSE Arca Holdings with a reference to NYSE Group, thus designating it
as the Holding Member for purposes of the NYSE Arca Bylaws.
Third, certain other references to ``Holding Member'' in the NYSE
Arca Bylaws would be amended. Sections 2.02, 2.04, and 2.05 of the NYSE
Arca Bylaws set forth provisions for scheduling meetings of the Holding
Member and the presiding officer and secretary for such meetings.
Articles II and III of the Second Amended and Restated Bylaws of NYSE
Group include provisions for meetings of NYSE Group's stockholders and
Board of Directors, respectively. The operating agreements of the
Exchange's affiliates, NYSE and NYSE MKT, do not contain provisions
relating to annual meetings of NYSE Group.\7\ As such, the text of
Sections 2.02, 2.04, and 2.05 of the NYSE Arca Bylaws is unnecessary
and would be deleted and those sections would be marked ``Reserved.''
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\7\ The operating agreements are available at https://usequities.nyx.com/sites/usequities.nyx.com/files/fourth_amended_and_restated_operating_agreement_of_nyse_llc.pdf and http://wallstreet.cch.com/MKT/pdf/operating_agreement.pdf, respectively.
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Section 3.02(f) of the NYSE Arca Bylaws provides that, except as
otherwise provided in the NYSE Arca Bylaws or rules, the Nominating
Committee of NYSE Arca Holdings shall nominate directors for election
at the annual meeting of the Holding Member. NYSE Arca Rule 3.2 sets
forth a detailed process for the nomination and selection of fair
representation directors for the NYSE Arca Board of Directors, and NYSE
Arca Equities Rule 3.2 sets forth a similar process for the nomination
and selection of fair representation directors for the NYSE Arca
Equities Board of Directors.\8\ The NYSE Arca Bylaws and rules do not
have any other provisions concerning the nomination of non-fair
representation directors. As such, 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.\9\ The proposed rule change thus would not have any impact on
the process for the nomination and selection of fair representation
directors.
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\8\ See also Securities Exchange Act Release No. 67619 (August
8, 2012), 77 FR 49032 (August 15, 2012) (SR-NYSEArca-2012-67).
\9\ Article IV of the Second Amended and Restated Bylaws of NYSE
Group (``NYSE Group Bylaws'') does not specifically provide for a
Nominating Committee. The NYSE Group Bylaws are available at http://usequities.nyx.com/sites/corporate.nyx.com/files/amendedandrestatedbylawsofnysegroup.pdf.
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Finally, Section 3.13 of the NYSE Arca Bylaws provides that no
member of the Board of Directors of NYSE Arca Holdings who is not also
a member of the Board of Directors of the Exchange, and no officer,
staff, counsel or other advisor of NYSE Arca Holdings who is not also
an officer, staff, counsel or advisor of the Exchange, may participate
in any meetings of the Exchange's Board of Directors (or any committees
thereof) pertaining to the Exchange's self-regulatory function
(including disciplinary matters) or relating to the structure of the
market which the Exchange regulates. The references to NYSE Arca
Holdings would be replaced with references to NYSE Group.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\10\ in general, and furthers the objectives of Section 6(b)(5) of
the Act,\11\ 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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\10\ 15 U.S.C. 78f(b).
\11\ 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
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not designed to address any competitive issue or have any impact on
competition; rather, it is intended solely to eliminate an

[[Page 13105]]

unnecessary intermediate holding company from the ownership structure
of the Exchange.

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 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-NYSEArca-2013-17 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-2013-17. 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, on business days
between the hours of 10 a.m. and 3 p.m., located at 100 F Street NE.,
Washington, DC 20549-1090. Copies of the filing will also 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-2013-17 and should
be submitted on or before March 19, 2013.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-04369 Filed 2-25-13; 8:45 am]
BILLING CODE 8011-01-P