[Federal Register Volume 78, Number 70 (Thursday, April 11, 2013)]
[Notices]
[Pages 21650-21651]
From the Federal Register Online via the Government Publishing 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