[Federal Register Volume 79, Number 228 (Wednesday, November 26, 2014)]
[Notices]
[Pages 70608-70609]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27975]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73657; File No. SR-NYSE-2014-62]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change Amending the Bylaws of Its
Wholly-Owned Subsidiary NYSE Regulation, Inc. To Provide That Non-
Affiliated Directors Would Not Be Removed for Cause if They Are Acting
in Good Faith in Exercising Their Responsibilities as Directors Related
to NYSE Regulation's Functions and Responsibilities Delegated to It
Under the Delegation Agreement Between the Exchange, NYSE Regulation
and NYSE Market, Inc.
November 20, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is
hereby given that on November 7, 2014, New York Stock Exchange LLC
(``NYSE'' or the ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I, II and III 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 bylaws of its wholly-owned
subsidiary NYSE Regulation, Inc. (``NYSE Regulation'') to provide that
non-affiliated directors (as that term is defined in those bylaws)
would not be removed for cause if they are acting in good faith in
exercising their responsibilities as directors related to NYSE
Regulation's functions and responsibilities delegated to it under the
Delegation Agreement between the Exchange, NYSE Regulation and NYSE
Market (DE), Inc. 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, on the Commission's Web site at http://www.sec.gov, 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 is proposing to amend Article III, Section 4 of NYSE
Regulation's Sixth Amended and Restated Bylaws (the ``Bylaws'') to
provide that ``non-affiliated directors'' \3\ would not be removed for
cause if they are acting in good faith in exercising their
responsibilities as directors related to NYSE Regulation's functions
and responsibilities delegated to it under the delegation agreement
between the Exchange, NYSE Regulation and NYSE Market (DE), Inc. (the
``Delegation Agreement''),\4\ and to make conforming changes.
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\3\ The Bylaws define ``non-affiliated directors'' as U.S.
Persons who are not members of the board of directors of
Intercontinental Exchange, Inc. (``ICE'') and qualify as independent
under NYSE Regulation's director independence policy. See Bylaw
[sic] of NYSE Regulation, Inc., Article III, Section 1(A); see also
Securities [sic] Act Release No. 67564 (August 1, 2012), 77 FR 47161
(August 7, 2012) (SR-NYSE-2012-17) (approving NYSE Regulation's
director independence policy). The Bylaws require that a majority of
NYSE Regulation's Board consist of non-affiliated directors. The
remaining directors are NYSE Regulation's Chief Executive Officer
(``CEO'') and members of the ICE board of directors that qualify as
independent under NYSE Regulation's director independence policy.
The Bylaws do not require any affiliated directors other than the
NYSE Regulation CEO.
\4\ See Securities [sic] Act Release No. 53382 (February 27,
2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77) (approving
NYSE's business combination with Archipelago Holdings, Inc.).
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Currently, Article III, Section 4 of the Bylaws provides that the
Exchange may only remove non-affiliated directors for ``cause.'' The
Exchange proposes to amend Article III, Section 4 to provide that
``cause'' would not encompass ``decisions or actions taken in good
faith by a Non-Affiliated Director in his or her capacity as a Director
of [NYSE Regulation] and related'' to NYSE Regulation's delegated
regulatory functions and responsibilities under the Delegation
Agreement. A copy of the proposed Seventh Amended and Restated Bylaws
is attached as Exhibit 5.\5\
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\5\ The Commission notes the Exhibit 5 is attached to the filing
submitted by the Exchange, but is not attached to the published
notice of this filing.
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The proposed amendment to the Bylaws makes explicit that conduct
consistent with a non-affiliated director's duties and responsibilities
related to NYSE Regulation's delegated functions and responsibilities
does not constitute grounds for removal. The Exchange believes that
approval of the proposed change would confirm to non-affiliated
directors that they would not be removed for decisions or actions taken
in the exercise of their fiduciary duties to NYSE Regulation and,
accordingly, contribute to a more efficient and orderly decision-making
process at the board level.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Exchange Act \6\ in general, and with Section
6(b)(1) \7\ in particular, in that it enables the Exchange to be so
organized as to have the capacity to be able to carry out the purposes
of the Exchange Act and to comply, and to enforce compliance by its
exchange members and persons
[[Page 70609]]
associated with its exchange members, with the provisions of the
Exchange Act, the rules and regulations thereunder, and the rules of
the Exchange. The proposed amendment to the Bylaws would make explicit
that a non-affiliated director cannot be removed for cause for
decisions or actions taken in good faith related to the regulatory
functions and responsibilities delegated to NYSE Regulation by the
Exchange. The proposed amendment would therefore provide non-affiliated
directors with reasonable assurances that actions or decisions
consistent with their fiduciary duty and believed, in good faith, to be
the proper exercise of NYSE Regulation's delegated functions and
responsibilities could not be used as a basis to remove those directors
from office. Accordingly, the Exchange believes that the proposed
amendment would contribute to the orderly operation of the NYSE
Regulation board of directors and its decision-making process, and
would enable the Exchange to be so organized as to have the capacity to
carry out the purposes of the Exchange Act and comply and enforce
compliance by its members and persons associated with its members, with
the provisions of the Exchange Act. The Exchange therefore believes
that approval of the amendment to the Bylaws is consistent with Section
6(b)(1).
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(1).
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The Exchange also believes that this filing furthers the objectives
of Section 6(b)(5) of the Exchange Act \8\ 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 the proposed amendment would remove potential
uncertainty among non-affiliated directors that certain decisions or
actions taken in good faith related to the delegated functions and
responsibilities could result in their removal from NYSE Regulation's
board of directors for cause and thereby would contribute to improved
effectiveness in the board decision-making process. The proposed
amendment is therefore consistent with and facilitates a governance and
regulatory structure that furthers the objectives of Section 6(b)(5) of
the Exchange Act. The orderly and efficient operation of NYSE
Regulation and its board of directors is also designed to protect
investors as well as 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
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act. The proposed rule
change is not intended to address competitive issues but rather is
concerned solely with the administration and functioning of the NYSE
Regulation board of directors.
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 up to 90 days (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 [email protected]. Please include
File Number SR-NYSE-2014-62 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2014-62. 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 offices 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-NYSE-2014-62,
and should be submitted on or before December 17, 2014.
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\9\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27975 Filed 11-25-14; 8:45 am]
BILLING CODE 8011-01-P