[Federal Register Volume 72, Number 4 (Monday, January 8, 2007)]
[Notices]
[Pages 814-832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-17]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55026; File No. SR-NYSE-2006-120]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Regarding Proposed Combination 
Between NYSE Group, Inc. and Euronext N.V.

December 29, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934, as amended, (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ notice is hereby given that on December 29, 2006, the 
New York Stock Exchange LLC (``NYSE'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been substantially prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240.19b-4.

---------------------------------------------------------------------------

[[Page 815]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, a New York limited liability company, registered 
national securities exchange and self-regulatory organization is 
submitting this rule filing (the ``Proposed Rule Change'') to the SEC 
in connection with the proposed business combination (the 
``Combination'') of NYSE Group, Inc., a Delaware corporation (``NYSE 
Group''), with Euronext N.V., a company organized under the laws of The 
Netherlands (``Euronext''). As a result of the Combination, the 
businesses of NYSE Group (including that of the Exchange and NYSE Arca, 
Inc., a Delaware corporation, registered national securities exchange 
and self-regulatory organization (``NYSE Arca'')) and Euronext will be 
held under a single, publicly traded holding company named NYSE 
Euronext, a Delaware corporation (``NYSE Euronext''). Following the 
Combination, each of NYSE Group and Euronext (or a successor Dutch 
holding company) will be a separate subsidiary of NYSE Euronext, and 
their respective businesses and assets will continue to be held as they 
are currently held (subject to any post-closing reorganization of 
Euronext). 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 companies listing their 
securities only on markets operated by Euronext and its subsidiaries 
will not become newly subject to U.S. laws (including, without 
limitation, the Sarbanes-Oxley Act of 2002) or regulation by the SEC as 
a result of the Combination, and that 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. 
In addition, ``members'' and ``member organizations'' (each as defined 
in the rules of the Exchange) of the Exchange, ``ETP holders'' and 
``Authorized Traders'' (each as defined in the Rules of NYSE Arca 
Equities) of NYSE Arca Equities, Inc. (``NYSE Arca Equities''), and 
``OTP Firms'' and ``OTP Holders'' (each as defined in the Rules of NYSE 
Arca) of NYSE Arca, in each case trading only on markets operated by 
the Exchange or NYSE Arca will not become newly subject to European 
rules or regulations as a result of the Combination, and members of the 
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. The Proposed Rule Change, if approved by the SEC, will not 
be operative until the consummation of the Combination.
    Other than as described herein, NYSE Euronext will not be seeking 
to make any changes to the regulated activities of NYSE Group and its 
subsidiaries in connection with the Combination. If NYSE Euronext 
determines to make any such changes, it will seek SEC approval to the 
extent required.
    The Exchange proposes that the organizational documents of NYSE 
Euronext, NYSE Group,\3\ the Exchange, NYSE Market, Inc. and NYSE 
Regulation, Inc. be revised to reflect the Combination, and that such 
organizational documents become operative upon consummation of the 
Combination. In addition, the Exchange proposes various amendments to 
its rules (as such rules may be in effect from time to time, the 
``Exchange Rules'') to reflect the Combination.
---------------------------------------------------------------------------

    \3\ Upon the consummation of the Combination, NYSE Group will be 
merged with and into Jefferson Merger Sub, Inc. and the name of 
Jefferson Merger Sub, Inc. will be changed to NYSE Group, Inc. The 
changes to the NYSE Group organizational documents refer to changes 
from the current NYSE Group organizational documents. Technically, 
however, the Amended and Restated Certificate of Incorporation and 
Amended and Restated Bylaws of NYSE Group that will be operative 
upon the consummation of the Combination will be amended and 
restated forms of the Certificate of Incorporation and Bylaws of 
Jefferson Merger Sub, Inc.
---------------------------------------------------------------------------

    The text of the Proposed Rule Change is available at the NYSE, the 
Commission's Public Reference Room, and on the Exchange's Web site 
(http://www.nyse.com). The text of Exhibits 5A through 5M of the 
Proposed Rule Change are also available on the Exchange's Web site and 
on the Commission's Web site (http://www.sec.gov/rules/sro.shtml).

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 Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change. The 
text of these 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 aspects 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, a New York limited liability company, registered 
national securities exchange and self-regulatory organization, is 
submitting this Proposed Rule Change to the SEC in connection with the 
Combination of NYSE Group with Euronext. As a result of the 
Combination, the businesses of NYSE Group (including that of the 
Exchange and NYSE Arca and Euronext will be held under a single, 
publicly traded holding company named NYSE Euronext. Following the 
Combination, each of NYSE Group and Euronext (or a successor Dutch 
holding company) will be a separate subsidiary of NYSE Euronext, and 
their respective businesses and assets will continue to be held as they 
are currently held (subject, in the case of Euronext, to any Post-
Closing Reorganization as described in the next paragraph below). Other 
than as described herein, NYSE Euronext will not be seeking to make any 
changes to the regulated activities of NYSE Group, Euronext or their 
respective subsidiaries in connection with the Combination. If NYSE 
Euronext determines to make any such changes to the regulated 
activities of NYSE Group or its subsidiaries, it will seek approval of 
the SEC to the extent required. If NYSE Euronext determines to make any 
changes to the regulated activities of Euronext or its subsidiaries in 
connection with the Combination, it will seek approval of the 
applicable European Regulators (as defined below) to the extent 
required. The Proposed Rule Change, if approved by the SEC, will not be 
operative until the consummation of the Combination.
    The Combination will occur pursuant to the terms of the Combination 
Agreement, dated as of June 1, 2006, as amended and restated as of 
November 24, 2006 (as may be amended from time to time, the 
``Combination Agreement''), by and among NYSE Group, Euronext, NYSE 
Euronext and Jefferson Merger Sub, Inc., a Delaware corporation and 
newly formed wholly owned subsidiary of NYSE Euronext (``Merger Sub''). 
Subject to the terms and conditions set forth in the Combination 
Agreement and in compliance with applicable law, NYSE Euronext will 
commence an offer to acquire all of the outstanding ordinary shares of 
Euronext for a combination of NYSE Euronext common stock and cash (the 
``Exchange Offer''). Upon successful completion of the

[[Page 816]]

Exchange Offer,\4\ NYSE Group will merge with Merger Sub (the 
``Merger''), and the surviving entity will be a wholly owned subsidiary 
of NYSE Euronext. NYSE Euronext intends, simultaneously with or as soon 
as possible after the completion of the Merger and assuming approval by 
the necessary vote of Euronext shareholders, to effect a corporate 
reorganization of Euronext and/or its subsidiaries (the ``Post-Closing 
Reorganization'') intended to result in Euronext becoming a wholly 
owned subsidiary of NYSE Euronext. The Post-Closing Reorganization may 
include, but is not limited to, a compulsory acquisition by NYSE 
Euronext of the Euronext ordinary shares from any remaining minority 
shareholder in accordance with Dutch law and the rules of the French 
Financial Market Authority, a liquidation of Euronext, a merger of 
Euronext, or a combination thereof.
---------------------------------------------------------------------------

    \4\ The successful completion of the Exchange Offer shall 
require that at least two-thirds of the outstanding Euronext 
ordinary shares shall have been tendered in the Exchange Offer; 
provided that, prior to filing the Exchange Offer with the French 
Financial Market Authority (Autorit[eacute] des March[eacute]s 
Financiers), NYSE Euronext shall have the right, after consultation 
with Euronext, to reduce this minimum condition so that it is no 
less than a majority of the outstanding Euronext ordinary shares.
---------------------------------------------------------------------------

    The Euronext shareholders and the NYSE Group stockholders voted to 
approve the Combination Agreement and the transactions contemplated by 
the Combination Agreement (including the Combination) on December 19, 
2006 and December 20, 2006, respectively. The prospectus used as part 
of the shareholder circular in connection with obtaining the Euronext 
shareholder approval, the proxy statement/prospectus used in connection 
with obtaining the NYSE Group stockholder approval, and the prospectus 
that will be used in connection with the Exchange Offer for U.S. 
holders of Euronext ordinary shares has been filed with the SEC as part 
of a registration statement of NYSE Euronext on Form S-4.\5\
---------------------------------------------------------------------------

    \5\ See NYSE Euronext Registration Statement on Form S-4, 
Registration No. 333-137506 (initially filed on September 21, 2006 
and declared effective on November 27, 2006), as amended from time 
to time (the ``Registration Statement'').
---------------------------------------------------------------------------

    Other than certain modifications described herein, NYSE Group's 
current corporate structure and governance and the Exchange's current 
corporate structure, governance and self-regulatory independence and 
separation will be preserved. Specifically, after the Combination, NYSE 
Group's business and assets will continue to be structured as follows:
     The Exchange, which is registered as a national securities 
exchange and is a self-regulatory organization, will remain a wholly 
owned subsidiary of NYSE Group. As described in more detail below, the 
organizational documents of NYSE Group will be amended to reflect that, 
after the Combination, it will be an intermediate holding company.
     NYSE Market, Inc., a Delaware corporation (``NYSE 
Market'') will remain a wholly owned subsidiary of the Exchange and 
conduct the Exchange's business. NYSE Regulation, Inc., a New York Type 
A not-for-profit corporation (``NYSE Regulation''), will remain a 
wholly owned subsidiary of the Exchange, and continue to perform the 
regulatory responsibilities for the Exchange pursuant to a delegation 
agreement with the Exchange and many of the regulatory functions of 
NYSE Arca pursuant to a services agreement with NYSE Arca. Each of NYSE 
Euronext, NYSE Group, the Exchange and NYSE Market acknowledges that it 
is responsible for referring possible rule violations to NYSE 
Regulation. In addition, there will be an explicit agreement among NYSE 
Euronext, NYSE Group, the Exchange, NYSE Market and NYSE Regulation to 
provide adequate funding for NYSE Regulation, as is currently the case 
among the NYSE Group entities. There will be no change to the current 
manner of election or appointment of the directors and officers of the 
Exchange, NYSE Market or NYSE Regulation as a result of the 
Combination, except for (a) changes in certain organizational documents 
of the Exchange, NYSE Market and NYSE Regulation to change certain 
references to NYSE Group to NYSE Euronext, (b) a change to shorten the 
time period for member organizations to vote for ``fair 
representation'' candidates, (c) the addition of a requirement that a 
majority of the directors of each of the boards of the Exchange, NYSE 
Market and NYSE Regulation be U.S. Persons (defined below), (d) a 
change from the requirement that the NYSE Market chief executive 
officer be the NYSE Group chief executive officer to the requirement 
that the NYSE Market chief executive officer be a U.S. Person (defined 
below), as described herein, (e) the deletion of provisions in certain 
organizational documents relating to the election or appointment of 
directors during the transition period following the merger between New 
York Stock Exchange, Inc. and Archipelago Holdings, Inc. in March 2006, 
and (f) the addition of a requirement that if a vacancy is created on 
the board of directors of the Exchange, NYSE Market or NYSE Regulation, 
then the director chosen to fill such vacancy shall be a U.S. Person 
(defined below). The Combination will have no effect on the ability of 
any party to trade securities on NYSE Market.
     Archipelago Holdings, Inc., a Delaware corporation (``Arca 
Holdings''), will remain a wholly owned subsidiary of NYSE Group. NYSE 
Arca Holdings, Inc., a Delaware corporation (``NYSE Arca Holdings''), 
and NYSE Arca L.L.C., a Delaware limited liability company (``NYSE Arca 
LLC''), will remain wholly owned subsidiaries of Arca Holdings. NYSE 
Arca will remain a wholly owned subsidiary of NYSE Arca Holdings and 
NYSE Arca Equities, a Delaware corporation formerly known as PCX 
Equities, Inc., will remain a wholly owned subsidiary of NYSE Arca. 
NYSE Arca will continue to maintain its status as a registered national 
securities exchange and self-regulatory organization. Arca Holdings' 
businesses and assets will continue to be held by it and its 
subsidiaries. As noted above, pursuant to a services agreement, NYSE 
Regulation will perform many of the regulatory functions of NYSE Arca.
     There will be no change to the current manner of election 
or appointment of the directors and officers of Arca Holdings, NYSE 
Arca Holdings, NYSE Arca LLC, NYSE Arca or NYSE Arca Equities (or of 
the Euronext exchanges) as a result of the Combination. The Combination 
will have no effect on the ability of any party to trade securities on 
NYSE Arca or NYSE Arca Equities.
    Similarly, Euronext and its subsidiaries will continue to operate 
their business and operations in substantially the same manner as they 
are conducted currently, with any changes subject to the approval of 
the European Regulators to the extent required.
    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:
     NYSE Group and its subsidiaries will continue to be 
regulated by the SEC (but will not be regulated by the European 
Regulators unless NYSE Group and its subsidiaries engage in activities 
in Europe within the jurisdiction of the European Regulators), and 
Euronext and its subsidiaries will continue to be regulated by the 
European Regulators (but will not be regulated by the SEC unless 
Euronext and its subsidiaries engage in activities in the United States 
within the jurisdiction of the SEC);

[[Page 817]]

     Companies 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;
     The Combination will not cause companies that currently 
trade only on a Euronext exchange and are not subject to the Sarbanes-
Oxley Act of 2002 (the ``Sarbanes-Oxley Act'') to become subject to the 
Sarbanes-Oxley Act unless those companies decide to list their 
securities on the Exchange, NYSE Arca or another U.S. securities 
exchange or register the sale of their securities under the U.S. 
Securities Act of 1933, as amended (the ``Securities Act'') or register 
a class of securities under the Exchange Act \6\; and
---------------------------------------------------------------------------

    \6\ A company is subject to the Sarbanes-Oxley Act only if (a) 
its securities are registered under Section 12 of the Exchange Act, 
(b) the company is required to file reports under Section 15(d) of 
the Exchange Act or (c) files or has filed a registration statement 
that has not yet become effective under the Securities Act, and such 
registration statement has not been withdrawn. See Section 2(a)(7) 
of the Sarbanes-Oxley Act.
---------------------------------------------------------------------------

     ``Members'' and ``member organizations'' (each as defined 
in the rules of the Exchange) of the Exchange, ``ETP Holders'' and 
``Authorized Traders'' of NYSE Arca Equities (each as defined in the 
Rules of NYSE Arca Equities), and ``OTP Firms'' and ``OTP Holders'' 
(each as defined in the Rules of NYSE Arca) of NYSE Arca trading only 
on markets operated by the Exchange or NYSE Arca will not become newly 
subject to European rules or regulations as a result of the 
Combination, and members of the 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.
Purpose of the Combination
    The Combination will create a holding company, NYSE Euronext, under 
which the businesses of the NYSE Group and Euronext will be held.\7\ 
The Exchange expects that, after the Combination, the combined company 
will have much greater flexibility and ability to respond to global 
competition. The combination of the businesses of the NYSE Group and 
Euronext under a single holding company also has the advantage of 
creating a diversified business model for the combined company. The 
Combination will leverage the best of NYSE Group's and Euronext's 
collective technology sourced in an efficient manner to realize 
expected synergies of the Combination.
Corporate Structure
NYSE Euronext
    Following the Combination, NYSE Euronext will be a for-profit, 
publicly traded stock corporation and will act as a holding company for 
the businesses of the NYSE Group and Euronext. NYSE Euronext will hold 
all of the equity interests in NYSE Group and its subsidiaries, 
including the Exchange and NYSE Arca, and a majority (if not all) of 
the equity interests in Euronext and its respective subsidiaries. NYSE 
Euronext common stock will be listed on both the Exchange, trading in 
U.S. dollars, and Euronext Paris, trading in euros. The NYSE Euronext 
group's U.S. headquarters will be in New York, New York, and its 
international headquarters will be in Paris, France and Amsterdam, The 
Netherlands.
---------------------------------------------------------------------------

    \7\ The Combination, however, will not result in an actual 
combination of the various exchanges owned by NYSE Group and 
Euronext.
---------------------------------------------------------------------------

    NYSE Group owns two U.S. registered national securities exchanges: 
The Exchange and NYSE Arca, providing marketplaces where investors buy 
and sell listed companies' common stock and other securities as well as 
equity options and securities traded on the basis of unlisted trading 
privileges. NYSE Regulation regulates members and member organizations 
of the Exchange and ETP Holders and Authorized Traders of NYSE Arca 
Equities and OTP Firms and OTP Holders of NYSE Arca through the 
enforcement of exchange rules and U.S. federal securities laws. NYSE 
Regulation also reviews companies listed on the NYSE and NYSE Arca to 
ascertain their compliance with financial and corporate governance 
listing standards.
    Euronext owns a group of European exchanges, including trading 
operations on regulated and non-regulated markets for cash products in 
France, Belgium, The Netherlands, and Portugal and derivatives in the 
United Kingdom and in the four above-mentioned locations. As a result, 
the activities of the Euronext markets are or may be subject to the 
jurisdiction and authority of a number of European regulators, 
including the Dutch Minister of Finance, the French Minister of the 
Economy, the French Financial Market Authority (Autorit[eacute] des 
March[eacute]s Financiers), the Netherlands Authority for the Financial 
Markets (Autoriteit Financiele Markten), the Belgian Banking, Finance, 
and Insurance Commission (Commission Bancaire, Financi[egrave]re, et 
des Assurances), the French Committee of Credit Establishments and 
Investment Undertakings (Comit[eacute] des Etablissements de 
Cr[eacute]dit et des Enterprises d'Investissement--CECEI), the 
Portuguese Securities Market Commission (Comiss[atilde]o do Mercado de 
Valores Mobili[aacute]rios--CMVM) and the U.K. Financial Services 
Authority (FSA) (together with any other governmental securities 
regulator in any European country where NYSE Euronext or any European 
Market Subsidiary \8\ operates a European Regulated Market and in each 
case only to the extent that it has authority and jurisdiction in the 
particular context, the ``European Regulators'').
---------------------------------------------------------------------------

    \8\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article VII, Section 7.3(D).
---------------------------------------------------------------------------

NYSE Euronext Board of Directors
    It is currently contemplated that immediately after the 
Combination, the NYSE Euronext board of directors will consist of 22 
directors as follows:
     11 directors will be the directors of NYSE Group as of 
immediately prior to the completion of the Combination (including the 
chief executive officer and chairman of the board of NYSE Group);
     Nine directors will be members of the supervisory board of 
Euronext \9\ as of immediately prior to the completion of the 
Combination (including the chairman of the Euronext supervisory board); 
provided that Euronext may substitute one or more such individuals from 
the supervisory board with persons who are European Persons as long as 
such newly designated person is reasonably acceptable to NYSE Group;
---------------------------------------------------------------------------

    \9\ The supervisory board of a Dutch company is the functional 
equivalent of a board of directors of a U.S. company, but is not 
permitted to include members of management.
---------------------------------------------------------------------------

     One director will be the chief executive officer of 
Euronext as of immediately prior to the completion of the Combination; 
and
     The remaining director will be Sylvain Hefes, who is a 
European Person (as defined below) approved by both the NYSE Group 
board of directors and the Euronext supervisory board.
    The size of the NYSE Euronext board of directors may be changed by 
the NYSE Euronext board of directors pursuant to a resolution adopted 
by two-thirds of the directors then in office or a vote of not less 
than 80% of the votes entitled to be cast by the holders of the then-
outstanding shares of capital stock of NYSE Euronext entitled to vote 
generally in the election of directors, voting together as a single 
class.
    The proposed Amended and Restated NYSE Euronext Bylaws will provide 
that the NYSE Euronext board of

[[Page 818]]

directors may be composed of either: (1) An equal number of U.S. 
Persons and European Persons or (2) the smallest possible majority of 
U.S. Persons and the largest possible minority of European Persons. 
Specifically, in any election of directors, the nominees whom shall be 
elected to the NYSE Euronext board of directors shall be nominees who 
receive the highest number of votes such that, immediately after such 
election, (1) U.S. Persons as of such election shall constitute at 
least half of, and no more than the smallest number of directors that 
will constitute a majority of, the directors on the NYSE Euronext board 
of directors and (2) European Persons as of such election shall 
constitute the remainder of the directors on the NYSE Euronext board of 
directors.\10\
---------------------------------------------------------------------------

    \10\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article III, Section 3.2(A).
---------------------------------------------------------------------------

    The initial NYSE Euronext board of directors will contain an equal 
number of U.S. Persons and European Persons, and this parity will be 
maintained unless the nominating and governance committee and the board 
of directors of NYSE Euronext, both equally composed of U.S. Persons 
and European Persons, decide otherwise or unless the Amended and 
Restated NYSE Euronext bylaws are amended by a supermajority vote.
    For purposes of the proposed Amended and Restated NYSE Euronext 
Bylaws:
     A ``European Person'' shall mean, as of the date of his or 
her most recent election or appointment as a director, any person whose 
domicile as of such date is and for the immediately preceding twenty-
four (24) months shall have been a country in Europe; \11\
---------------------------------------------------------------------------

    \11\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article III, Section 3.2(A).
---------------------------------------------------------------------------

     A ``U.S. Person'' shall mean, as of the date of his or her 
most recent election or appointment as a director any person whose 
domicile as of such date is and for the immediately preceding twenty-
four (24) months shall have been the United States; \12\ and
---------------------------------------------------------------------------

    \12\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article III, Section 3.2(A).
---------------------------------------------------------------------------

     ``Europe'' shall mean: (1) Any and all of the 
jurisdictions in which Euronext or any of its subsidiaries operates a 
European regulated market; (2) any member state of the European 
Economic Area as of the Effective Time (as defined in the Combination 
Agreement) and any state that becomes a member of the European Economic 
Area after the Effective Time (as defined in the Combination 
Agreement); and (3) Switzerland.\13\
---------------------------------------------------------------------------

    \13\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article VII, Section 7.3(F).
---------------------------------------------------------------------------

    The initial term of directors will end with the first annual 
stockholders meeting to be held by NYSE Euronext, at which meeting the 
existing directors of NYSE Euronext will be renominated as directors of 
NYSE Euronext. Thereafter, the directors will serve one-year terms. 
Nominees to the NYSE Euronext board of directors will be nominated by 
the nominating and governance committee of the NYSE Euronext board of 
directors, which committee shall be comprised of an equal number of 
European Persons and U.S. Persons.
    The proposed Amended and Restated NYSE Euronext Bylaws will also 
provide that either (1) the chairman of the board shall be a U.S. 
Person and the chief executive officer shall be a European Person or 
(2) the chairman of the board shall be a European Person and the chief 
executive officer shall be a U.S. Person.\14\ Accordingly, the offices 
of the chairman and chief executive officer of NYSE Euronext may not be 
occupied simultaneously by the same person. The chief executive officer 
and deputy chief executive officer may be, but are not required to be, 
members of the board of directors of NYSE Euronext. A director may 
serve for any number of terms, consecutive or otherwise. Directors need 
not be stockholders of NYSE Euronext.
---------------------------------------------------------------------------

    \14\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article III, Section 3.3.
---------------------------------------------------------------------------

    Under Section 3.4 of the proposed Amended and Restated NYSE 
Euronext Bylaws, all members of the NYSE Euronext board of directors 
(other than the chief executive officer and deputy chief executive 
officer of NYSE Euronext if they are members of the board of directors) 
must satisfy the independence requirements set forth in NYSE Euronext's 
director independence policy, as amended from time to time.\15\
---------------------------------------------------------------------------

    \15\ The chief executive officer and deputy chief executive 
officer, if they are members of the board of directors, will be 
recused from any act of the board of directors, whether it is acting 
as the board of directors or as a committee of the board, with 
respect to any act of any board committee that is required to be 
comprised solely of independent directors. See proposed Amended and 
Restated NYSE Euronext Bylaws, Article III, Section 3.4. To clarify 
and continue NYSE Group board's current practice of soliciting the 
input of NYSE Group management for certain board and committee 
matters, the Exchange proposes to use the word ``acts'' instead of 
the word ``deliberations'' and ``acts'' instead of the word 
``activities'' (each of which are currently used in the Amended and 
Restated Bylaws of NYSE Group). This same clarification to board 
practice will also be made to the current Bylaws of NYSE Market and 
the current Amended and Restated Bylaws of NYSE Regulation.
---------------------------------------------------------------------------

    The independence policy of the NYSE Euronext board of directors 
will be substantially similar to the current SEC-approved independence 
policy of the NYSE Group board of directors,\16\ except that:
---------------------------------------------------------------------------

    \16\ See Securities Exchange Act Release No. 53382 (February 27, 
2006), 71 FR 11251 (March 6, 2006).
---------------------------------------------------------------------------

     The deputy chief executive officer, in addition to the 
chief executive officer, may serve as a director of NYSE Euronext;
     With respect to broker-dealers that are not members of the 
Exchange or NYSE Arca, the independence policy only applies to broker-
dealers registered under the Exchange Act or persons employed or 
affiliated with such broker-dealers, including European affiliates (but 
not purely non-U.S. broker-dealers);
     The independence policy does not per se prohibit executive 
officers of Exchange-listed and NYSE Arca-listed companies that are 
``foreign private issuers'' (as defined under Rule 3b-4 under the 
Exchange Act) from serving as independent directors of NYSE Euronext; 
and
     There will be a transition period so that the independence 
requirements of the NYSE Euronext director independence policy will not 
apply to the European Persons on the NYSE Euronext board of directors 
until the annual meeting of NYSE Euronext stockholders in 2008.\17\
---------------------------------------------------------------------------

    \17\ Unlike the members of the NYSE Group board of directors, 
currently the Euronext supervisory board members are not subject to 
an independence policy similar to the proposed independence policy 
of NYSE Euronext. It is important that the former Euronext 
Supervisory Board members be permitted to serve on the initial Board 
of Directors of NYSE Euronext because of their depth of experience 
with the Euronext markets. The transition period is designed to 
allow for this. Any potential issues created by the transition 
period are expected to be mitigated by the fact that, upon the 
consummation of the Combination, half of anticipated the board of 
directors of NYSE Euronext will be composed of former NYSE Group 
directors, all of which qualify as independent under the NYSE Group 
Independence Policy.
---------------------------------------------------------------------------

    Specifically, under the director independence policy, each member 
of the NYSE Euronext board of directors, other than the chief executive 
officer and deputy chief executive officer of NYSE Euronext, will be 
required to be independent from (1) NYSE Euronext and its subsidiaries 
(including NYSE Group, Euronext and their respective subsidiaries), (2) 
any members or member organizations of the Exchange, NYSE Arca, or NYSE 
Arca Equities,\18\

[[Page 819]]

(3) any non-member broker-dealer that is registered under the Exchange 
Act and engages in business involving substantial direct contact with 
securities customers, and (4) any issuer of securities listed on the 
Exchange or NYSE Arca, unless such issuer is a ``foreign private 
issuer'' as defined under Rule 3b-4 promulgated under the Exchange Act.
---------------------------------------------------------------------------

    \18\ This would include members, allied members (each as defined 
in the Exchange Rules) and allied persons (as defined in the NYSE 
Arca and NYSE Arca Equities Rules), member organizations of the 
Exchange, OTP Firms and OTP Holders of NYSE Arca (each as defined in 
the Exchange Rules and the rules of NYSE Arca, respectively, as may 
be in effect from time to time) and ETP Holders of NYSE Arca 
Equities (as defined in the rules of NYSE Arca Equities, as may be 
in effect from time to time).
---------------------------------------------------------------------------

    In contrast to the current independence policy of NYSE Group, the 
independence policy of NYSE Euronext will not provide as a categorical 
matter that a person fails to be independent if he or she is an 
executive officer of a foreign private issuer of securities listed on 
the Exchange or NYSE Arca. The Exchange believes that this change is 
important because NYSE Euronext will be a multinational company, with 
European Persons comprising half of its initial directors, most of whom 
will initially be former directors of Euronext. Euronext does not 
prohibit executive officers of companies listed on Euronext exchanges 
from serving as directors of Euronext because Euronext does not (and 
NYSE Euronext will not) regulate these companies in the way that the 
Exchange regulates its listed companies. The Exchange therefore 
believes that a categorical requirement prohibiting all executive 
officers of foreign private issuers listed on the NYSE on NYSE Arca 
could preclude a large pool of otherwise highly qualified director 
candidates from serving on the NYSE Euronext board of directors and is 
not necessary.
    In addition, the director independence policy will contain a 
transition period so that the independence requirements will not apply 
to the European Persons on the NYSE Euronext board of directors until 
the annual meeting of NYSE Euronext stockholders in 2008.
    Finally, in contrast to the current independence policy of NYSE 
Group, the independence policy of NYSE Euronext will not provide as a 
categorical matter that a person fails to be independent if he or she 
is a director of an affiliate of a member organization (which includes 
member organizations of New York Stock Exchange LLC (as defined in 
paragraph (b) of Rule 2 of New York Stock Exchange LLC), OTP Firms of 
NYSE Arca (as defined in Rules 1.1(r) of NYSE Arca) and ETP Holders of 
NYSE Arca Equities, Inc. (as defined in Rule 1.1(n) of NYSE Arca 
Equities, Inc.)). In addition, Rule 2B of the Exchange will be amended 
to clarify that, if a director of an affiliate of a member organization 
serves as a director of NYSE Euronext, this fact shall not cause such 
member organization to be an affiliate of the Exchange, or an affiliate 
of an affiliate of the Exchange.
    The independence policy of NYSE Euronext will require, however, 
that (1) executive officers of foreign private issuers (including, for 
the avoidance of doubt, companies whose securities are listed on a 
Euronext exchange), (2) executive officers of NYSE Euronext, (3) any 
European Person on the NYSE Euronext board of directors who would not 
satisfy the independence requirements in the independence policy but 
for the transition period, and (4) any director of an affiliate of a 
member organization, taken together, shall constitute no more than a 
minority of the total number of directors of NYSE Euronext. In 
addition, none of (1) an executive officer of an issuer whose 
securities are listed on the Exchange or NYSE Arca (regardless of 
whether such issuer is a foreign private issuer), (2) a European Person 
on the NYSE Euronext board of directors who would not satisfy the 
independence requirements in the independence policy but for the 
transition period, or (3) any director of an affiliate of a member 
organization can qualify as an independent director of the Exchange, 
NYSE Market or NYSE Regulation. Consequently, the Exchange believes 
that the proposed changes, when taken together, do not present 
significant concerns regarding the independence of the board of NYSE 
Euronext.
    The Exchange proposes that each of the Amended and Restated 
Operating Agreement of the Exchange, the Amended and Restated Bylaws of 
NYSE Market and the Amended and Restated Bylaws of NYSE Regulation be 
amended so that each reference to the independence policy or 
requirements of NYSE Group shall be replaced with a reference to the 
independence policy or requirements of NYSE Euronext.
Committees of NYSE Euronext Board of Directors
    After the Combination, the NYSE Euronext board of directors may 
create one or more committees. It is expected that, upon completion of 
the Combination, the NYSE Euronext board of directors will initially 
have the following three standing committees: (1) An audit committee; 
(2) a human resource and compensation committee; and (3) a nominating 
and governance committee. These committees also will perform relevant 
functions for NYSE Group, the Exchange, NYSE Market, NYSE Regulation, 
Arca Holdings, NYSE Arca and NYSE Arca Equities, as well as other 
subsidiaries of NYSE Euronext, except that the board of directors of 
NYSE Regulation will continue to have its own compensation and 
nominating and governance committees.
    Each of the audit committee, nominating and governance committee 
and human resources and compensation committee of the NYSE Euronext 
board of directors will consist solely of directors meeting the 
independence requirements of NYSE Euronext. As a result, neither the 
chief executive officer nor the deputy chief executive officer of NYSE 
Euronext will be permitted to serve on any of these committees. The 
NYSE Euronext board of directors will review and adopt a charter for 
each of these committees annually. Immediately after the Combination, 
the nominating and governance committee of NYSE Euronext will be 
comprised of an equal number of persons who were directors of NYSE 
Group and directors of Euronext, in each case as of immediately prior 
to the Combination, and the Amended and Restated Bylaws of NYSE 
Euronext will provide that the nominating and governance committee will 
be comprised of an equal number of U.S. Persons and European Persons.
NYSE Euronext Management
    NYSE Euronext will also have a management committee. As of the 
consummation of the Combination, the management committee will consist 
of fourteen members, with an equal number of members designated by NYSE 
Group and Euronext and will include the chief executive officer of NYSE 
Group and the chief executive officer of Euronext, in each case as of 
immediately prior to the Combination.
    The management committee will be primarily responsible for managing 
the strategic and high-level business and affairs of NYSE Euronext, 
subject to the oversight of the NYSE Euronext board of directors, and 
except as discussed below in relation to NYSE Regulation. The only 
members of the senior management team of NYSE Euronext who will also 
serve as directors of NYSE Euronext are the chief executive officer and 
deputy chief executive officer of NYSE Euronext. The chief executive 
officer of NYSE Regulation will attend as appropriate meetings of the 
board of directors of NYSE Euronext and each of NYSE Group, the 
Exchange, NYSE Market, NYSE Arca L.L.C., NYSE Arca or NYSE Arca 
Equities, and also will not be prohibited from meeting with management 
of NYSE Euronext and each of NYSE Group, the Exchange, NYSE Market, 
NYSE Arca L.L.C., NYSE

[[Page 820]]

Arca or NYSE Arca Equities. However, he or she will not be an officer 
or employee of any affiliated entity other than NYSE Regulation and 
will report solely to the NYSE Regulation board of directors.
Voting and Ownership Limitations of NYSE Euronext Stock
    The proposed Amended and Restated NYSE Euronext Certificate of 
Incorporation will place certain restrictions on the ability to vote 
and own shares of common stock of NYSE Euronext. Under the proposed 
Amended and Restated Certificate of Incorporation of NYSE Euronext, no 
person (either alone or together with its related persons \19\) will be 
entitled to vote or cause the voting of shares of stock of NYSE 
Euronext beneficially owned by such person or its related persons, in 
person or by proxy or through any voting agreement or other 
arrangement, to the extent that such shares represent in the aggregate 
more than 10% of the then outstanding votes entitled to be cast on such 
matter, and no person (either alone or together with its related 
persons) may acquire the ability to vote more than 10% of the then 
outstanding votes entitled to be cast on any such matter by virtue of 
agreements or arrangements entered into with other persons not to vote 
shares of NYSE Euronext's outstanding capital stock. NYSE Euronext 
shall disregard any such votes purported to be cast in excess of this 
limitation.\20\
---------------------------------------------------------------------------

    \19\ A ``related person'' means, with respect to any person, (i) 
any ``affiliate'' of such person (as such term is defined in Rule 
12b-2 under the Exchange Act); (ii) any other person(s) with which 
such first person has any agreement, arrangement or understanding 
(whether or not in writing) to act together for the purpose of 
acquiring, voting, holding or disposing of shares of the stock of 
NYSE Euronext; (iii) in the case of a person that is a company, 
corporation or similar entity, any executive officer (as defined 
under Rule 3b-7 under the Exchange Act) or director of such person 
and, in the case of a person that is a partnership or a limited 
liability company, any general partner, managing member or manager 
of such person, as applicable; (iv) in the case of a person that is 
a ``member organization'' (as defined in the Exchange Rules), any 
``member'' (as defined in the Exchange Rules) that is associated 
with such person (as determined using the definition of ``person 
associated with a member'' as defined under Section 3(a)(21) of the 
Exchange Act); (v) in the case of a person that is an OTP Firm, any 
OTP Holder that is associated with such person (as determined using 
the definition of ``person associated with a member'' as defined 
under Section 3(a)(21) of the Exchange Act); (vi) in the case of a 
person that is a natural person, any relative or spouse of such 
natural person, or any relative of such spouse who has the same home 
as such natural person or who is a director or officer of NYSE 
Euronext or any of its parents or subsidiaries; (vii) in the case of 
a person that is an executive officer (as defined under Rule 3b-7 
under the Exchange Act), or a director of a company, corporation or 
similar entity, such company, corporation, or entity, as applicable; 
(viii) in the case of a person that is a general partner, managing 
member or manager of a partnership or limited liability company, 
such partnership or limited liability company, as applicable; (ix) 
in the case of a person that is a ``member'' (as defined in the 
Exchange Rules), the ``member organization'' (as defined in the 
Exchange Rules) with which such person is associated (as determined 
using the definition of ``person associated with a member'' as 
defined under Section 3(a)(21) of the Exchange Act); and (x) in the 
case of a person that is an OTP Holder, the OTP Firm with which such 
person is associated (as determined using the definition of ``person 
associated with a member'' as defined under Section 3(a)(21) of the 
Exchange Act). See proposed Amended and Restated NYSE Euronext 
Certificate of Incorporation, Article V, Section 1(L).
    \20\ See proposed Amended and Restated NYSE Euronext Certificate 
of Incorporation, Article V, Section 1(A).
---------------------------------------------------------------------------

    In addition, under the proposed Amended and Restated NYSE Euronext 
Certificate of Incorporation, no person (either alone or together with 
its related persons) may at any time beneficially own shares of stock 
of NYSE Euronext representing in the aggregate more than 20% of the 
then outstanding votes entitled to be cast on any matter.\21\
---------------------------------------------------------------------------

    \21\ See proposed Amended and Restated NYSE Euronext Certificate 
of Incorporation, Article V, Section 2(A).
---------------------------------------------------------------------------

    In the event that a person, either alone or together with its 
related persons, beneficially owns shares of stock of NYSE Euronext in 
excess of the 20% threshold, such person and its related persons will 
be obligated to sell promptly, and NYSE Euronext will be obligated to 
purchase promptly, at a price equal to the par value of such shares of 
stock and to the extent that funds are legally available for such 
purchase, that number of shares necessary to reduce the ownership level 
of such person and its related persons to below the permitted 
threshold, after taking into account that such repurchased shares will 
become treasury shares and will no longer be deemed to be 
outstanding.\22\
---------------------------------------------------------------------------

    \22\ See proposed Amended and Restated NYSE Euronext Certificate 
of Incorporation, Article V, Section 2(D).
---------------------------------------------------------------------------

    The NYSE Euronext board of directors will have the right to waive 
the provisions regarding voting and ownership limits applicable to any 
person by a resolution expressly permitting this voting or ownership 
(which resolution must be filed with and approved by the SEC under 
Section 19 of the Exchange Act and filed with and approved by each 
European Regulator having appropriate jurisdiction and authority), 
subject to a determination by the NYSE Euronext board of directors that 
the exercise of such voting rights (or the entering into of a voting 
agreement) or ownership, as applicable:
     Will not impair the ability of any of the Exchange, NYSE 
Market, NYSE Regulation, NYSE Arca L.L.C., NYSE Arca or NYSE Arca 
Equities (each, a ``U.S. Regulated Subsidiary'' and together, the U.S. 
Regulated Subsidiaries''), NYSE Euronext or NYSE Group (if and to the 
extent that NYSE Group continues to exist as a separate entity) to 
discharge their respective responsibilities under the Exchange Act and 
the rules and regulations thereunder;
     Will not impair the ability of any of the European Market 
Subsidiaries or NYSE Euronext or Euronext (if and to the extent that 
Euronext continues to exist as a separate entity) to discharge their 
respective responsibilities under the European Exchange Regulations; 
\23\
---------------------------------------------------------------------------

    \23\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article VII, Section 7.3(B).
    ``European Exchange Regulations'' are defined as (1) laws 
providing for the regulation of securities exchanges in France, the 
Netherlands, Belgium, Portugal and the United Kingdom and (2) 
following the formation or acquisition by Euronext of any European 
Regulated Market not owned and operated by Euronext as of the 
Effective Time (as defined in the Combination Agreement), laws 
providing for the regulation of securities exchanges in the 
jurisdiction in which such European Regulated Market operates; 
provided that (a) the formation or acquisition of such European 
Regulated Market shall have been approved by the Board of Directors 
of NYSE Euronext and (b) the jurisdiction in which such European 
Regulated Market operates is represented in the Euronext College of 
Regulators.
    ``European Market Subsidiary'' (and collectively, the ``European 
Market Subsidiaries'') shall mean any ``market operator'' (as 
defined by the European Directive on Markets in Financial 
Instruments 2004/39 EC) that is (1) owned by Euronext as of the 
Effective Time (as defined in the Combination Agreement) and 
continues to be owned directly or indirectly by NYSE Euronext; or 
(2) acquired by Euronext after the Effective Time (as defined in the 
Combination Agreement); provided that, in the case of clause (2), 
the acquisition of such entity shall have been approved by the Board 
of Directors of NYSE Euronext and the jurisdiction in which such 
European Market Subsidiary operates is represented in the Euronext 
College of Regulators.
    ``Euronext College of Regulators'' means (1) the Committee of 
Chairmen of the French Financial Market Authority (Autorit[eacute] 
des March[eacute]s Financiers), the Netherlands Authority for the 
Financial Markets (Autoriteit Financiele Markten), the Belgian 
Banking, Finance, and Insurance Commission (Commission Bancaire, 
Financi[eacute]re, et des Assurances), the Portuguese Securities 
Market Commission (Comiss[atilde]o do Mercado de Valores 
Mobili[aacute]rios--CMVM), and the U.K. Financial Services Authority 
(FSA), pursuant to the Memoranda of Understanding, dated March 3, 
2003 and March 22, 2001, and (2) a successor body thereto created to 
include a European Regulator that regulates a European Market 
Subsidiary.
---------------------------------------------------------------------------

     Is otherwise in the best interest of NYSE Euronext, its 
stockholders, the U.S. Regulated Subsidiaries and the European Market 
Subsidiaries; and
     Will not impair the SEC's ability to enforce the Exchange 
Act or the European Regulators' ability to enforce the European 
Exchange Regulations.

[[Page 821]]

    In making these determinations, the NYSE Euronext board of 
directors may impose conditions and restrictions on the relevant 
stockholder or its related persons that it deems necessary, appropriate 
or desirable in furtherance of the objectives of the Exchange Act, 
European Exchange Regulations and its governance. Any such waiver would 
be tantamount to a proposed rule change subject to approval by the SEC, 
and if applicable, the European Regulators. However, the NYSE Euronext 
board of directors may not waive the voting and ownership limits above 
the 20% threshold for any person if such person or its related persons 
is:
     For so long as NYSE Euronext directly or indirectly 
controls the Exchange or NYSE Market, a ``member'' or ``member 
organization'' (as defined in Exchange Rules);
     For so long as NYSE Euronext directly or indirectly 
controls NYSE Arca, NYSE Arca Equities or any facility of NYSE Arca, an 
ETP Holder (as defined in the NYSE Arca Equities rules of NYSE Arca, as 
such rules may be in effect from time to time) of NYSE Arca Equities or 
an OTP Holder or an OTP Firm (each as defined in the rules of NYSE 
Arca, as such rules may be in effect from time to time) of NYSE Arca; 
or
     Subject to any statutory disqualification (as defined in 
Section 3(a)(39) of the Exchange Act) (a ``U.S. Disqualified Person'') 
or has been determined by a European Regulator to be in violation of 
laws or regulations adopted in accordance with the European Directive 
on Markets in Financial Instruments applicable to any European Market 
Subsidiary requiring such person to act fairly, honestly and 
professionally (a ``European Disqualified Person'').
    The proposed Amended and Restated NYSE Euronext Certificate of 
Incorporation will also require any stockholder that the NYSE Euronext 
board of directors reasonably believes to be subject to the voting or 
ownership restrictions summarized above, and any person (either alone 
or together with its related persons) that at any time beneficially 
owns 5% or more of NYSE Euronext's outstanding capital stock (which 
ownership has not been reported to NYSE Euronext), to provide to NYSE 
Euronext, upon the request of the NYSE Euronext board of directors, 
complete information as to all shares of stock of NYSE Euronext 
beneficially owned by such person and its related persons, and any 
other factual matters relating to the applicability or effect of the 
voting and ownership limitations outlined above as may be reasonably 
requested of such person and its related persons.\24\
---------------------------------------------------------------------------

    \24\ See proposed Amended and Restated NYSE Euronext Certificate 
of Incorporation, Article V, Section 4.
---------------------------------------------------------------------------

Protection of Self-Regulatory Functions and Oversight
    The proposed Amended and Restated NYSE Euronext Bylaws will contain 
several other provisions designed to protect the independence of the 
self-regulatory function of the U.S. Regulated Subsidiaries and the 
European Market Subsidiaries.
    The proposed Amended and Restated NYSE Euronext Bylaws require 
that, in discharging his or her responsibilities as a member of the 
board, each director of NYSE Euronext must, to the fullest extent 
permitted by applicable law, take into consideration the effect that 
NYSE Euronext's actions would have on the ability of the U.S. Regulated 
Subsidiaries to carry out their responsibilities under the Exchange 
Act, on the ability of the European Market Subsidiaries to carry out 
their responsibilities under the European Exchange Regulations as 
operators of European Regulated Markets, and on the ability of NYSE 
Group, the U.S. Regulated Subsidiaries and NYSE Euronext to:
     Engage in conduct that fosters and does not interfere with 
the ability of NYSE Group, the U.S. Regulated Subsidiaries and NYSE 
Euronext to prevent fraudulent and manipulative acts and practices in 
the securities markets;
     Promote just and equitable principles of trade in the 
securities markets;
     Foster cooperation and coordination with persons engaged 
in regulating, clearing, settling, processing information with respect 
to, and facilitating transactions in securities;
     Remove impediments to and perfect the mechanisms of a free 
and open market in securities and a U.S. national securities market 
system; and
     In general, to protect investors and the public 
interest.\25\
---------------------------------------------------------------------------

    \25\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article III, Section 3.15.
---------------------------------------------------------------------------

    Moreover, the proposed Amended and Restated NYSE Euronext Bylaws 
provide that each director, officer, and employee of NYSE Euronext, in 
discharging his or her responsibilities in such capacity, shall (1) 
comply with the U.S. federal securities laws, the European Exchange 
Regulations, and the respective rules and regulations thereunder; (2) 
cooperate with the SEC and the European Regulators; and (3) cooperate 
with the U.S. Regulated Subsidiaries and the European Market 
Subsidiaries pursuant to, and to the extent of, their regulatory 
authority.\26\
---------------------------------------------------------------------------

    \26\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article III, Section 3.15.
---------------------------------------------------------------------------

    The proposed Amended and Restated NYSE Euronext Bylaws provide 
that, to the fullest extent permitted by applicable law, all 
confidential information pertaining to (1) the self-regulatory function 
of the Exchange, NYSE Market, NYSE Regulation, NYSE Arca and NYSE Arca 
Equities (including but not limited to disciplinary matters, trading 
data, trading practices and audit information) contained in the books 
and records of any of the U.S. Regulated Subsidiaries, and (2) the 
self-regulatory function of the European Market Subsidiaries under the 
European Exchange Regulations as operator of a European Regulated 
Market (including but not limited to disciplinary matters, trading 
data, trading practices and audit information) contained in the books 
and records of the European Market Subsidiaries, that shall come into 
the possession of NYSE Euronext shall:
     Not be made available to any persons other than to those 
officers, directors, employees and agents of NYSE Euronext that have a 
reasonable need to know the contents thereof;
     Be retained in confidence by NYSE Euronext and its 
officers, directors, employees and agents; and
     Not be used for any commercial purposes.\27\
---------------------------------------------------------------------------

    \27\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article VIII.
---------------------------------------------------------------------------

    Notwithstanding the foregoing, nothing in the Amended and Restated 
NYSE Euronext Bylaws shall be interpreted so as to limit or impede:
     The rights of the European Regulators or any of the 
European Market Subsidiaries to have access to and examine such 
confidential information pursuant to European Exchange Regulations;
     The rights of the SEC or any of the U.S. Regulated 
Subsidiaries to have access to and examine such confidential 
information pursuant to the U.S. federal securities laws and the rules 
and regulations thereunder; or
     The ability of any officers, directors, employees or 
agents of NYSE Euronext to disclose such confidential information to 
the SEC or the U.S. Regulated Subsidiaries or the European Regulators 
or the European Market Subsidiaries.\28\
---------------------------------------------------------------------------

    \28\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article VIII.
---------------------------------------------------------------------------

    NYSE Euronext's books and records shall be subject at all times to 
inspection and copying by (a) the SEC, (b) each of the European 
Regulators, (c) any U.S.

[[Page 822]]

Regulated Subsidiary and (d) any European Market Subsidiary; provided 
that, (1) in the case of (c), such books and records are related to the 
operation or administration of such U.S. Regulated Subsidiary or any 
other U.S. Regulated Subsidiary over which such U.S. Regulated 
Subsidiary has regulatory authority or oversight and (2) in the case of 
(d), such books and records are related to the operation or 
administration of such European Market Subsidiary or any European 
Regulated Market over which such European Market Subsidiary has 
regulatory authority or oversight. NYSE Euronext's books and records 
related to U.S. Regulated Subsidiaries shall be maintained within the 
United States, and NYSE Euronext's books and records related to 
European Market Subsidiaries shall be maintained in the home 
jurisdiction of one or more of the European Market Subsidiaries. The 
proposed Amended and Restated NYSE Euronext Bylaws provide that, to the 
extent that any of NYSE Euronext's books and records relate to both 
U.S. Regulated Subsidiaries and European Market Subsidiaries (each such 
book and record, an ``Overlapping Record''), NYSE Euronext shall be 
entitled to maintain such books and records in either the United States 
or the home jurisdiction of one or more of the European Market 
Subsidiaries. To facilitate compliance with the requirements of Rule 
17a-1(b) under the Exchange Act, NYSE Euronext shall maintain in the 
United States originals or copies of Overlapping Records covered by 
Rule 17a-1(b) promptly after creation of such Overlapping Records.
    The proposed Amended and Restated NYSE Euronext Bylaws provide 
that, for so long as NYSE Euronext directly or indirectly controls any 
U.S. Regulated Subsidiary, the books, records, premises, officers, 
directors and employees of NYSE Euronext shall be deemed to be the 
books, records, premises, officers, directors and employees of the U.S. 
Regulated Subsidiaries for purposes of and subject to oversight 
pursuant to the Exchange Act, and for so long as NYSE Euronext directly 
or indirectly controls any European Market Subsidiary, the books, 
records, premises, officers, directors and employees of NYSE Euronext 
shall be deemed to be the books, records, premises, officers, directors 
and employees of such European Market Subsidiaries for purposes of and 
subject to oversight pursuant to the European Exchange Regulations.\29\
---------------------------------------------------------------------------

    \29\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article VIII.
---------------------------------------------------------------------------

    The proposed Amended and Restated NYSE Euronext Bylaws provide that 
NYSE Euronext shall comply with the U.S. federal securities laws and 
the rules and regulations thereunder, the European Exchange Regulations 
and the rules and regulations thereunder and shall cooperate with the 
SEC, the European Regulators, and the U.S. Regulated Subsidiaries 
pursuant to and to the extent of their respective regulatory authority, 
and shall take reasonable steps necessary to cause its agents to 
cooperate, with the SEC and the European Regulators and, where 
applicable, the U.S. Regulated Subsidiaries pursuant to their 
regulatory authority.\30\
---------------------------------------------------------------------------

    \30\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article IX.
---------------------------------------------------------------------------

    The proposed Amended and Restated NYSE Euronext Bylaws also provide 
that NYSE Euronext, its directors and officers, and those of its 
employees whose principal place of business and residence is outside of 
the United States shall be deemed to irrevocably submit to the 
jurisdiction of the U.S. federal courts and the SEC for the purposes of 
any suit, action or proceeding pursuant to the U.S. federal securities 
laws, and the rules and regulations thereunder, commenced or initiated 
by the SEC arising out of, or relating to, the activities of the U.S. 
Regulated Subsidiaries (and shall be deemed to agree that NYSE Euronext 
may serve as U.S. agent for purposes of service of process in such 
suit, action or proceeding). Further, NYSE Euronext, as well as each 
such director, officer or employee by virtue of acceptance of such 
position, shall be deemed to waive, and agree not to assert by way of 
motion, as a defense or otherwise in any such suit, action or 
proceeding, any claims that it or they are not personally subject to 
the jurisdiction of the SEC, that the suit, action or proceeding is an 
inconvenient forum or that the venue of the suit, action or proceeding 
is improper, or that the subject matter thereof may not be enforced in 
or by such courts or agency.\31\
---------------------------------------------------------------------------

    \31\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article VII, Section 7.1.
---------------------------------------------------------------------------

    The proposed Amended and Restated NYSE Euronext Bylaws also provide 
that NYSE Euronext, its directors, officers and employees shall be 
deemed to irrevocably submit to the jurisdiction of the European 
Regulators and to courts in the capital city of the country of each 
such regulator for the purposes of any suit, action or proceeding 
pursuant to the European Exchange Regulations and the rules and 
regulations thereunder, commenced or initiated by the European 
Regulators arising out of, or relating to, the activities of the 
European Market Subsidiaries. Further, NYSE Euronext, as well as each 
such director, officer or employee by virtue of acceptance of such 
position, shall be deemed to waive, and agree not to assert by way of 
motion, as a defense or otherwise in any such suit, action or 
proceeding, any claims that it or they are not personally subject to 
the jurisdiction of the European Regulators, that the suit, action or 
proceeding is an inconvenient forum or that the venue of the suit, 
action or proceeding is improper, or that the subject matter thereof 
may not be enforced in or by such courts or regulators.\32\
---------------------------------------------------------------------------

    \32\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article VII, Section 7.2.
---------------------------------------------------------------------------

    The proposed Amended and Restated NYSE Euronext Certificate of 
Incorporation and proposed Amended and Restated NYSE Euronext Bylaws 
provide that:
     For so long as NYSE Euronext shall control, directly or 
indirectly, any of the U.S. Regulated Subsidiaries, before any 
amendment to or repeal of any provision of the Amended and Restated 
NYSE Euronext Certificate of Incorporation or Amended and Restated NYSE 
Euronext Bylaws shall be effective, such amendment or repeal shall be 
submitted to the boards of directors of the Exchange, NYSE Market, NYSE 
Regulation, NYSE Arca and NYSE Arca Equities, and if any or all of such 
boards of directors determines that the amendment or repeal must be 
filed with or filed with and approved by the SEC under Section 19 of 
the Exchange Act before such amendment or repeal may be effectuated, 
then such amendment or repeal shall not be effectuated until filed with 
or filed with and approved by the SEC; \33\ and
---------------------------------------------------------------------------

    \33\ See proposed Amended and Restated NYSE Euronext Certificate 
of Incorporation, Article X; proposed Amended and Restated NYSE 
Euronext Bylaws, Section 10.10(C).
---------------------------------------------------------------------------

     For so long as NYSE Euronext shall control, directly or 
indirectly, any European Market Subsidiary, before any amendment to or 
repeal of any provision of the Amended and Restated NYSE Euronext 
Certificate of Incorporation or Amended and Restated NYSE Euronext 
Bylaws shall be effective, such amendment or repeal shall be submitted 
to the boards of directors of the European Market Subsidiaries and, if 
any or all of such boards of directors shall determine that such 
amendment or repeal must be filed with, or filed with and approved by, 
a European Regulator under European Exchange Regulations before such 
amendment or repeal may be

[[Page 823]]

effectuated, then such amendment or repeal shall not be effectuated 
until filed with, or filed with and approved by, the relevant European 
Regulator(s).
    In addition, the proposed Amended and Restated Bylaws of NYSE 
Euronext provides that NYSE Euronext, its directors, officers and 
employees shall give due regard to the preservation of the independence 
of the self-regulatory function of the U.S. Regulated Subsidiaries (to 
the extent of each U.S. Regulated Subsidiary's self-regulatory 
function) and to obligations to investors and the general public and 
shall not take any actions that would interfere with the effectuation 
of any decisions by the board of directors or managers of the U.S. 
Regulated Subsidiaries relating to their regulatory functions 
(including enforcement and disciplinary matters) or that would 
interfere with the ability of the U.S. Regulated Subsidiaries to carry 
out their respective responsibilities under the Exchange Act.\34\
---------------------------------------------------------------------------

    \34\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article IX, Section 9.4.
---------------------------------------------------------------------------

    Furthermore, the proposed Amended and Restated Bylaws of NYSE 
Euronext provide that NYSE Euronext, its directors, officers and 
employees shall give due regard to the preservation of the independence 
of the self-regulatory function of the European Market Subsidiaries (to 
the extent of each European Market Subsidiaries' self-regulatory 
function) and to its obligations to investors and the general public, 
and shall not take any actions that would interfere with the 
effectuation of any decisions by the board of directors or managers of 
the European Market Subsidiaries relating to their regulatory 
responsibilities (including enforcement and disciplinary matters) or 
that would interfere with the ability of the European Market 
Subsidiaries to carry out their respective regulatory responsibilities 
under the European Exchange Regulations.\35\
---------------------------------------------------------------------------

    \35\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article IX, Section 9.5.
---------------------------------------------------------------------------

    Under the proposed Amended and Restated NYSE Euronext Bylaws, NYSE 
Euronext shall take reasonable steps necessary to cause its officers, 
directors and employees, prior to accepting a position as an officer, 
director or employee, as applicable, of NYSE Euronext to consent in 
writing to the applicability to them of certain of these provisions 
with respect to their activities related to any U.S. Regulated 
Subsidiary.\36\
---------------------------------------------------------------------------

    \36\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Article IX, Section 9.3.
---------------------------------------------------------------------------

    The proposed Amended and Restated NYSE Euronext Bylaws require the 
affirmative vote of at least two-thirds of the directors then in office 
for (a) the consummation of any Extraordinary Transaction (as defined 
below), or (b) the execution by NYSE Euronext or any of its 
subsidiaries of a definitive agreement providing for an Extraordinary 
Transaction. An ``Extraordinary Transaction'' shall mean any of the 
following: (i) The direct or indirect acquisition, sale or disposition 
by NYSE Euronext or any of its subsidiaries of assets or equity 
securities where the consideration received in respect of such assets 
or equity securities has a fair market value, measured as of the date 
of the execution of the definitive agreement providing for such 
acquisition, sale or disposition (or, if no definitive agreement is 
executed for such acquisition, sale or disposition, the date of the 
consummation of such acquisition, sale or disposition), in excess of 
30% of the aggregate equity market capitalization of NYSE Euronext as 
of such date; (ii) a merger or consolidation of the NYSE Euronext or 
any of its subsidiaries with any entity with an aggregate equity market 
capitalization (or, if such entity's equity securities shall not be 
traded on a national securities exchange, with a fair market value of 
assets), measured as of the date of the execution of the definitive 
agreement providing for such merger or consolidation (or, if no 
definitive agreement is executed for such merger or consolidation, the 
date of the consummation of such merger or consolidation), in excess of 
30% of the aggregate equity market capitalization of NYSE Euronext as 
of such date; or (iii) any direct or indirect acquisition by NYSE 
Euronext or any of its subsidiaries of assets or equity securities of 
an entity whose principal place of business is outside of the United 
States and Europe, or any merger or consolidation of NYSE Euronext or 
any of its subsidiaries with an entity whose principal place of 
business is outside of the United States and Europe, pursuant to which 
NYSE Euronext has agreed that one or more directors of the board of 
directors of NYSE Euronext shall be a person who is neither a U.S. 
Person nor a European Person as of the most recent election of 
directors.\37\
---------------------------------------------------------------------------

    \37\ See proposed Amended and Restated NYSE Euronext Bylaws, 
Section 10.9. Section 10.9 also provides that none of the 
transactions contemplated by the Combination Agreement, including 
the Combination, shall constitute an Extraordinary Transaction.
---------------------------------------------------------------------------

    The NYSE Group does not currently, nor after the Combination will 
it or NYSE Euronext, own or control any of the member organizations of 
the Exchange. To the extent that a member organization is the owner of 
NYSE Euronext common stock, the ownership limitations described above 
are intended to deal with the issues that might otherwise be presented. 
However, the Exchange understands that the SEC is also concerned about 
potential unfair competition and conflicts of interest between a U.S. 
exchange's self-regulatory obligations and its commercial interests 
that could exist if such exchange were to become affiliated with one of 
its members, as well as the potential for unfair competitive advantage 
that the affiliated member could have by virtue of informational or 
operational advantages, or the ability to receive preferential 
treatment.\38\ The Exchange acknowledges that ownership of, or a 
control relationship with, a member organization by NYSE Euronext or 
any of its subsidiaries would necessitate that the foregoing concerns 
be first addressed with, and to the satisfaction of, the SEC \39\ and/
or, as appropriate, the European Regulators.
---------------------------------------------------------------------------

    \38\ See Securities Exchange Act Release Nos. 52497 (September 
22, 2005), 70 FR 56949 (September 29, 2005) (File No. SR-PCX-2005-
90) and 53382 (February 27, 2006), 71 FR 11251 (March 6, 2006) (File 
No. SR-NYSE-2005-77).
    \39\ See proposed Exchange Rule 2(B). We note that the SEC has 
specifically approved the ownership and operation of the outbound 
router function of Archipelago Securities by Archipelago, subject to 
the conditions specified in Securities Exchange Act Release No. 
52497. See id.
---------------------------------------------------------------------------

Delaware Trust and Dutch Foundation
Generally
    NYSE Euronext will operate several regulated entities located in 
the United States and in various jurisdictions in Europe. In connection 
with obtaining regulatory approval of the Combination, NYSE Euronext 
intends to implement certain special arrangements consisting of two 
standby structures, one involving a Dutch foundation (stichting) and 
one involving a Delaware trust. The Dutch foundation will be empowered 
to take actions to mitigate the effects of any material adverse change 
in U.S. law that has an ``extraterritorial'' impact on non-U.S. issuers 
listed on Euronext markets, non-U.S. financial services firms that are 
members of Euronext markets or holders of exchange licenses with 
respect to the Euronext markets. The Delaware trust will be empowered 
to take actions to mitigate the effects of any material adverse change 
in European law that has 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

[[Page 824]]

licenses with respect to the NYSE Group securities exchanges.
Administration of the Dutch Foundation and of the Delaware Trust
    The Dutch foundation will be administered by a board of three 
directors, and the Delaware trust will be administered by a board of 
three trustees. Each director will be required to be of high repute and 
to have experience and expertise in the securities industry, regulation 
and/or corporate governance and satisfy the independence requirements 
applicable to the board of directors of New York Stock Exchange LLC. 
Terms of appointment for the directors of each of the foundation and 
the trust will be three years for the first three terms with one-year 
terms thereafter, with no limit on the total number of terms a director 
may serve.
    The initial directors of the Delaware trust and the Dutch 
foundation will be selected jointly by NYSE Group and Euronext prior to 
the Combination, with successor members to be selected by the 
nominating and governance committee of the NYSE Euronext board of 
directors. Persons nominated by the nominating and governance committee 
of the NYSE Euronext board of directors to serve on the board of the 
Dutch foundation must be approved by the Chairs Committee of the 
College of Euronext Regulators and must pass any ``fit and proper'' 
test under applicable European laws or regulations. Persons nominated 
by the nominating and governance committee of the NYSE Euronext board 
of directors to serve on the board of the Delaware trust must not be 
unacceptable to the Staff of the SEC and must not be subject to any 
statutory disqualification (as defined in Section 3(a)(39) of the 
Exchange Act). Directors of the Dutch foundation and the Delaware trust 
may only be removed for cause by the nominating and governance 
committee of the NYSE Euronext board of directors; provided, however, 
that NYSE Euronext shall provide prior written notice of such removal 
to the College of Euronext Regulators (in the case of a foundation 
director) and to the Director of the Division of Market Regulation of 
the SEC (in the case of a trustee).
    Actions of the Dutch foundation and the Delaware trust will require 
majority approval of the members of the relevant board of directors, 
following reasonable consultation and good-faith cooperation with NYSE 
Euronext. In:
     Determining whether a material adverse change of law (as 
described below) has occurred or is continuing (including for purposes 
of determining when a remedy must be unwound as described below);
     Deciding upon the exercise of the remedies as described 
below; and
     In exercising its rights and powers during the pendency of 
a material adverse change of law;

The duty of the Dutch foundation and its board of directors and the 
Delaware trust and its trustees shall be to act in the public interests 
of the markets operated by Euronext and NYSE Group, respectively, and 
their respective subsidiaries if and only to the extent necessary to 
avoid or eliminate a material adverse change of law. In all other 
circumstances, the duty of the Dutch foundation and its board and the 
Delaware trust and its trustees shall be to act in the best interests 
of NYSE Euronext; in the event of any conflict between the duties of 
the Dutch foundation and its board of directors and/or the Delaware 
trust and its trustees to act in any of the circumstances referred to 
in three bulleted items of the preceding sentence, on the one hand, and 
the duties of the Dutch foundation and its board of directors and/or 
the Delaware trust and its trustees in any other circumstances referred 
to in the preceding sentence, on the other hand, the former shall 
prevail.
Material Adverse Change in Law
    With respect to Euronext and the Dutch foundation, a material 
adverse change in law means: (1) The enactment of a new U.S. law 
(including the enactment of a new law that amends an existing law and 
including the enactment or adoption of regulations implementing any 
such new law or, if applicable, regulations amending or replacing 
regulations implementing any such existing or new law) or (2) a change 
of interpretation of any such existing or new laws or regulations by a 
competent U.S. regulatory authority or a U.S. court of competent 
jurisdiction pursuant to an order or judgment that is final, binding 
and not subject to appeal, in each case having a material adverse 
effect (including as may result from an increase in the regulatory 
burden that may occur as a result of such law) on:
     A substantial proportion of the non-U.S. issuers listed on 
a Euronext market or all of the non-U.S. issuers listed on a Euronext 
market belonging to a single industry sector, in each case solely 
because:
     The securities of such non-U.S. issuers are listed on such 
Euronext market; and
     Such Euronext market is owned directly or indirectly by 
NYSE Euronext (it being understood that if non-U.S. issuers can avoid 
such material adverse effect by complying with Rule 12g3-2(b) under the 
Exchange Act, in its form as of the date of the completion of the 
Combination, or a provision not materially more burdensome, then such 
U.S. laws shall not be deemed to have a material adverse effect on non-
U.S. issuers);
     A substantial proportion of the non-U.S. financial 
services firms of any Euronext market solely because:
     Such non-U.S. financial services firms are members of such 
Euronext market (and such firm is not a member of, and does not do 
business on, a NYSE Group securities exchange or other U.S. market); 
and
     Such Euronext market is owned directly or indirectly by 
NYSE Euronext; or
     To the extent that the object of such new law is to 
regulate the market operating rules, listing standards, or member 
financial services firm rules for such firms that are not members of, 
and do not do business on, a NYSE Group securities exchange or other 
U.S. market, any holder of an exchange license for a Euronext market in 
a manner that has a material adverse effect on such market solely 
because:
     Such holder operates a Euronext market; and
     Such Euronext market is owned directly or indirectly by 
NYSE Euronext.
    With respect to the Delaware trust and any NYSE Group securities 
exchange, a material adverse change in law means: (1) The enactment of 
a new European law (including the enactment of a new law that amends an 
existing law and including the enactment or adoption of regulations 
implementing any such new law or, if applicable, regulations amending 
or replacing regulations implementing any such existing or new law) or 
(2) a change of interpretation of any such existing or new laws or 
regulations by a competent European regulatory authority or a European 
court of competent jurisdiction pursuant to an order or judgment that 
is final, binding and not subject to appeal, in each case having a 
material adverse effect (including as may result from an increase in 
the regulatory burden that may occur as a result of such law) on:
     A substantial proportion of the non-European issuers 
listed on a NYSE Group securities exchange or all of the non-European 
issuers listed on a NYSE Group securities exchange belonging to a 
single industry sector, in each case solely because:
     The securities of such non-European issuers are listed on 
such NYSE Group securities exchange; and

[[Page 825]]

     Such NYSE Group securities exchange is owned directly or 
indirectly by NYSE Euronext;
     A substantial proportion of the non-European financial 
services firms of any NYSE Group securities exchange solely because:
     Such non-European financial services firms are members of 
such NYSE Group securities exchange (and such firm is not a member of, 
and does not do business on, a Euronext market or other European 
securities market); and
     Such NYSE Group securities exchange is owned directly or 
indirectly by NYSE Euronext; or
     To the extent the object of such law is to regulate the 
market operating rules, listing standards, or member financial services 
firm rules for such firms that are not members of, and do not do 
business on, a Euronext market or other regulated market within Europe, 
such NYSE Group securities exchange in a manner that has a material 
adverse effect on such NYSE Group securities exchange solely because:
     Such entity is a NYSE Group securities exchange; and
     Such NYSE Group securities exchange is owned directly or 
indirectly by NYSE Euronext.
    However, in either case, a material adverse change of law shall not 
be deemed to have occurred with respect to any U.S. or European law, as 
applicable, if such law is not (and for so long as it is not) 
effective, enforceable or applicable by reason of any permanent or 
temporary injunction, order or other administrative relief, or that is 
not self-effectuating in the absence of implementing regulations that 
have not yet been adopted.
    For purposes of determining whether a material adverse change of 
law has occurred:
     A ``non-U.S. issuer'' is any legal entity (1) incorporated 
or established in a jurisdiction outside of the United States that has 
securities listed on a Euronext market; (2) that does not have any 
securities listed on any U.S. securities exchange and is not otherwise 
required to be have any of its securities registered under the Exchange 
Act; and (3) that has not offered (within the meaning of the Securities 
Act) any securities to the public in the United States or filed a 
registration statement with the SEC under the Securities Act;
     A ``non-U.S. financial services firm'' is any legal entity 
(1) incorporated or established in a jurisdiction outside of the United 
States that is a member of a Euronext market and is not a member of any 
market, securities exchange or securities association in the United 
States; (2) that is not required to be registered under the Exchange 
Act; (3) that does not have any securities listed on any U.S. 
securities exchange and is not otherwise required to have any of its 
securities registered under the Exchange Act; (4) that has not offered 
(within the meaning of the Securities Act) any securities in the United 
States and has not filed a registration statement with the SEC under 
the Securities Act; (5) that does not engage in business in the United 
States; and (6) that is not a member of the National Association of 
Securities Dealers;
     A ``non-European issuer'' is any legal entity (1) 
incorporated or established in a jurisdiction outside of Europe that 
has securities listed on a NYSE Group securities exchange; (2) that 
does not have any securities listed on a regulated market in Europe 
and, to the extent that the concept of securities registration exists 
under any European exchange regulation, is not otherwise required to 
have any of its securities registered under such European exchange 
regulation; and (3) that has not offered any securities in Europe or, 
to the extent that the concept of securities registration exists under 
any European exchange regulation, filed a registration statement to 
register shares with European regulators under any European exchange 
regulation;
     A ``non-European financial services firm'' is any legal 
entity (1) incorporated or established in a jurisdiction outside of 
Europe that is a member of a NYSE Group securities exchange and is not 
a member of any regulated market in Europe; (2) that is not required to 
be registered under any European exchange regulation (to the extent 
that the concept of registration exists under any European exchange 
regulation); (3) does not have any securities listed on any regulated 
market in Europe and, to the extent that the concept of securities 
registration exists under any European exchange regulation, is not 
otherwise required to have any of its securities registered under such 
European exchange regulation; and (4) that has not offered (within the 
meaning of the European exchange regulations) any securities in any 
jurisdiction in Europe and, to the extent that the concept of 
securities registration exists under any European exchange regulation, 
has not filed a registration statement with any European regulator 
under European exchange regulation; and
     ``Europe'' means (1) any and all of the jurisdictions in 
which Euronext or any of its subsidiaries operates a European regulated 
market; (2) any member state of the European Economic Area as of the 
effective time of the Combination and any state that becomes a member 
of the European Economic Area after the effective time of the 
Combination; and (3) Switzerland (with ``European'' having a 
correlative meaning).

Remedies of the Dutch Foundation and Delaware Trust

    If a material adverse change in law occurs with respect to a 
Euronext market or a NYSE Group securities exchange (the ``affected 
subsidiary'') and shall continue after the cure periods specified 
below, the board of trustees of the Delaware trust (in the case where 
the affected subsidiary is a NYSE Group securities exchange) or the 
board of directors of the Dutch foundation (in the case where the 
affected subsidiary operates a Euronext market), as applicable, may 
exercise the following remedies following prior notice to, and, if 
required under then applicable laws, prior approval by, the European 
regulators having jurisdiction over Euronext or its regulated 
subsidiaries or the SEC, as applicable:
     After a cure period of six months, the delivery of 
confidential or public and non-binding or binding advice to NYSE Group 
(in the case where the affected subsidiary is a NYSE Group securities 
exchange) or Euronext (in the case where the affected subsidiary 
operates a Euronext market) and NYSE Euronext with respect to the 
affected subsidiary relating to decisions regarding (1) changes to the 
rules of the relevant securities exchange or market, (2) decisions to 
enter into (or not enter into) or alter the terms of listing agreements 
of the relevant securities exchange or market, (3) decisions to enter 
into (or not enter into) or alter the terms of contractual arrangements 
with any non-European or non-U.S., respectively, financial services 
firms in relation to the U.S. or European market, respectively, (4) 
changes in information and communications technologies for the relevant 
markets or securities exchanges, (5) changes in clearing and settlement 
for the relevant market or securities exchanges, as applicable and (6) 
in the case of the Dutch foundation, decisions to eliminate or impair 
the existence or continuation of a European market ((1) through (6), 
together the ``Assumed Matters'');
     After a cure period of six months, the assumption of 
management responsibilities of NYSE Group (in the case where the 
affected subsidiary is a NYSE Group securities exchange) or Euronext 
(in the case where the affected subsidiary operates a Euronext market) 
or its affected subsidiary with respect to some or all of the Assumed 
Matters;

[[Page 826]]

     After a cure period of six months, the exercise of a call 
option over priority shares issued by NYSE Group (in the case where the 
affected subsidiary operates a NYSE Group securities exchange) or 
Euronext (in the case where the affected subsidiary operates a Euronext 
market) or its affected subsidiary, which priority shares will carry no 
or a limited economic right or interest and the right to vote on, make 
proposals with respect to and impose consent requirements to approve 
actions in relation to, the Assumed Matters; and
     After a cure period of nine months, the exercise of a call 
option over the common stock or voting securities of NYSE Group (in the 
case where the affected subsidiary is a NYSE Group securities exchange) 
or the ordinary shares or voting securities of Euronext (in the case 
where the affected subsidiary operates a Euronext market) or its 
affected subsidiary, in each case, with such common stock, ordinary 
shares or voting securities being the minimum number necessary, in the 
reasonable opinion of the trustees of the Delaware trust or the board 
of directors of the Dutch foundation, as the case may be, to cause all 
affected subsidiaries to cease to be subject to a material adverse 
change of law.
    Furthermore, subject to any required approval by the European 
regulators having jurisdiction over Euronext or its regulated 
subsidiaries or the SEC (as applicable), the Dutch foundation or the 
Delaware trust shall be entitled to give confidential non-binding 
advice to NYSE Euronext at any time before the end of the above-
mentioned cure period and NYSE Euronext shall be entitled, in its sole 
discretion, to implement any remedy at any time before the end of such 
cure period.
    Any of the above remedies may be imposed only if and to the extent 
that such remedy (1) causes all affected subsidiaries to cease to be 
subject to a material adverse change of U.S. law or European law, as 
the case may be; and (2) is the remedy available that causes the least 
intrusion on the conduct of the business and operations of NYSE 
Euronext and Euronext or NYSE Group, as the case may be, and their 
respective subsidiaries, including the affected subsidiaries, by their 
respective governing bodies. In determining whether a remedy satisfies 
the condition in clause (2) of the prior sentence:
     Negative control by the Dutch foundation or Delaware 
trust, as the case may be, shall be preferred over affirmative control 
by the Dutch foundation or Delaware trust;
     Authority of the Dutch foundation or Delaware trust, as 
the case may be, shall be asserted over the fewest and most narrow 
decisions of NYSE Euronext and its subsidiaries; and
     A remedy covering fewer entities and subsidiary entities 
shall be preferred over a remedy covering more entities and parent 
entities;
     The call option over the priority shares shall be viewed 
as a remedy of last resort among the remedies that are available after 
the six-month cure period; and
     The call option over the common stock, ordinary shares and 
voting securities shall be viewed as a remedy of last resort among all 
remedies.
    In addition, prior to the exercise of a call option, the board of 
directors of the Dutch foundation or the board of trustees of the 
Delaware trust, as applicable, must first:
     Determine that no other remedy can cause all of the 
affected subsidiaries to cease to be subject to a material adverse 
change of law;
     Consult with the NYSE Euronext board of directors; and
     In the case of a material adverse change in law with 
respect to a Euronext market, consult with the Euronext supervisory and 
managing boards and the applicable European regulators with authority 
over the affected exchange to consider the solutions available to 
address the situation that has arisen and would trigger the right of 
the Dutch foundation to exercise the remedies described above, taking 
into account any possible adverse consequences for NYSE Euronext or 
Euronext in terms of taxation or accounting treatment; and
     In the case of a material adverse change in law with 
respect to a NYSE Group securities exchange, consult with the NYSE 
Group board of directors and the SEC to consider the solutions 
available to address the situation that has arisen and would trigger 
the right of the Delaware trust to exercise of the remedies described 
above, taking into account any possible adverse consequences for NYSE 
Euronext or NYSE Group in terms of taxation or accounting treatment;

in each case, acting in the best interest of NYSE Euronext.
    In the event a call option is exercised, the Dutch foundation or 
the Delaware trust, as applicable, will issue to NYSE Euronext 
certificates representing the economic rights of any shares acquired 
pursuant to such option exercise.
Unwinding of Remedies
    If and when any of the conditions of a material adverse change of 
law cease, any and all remedies shall be immediately unwound.
    Additionally, NYSE Euronext shall have the right, at any time and 
regardless of whether a change of law continues to be a material 
adverse change of law, to request and cause the unwinding of any remedy 
for the purpose of and to the extent necessary to effect a divesture or 
spin-off of all or part of its interest in NYSE Group or NYSE Euronext, 
as applicable, or any subsidiary of NYSE Euronext operating an exchange 
that is affected by a material adverse change of law, as the case may 
be.
Consequences of the Exercise of Remedies
    The exercise of the remedies may trigger a total or partial loss by 
NYSE Euronext of operating control over some of its regulated markets 
or securities exchanges. For example, if the Dutch foundation were to 
deliver binding advice with respect to an affected subsidiary of 
Euronext, or were to assume management responsibilities with respect to 
the affected subsidiary, NYSE Euronext and its management may lose 
control of key decisions regarding the operation of such affected 
subsidiary. In addition, the Dutch foundation or the Delaware trust may 
require that NYSE Euronext transfer control over a substantial portion 
of its business and assets to the direction of the foundation or trust.
Automatic Suspension and Repeal of Certain Provisions in the NYSE 
Euronext Organizational Documents
    Immediately following the exercise of a call option over a 
substantial portion of Euronext's business (a ``Euronext call 
option''), and for so long as the Dutch foundation shall continue to 
hold any priority shares or ordinary shares of Euronext, or the voting 
securities of one or subsidiaries of Euronext that, taken together, 
represent a substantial portion of Euronext's business, then the 
following provisions of the proposed Amended and Restated NYSE Euronext 
Bylaws shall be suspended:
     The requirement that European Persons are represented in a 
certain proportion on the NYSE Euronext board of directors and the 
nominating and governance committee of the NYSE Euronext board of 
directors;
     The requirement of supermajority board or shareholder 
approval for certain extraordinary transactions;
     The provisions granting jurisdiction to European 
regulators over certain actions of NYSE Euronext and the NYSE Euronext 
board of directors; and
     References to European regulators, European market 
subsidiaries and European disqualified persons

[[Page 827]]

appearing in the NYSE Euronext bylaws.
    In addition, if:
     After a period of six months following the exercise of a 
Euronext call option, the Dutch foundation shall continue to hold any 
ordinary shares of Euronext or of one or more subsidiaries of Euronext 
that, taken together, represent a substantial portion of Euronext's 
business;
     After a period of six months following the exercise of a 
Euronext call option, the Dutch foundation shall continue to hold any 
priority shares of Euronext or priority shares or similar voting 
securities of one or more subsidiaries of Euronext that, taken 
together, represent a substantial portion of Euronext's business 
(provided that, in this case, the NYSE Euronext board of directors has 
approved of such revocation); or
     At any time, NYSE Euronext no longer holds a direct or 
indirect controlling interest in Euronext or in one or more 
subsidiaries of Euronext that, taken together, represent a substantial 
portion of Euronext's business;

then, the following provisions shall be revoked:

     The provisions of the proposed Amended and Restated NYSE 
Euronext Bylaws noted above that were subject to suspension;
     The references in the proposed Amended and Restated NYSE 
Euronext Certificate of Incorporation and Bylaws to European 
regulators, European exchange regulations, European market 
subsidiaries, European regulated markets, Europe and European 
disqualified persons;
     The provisions in the proposed Amended and Restated NYSE 
Euronext Certificate of Incorporation and Bylaws requiring that 
amendments to such certificate of incorporation or bylaws be submitted 
to the European market subsidiaries and, if applicable, filed with and 
approved by a European regulator; and
     The provisions in the proposed Amended and Restated NYSE 
Euronext Bylaws requiring approval of either two-thirds or more of the 
NYSE Euronext directors or 80% of the votes entitled to be cast by the 
holders of the then-outstanding shares of capital stock of NYSE 
Euronext entitled to vote generally in the election of directors to 
amend certain bylaw provisions.
    In addition, any officer or director of NYSE Euronext who is a 
European Person shall resign or be removed from his or her office.
Transfer of Foundation and Trust Property
    In no event shall the Dutch foundation or the Delaware trust sell, 
transfer, convey, assign, dispose, pledge (or agree to sell, transfer, 
convey, assign, dispose or pledge) any property of the foundation or 
trust, respectively, except pursuant to (1) the unwinding of the 
remedies (as described above) or (2) in circumstances permitted by the 
goveranance and option agreement (in the case of the Dutch foundation) 
or the trust agreement (in the case of the Delaware trust), pursuant to 
written instructions from NYSE Euronext approved by the board of 
directors of NYSE Euronext. In addition to the foregoing, any transfer, 
conveyance, assignment, disposition or pledge by the Trust or any 
Trustee of any equity interest in, or all or substantially all of the 
assets of, the Exchange, NYSE Market, Inc., NYSE Regulation, Inc., NYSE 
Arca, L.L.C., NYSE Arca or NYSE Arca Equities, Inc. (other than any 
such transfer or disposition to NYSE Euronext or its subsidiaries 
pursuant to the unwinding of remedies) shall not be effected until 
filed with the SEC under Section 19 of the Exchange Act.
Submission to Jurisdiction
    The proposed trust agreement for the Delaware trust provides that 
the Delaware trust, the trustees and the officers and employees of the 
Delaware trust whose principal place of business and residence is 
outside of the United States shall be deemed to irrevocably submit to 
the jurisdiction of the U.S. federal courts and the SEC for the 
purposes of any suit, action or proceeding pursuant to the U.S. federal 
securities laws and the rules and regulations thereunder, commenced or 
initiated by the SEC arising out of, or relating to, the activities of 
the U.S. Regulated Subsidiaries (and shall be deemed to agree that the 
Delaware trust may serve as the U.S. agent for purposes of service of 
process in such suit, action or proceeding). Further, the Delaware 
trust and each such trustee, officer or employee of the Delaware trust, 
by virtue of his or her acceptance of any such position, shall be 
deemed to waive, and agree not to assert by way of motion, as a defense 
or otherwise in any such suit, action or proceeding, any claims that it 
or they are not personally subject to the jurisdiction of the SEC, that 
such suit, action or proceeding is an inconvenient forum or that the 
venue of such suit, action or proceeding is improper, or that the venue 
of such suit, action or proceeding is improper, or that the subject 
matter thereof may not be enforced in or by such courts or agency.
    The governance and option agreement for the Dutch foundation will 
provide that the Dutch foundation, its directors, officers and 
employees shall be deemed to irrevocably submit to the jurisdiction of 
the European Regulators and to courts in the capital city of the 
country of each such regulator for the purposes of any suit, action or 
proceeding pursuant to the European Exchange Regulations and the rules 
and regulations thereunder, commenced or initiated by the European 
Regulators arising out of, or relating to, the activities of the 
European Market Subsidiaries. Further, the Trust, as well as each such 
director, officer or employee by virtue of acceptance of such position, 
shall be deemed to waive, and agree not to assert by way of motion, as 
a defense or otherwise in any such suit, action or proceeding, any 
claims that it or they are not personally subject to the jurisdiction 
of the European Regulators, that the suit, action or proceeding is an 
inconvenient forum or that the venue of the suit, action or proceeding 
is improper, or that the subject matter thereof may not be enforced in 
or by such courts or regulators.
Other Duties
    In discharging his or her responsibilities as a trustee of the 
Delaware trust, the trustees shall (a) comply with the U.S. federal 
securities laws and the rules and regulations thereunder, (b) cooperate 
with the SEC and (c) cooperate with the U.S. Regulated Subsidiaries 
pursuant to, and to the extent of, their regulatory authority.
    In addition, the Delaware trust shall comply with the U.S. federal 
securities laws and the rules and regulations thereunder and shall 
cooperate with the SEC and the U.S. Regulated Subsidiaries pursuant to 
and to the extent of their respective regulatory authority, and shall 
take reasonable steps necessary to cause its agents to cooperate, with 
the SEC and, where applicable, the U.S. Regulated Subsidiaries pursuant 
to their regulatory authority.
Initiatives by the Board of Trustees of the Delaware Trust and the 
Board of Directors of the Foundation
    The board of the trustees of the Delaware trust shall be entitled 
to, and the SEC shall be entitled to request the board of trustees of 
the Delaware trust to, provide advice to and consult with NYSE 
Euronext, NYSE Group, the SEC and any other relevant persons or bodies 
regarding European Advocacy Actions (as defined below), and the 
Delaware

[[Page 828]]

trust and the board of trustees of the Delaware Trust shall be entitled 
to take European Advocacy Actions, to prevent a new European law or 
legislative proposal from becoming a material adverse change of 
European law, both before and after the enactment of the relevant new 
European law or proposal. ``European Advocacy Actions'' shall consist 
of one or more of the following: articles, opinion letters, 
advertising, press releases and lobbying efforts (including those 
directed at any European legislative or executive body, any European 
Regulator or other European governmental authority or those directed at 
the general public).
    The board of directors of the Dutch foundation shall be entitled 
to, and the European Regulators shall be entitled to request the board 
of directors of the Dutch foundation to, provide advice to and consult 
with NYSE Euronext, Euronext, the European Regulators and any other 
relevant persons or bodies regarding U.S. Advocacy Actions (as defined 
below), and the Dutch foundation and the board of directors of the 
Dutch foundation shall be entitled to take U.S. Advocacy Actions, to 
prevent a new U.S. law or legislative proposal from becoming a material 
adverse change of U.S. law, both before and after the enactment of the 
relevant new U.S. law or proposal. ``U.S. Advocacy Actions'' shall 
consist of one or more of the following: articles, opinion letters, 
advertising, press releases and lobbying efforts (including those 
directed at any U.S. legislative or executive body, the SEC, or other 
U.S. governmental authority or those directed at the general public).
Duration of the Dutch Foundation and Term of the Delaware Trust
    With respect to the Dutch foundation, the arrangements described 
above will be memorialized in a governance and option agreement 
between, among others, NYSE Euronext, Euronext and the foundation and 
the articles of incorporation of the foundation. The initial term of 
the governance and option agreement and the Delaware trust will be ten 
years from the date of the completion of the Combination, renewable for 
successive one-year terms at the request of board of the foundation or 
the Euronext College of Regulators, in the case of the Dutch 
foundation, or the board of trustees of the trust or the Chairman of 
the SEC, in the case of the Delaware trust; provided, however, that any 
extension that would cause the term of the governance and option 
agreement or the Delaware trust to continue past the 20th anniversary 
of the date of the completion of the Combination shall require the 
prior written consent of NYSE Euronext. Notwithstanding anything to the 
contrary, NYSE Euronext shall be obligated to provide its consent to 
continue the term of the governance and option agreement and the 
Delaware trust, and the governance and option agreement and the trust 
agreement and the rights, powers and remedies set forth therein shall 
remain in full force unless and until terminated, amended or novated by 
the parties thereto with the prior written approval of the Euronext 
College of Regulators (in the case of the governance and option 
agreement) and the SEC (in the case of the Delaware trust). If NYSE 
Euronext does not provide its prior written consent to the extension of 
the term of the governance and option agreement or the Delaware trust, 
NYSE Euronext must provide written notice to the Euronext College of 
Regulators (in the case of the governance and option agreement) and the 
Chairman of the SEC (in the case of the Delaware trust) at least one 
year prior to the scheduled expiration of the agreement or trust, and 
following a request of the Euronext College of Regulators or the 
Chairman of the SEC, respectively, NYSE Euronext and Euronext or NYSE 
Group, as the case may be, will review and discuss the possibility of 
renewing the governance and option agreement or the Delaware trust, as 
applicable, or adopting alternatives based on the then existing facts 
and circumstances.
NYSE Group Waiver of Ownership and Voting Limitations
    The Amended and Restated Certificate of Incorporation of NYSE Group 
was approved by the SEC on February 27, 2006 in connection with the 
business combination of the New York Stock Exchange, Inc. and Arca 
Holdings.\40\ In order to ensure that the ownership of NYSE Group by 
the public will not unduly interfere with or restrict the ability of 
the SEC or the Exchange to effectively carry out their regulatory 
oversight responsibilities under the Exchange Act and generally to 
enable the Exchange to operate in a manner that complies with the U.S. 
federal securities laws, including furthering the objectives of Section 
6(b)(5) of the Exchange Act, the Amended and Restated Certificate of 
Incorporation of NYSE Group imposes certain ownership and voting 
limitations with respect to the stock of NYSE Group (the ``NYSE Group 
ownership limitations'' and the ``NYSE Group voting limitations'').
---------------------------------------------------------------------------

    \40\ See Securities Exchange Act Release No. 53382 (February 27, 
2006), 71 FR 11251 (March 6, 2005).
---------------------------------------------------------------------------

    NYSE Group Ownership Limitation. The Amended and Restated 
Certificate of Incorporation of NYSE Group provides that no person, 
alone or together with its related persons,\41\ may own beneficially 
shares of NYSE Group stock representing in the aggregate more than 20% 
of the then outstanding votes entitled to be cast on any matter. The 
NYSE Group ownership limitation will apply unless and until (1) such 
person delivers to the board of directors of NYSE Group a notice in 
writing regarding its intention to acquire shares of NYSE Group stock 
that would cause such person, either alone or with its related persons, 
to own beneficially shares of stock of NYSE Group in excess of the NYSE 
Group ownership limitation, at least 45 days (or such shorter period as 
the board of directors of NYSE Group expressly consents to) prior to 
the intended acquisition, and (2) such person receives prior approval 
by the board of directors of NYSE Group and the SEC to exceed the NYSE 
Group ownership limitation, either alone or together with its related 
persons. Specifically, (1) the board of directors of NYSE Group must 
adopt a resolution approving such person (either alone or together with 
its related persons) to exceed the NYSE Group ownership limitation, (2) 
the resolution must be filed with the SEC under Section 19(b) of the 
Exchange Act and (3) such proposed rule change must be approved by the 
SEC and become effective thereunder.
---------------------------------------------------------------------------

    \41\ ``Related persons'' has the same meaning as set forth in 
footnote 19, supra.
---------------------------------------------------------------------------

    Subject to its fiduciary obligations under the Delaware General 
Corporation Law, as amended (``DGCL''), before adopting any such 
resolution, the board of directors of NYSE Group must first determine 
that: (1) Such acquisition of beneficial ownership by such person, 
either alone or with its related persons, would not impair any of the 
U.S. Regulated Subsidiaries' ability to discharge their respective 
responsibilities under the Exchange Act and the rules and regulations 
thereunder and is otherwise in the best interests of NYSE Group, its 
stockholders and the U.S. Regulated Subsidiaries; (2) such acquisition 
of beneficial ownership by such person, either alone or with its 
related persons, will not impair the SEC's ability to enforce the 
Exchange Act; \42\ (3) such

[[Page 829]]

person and its related persons are not subject to any statutory 
disqualification (as defined in Section 3(a)(39) of the Exchange Act); 
(4) for so long as NYSE Group directly or indirectly controls NYSE Arca 
(formerly known as Pacific Exchange, Inc.) and NYSE Arca Equities 
(formerly known as PCX Equities, Inc.) or any facility of NYSE Arca, 
neither such person nor its related persons is an ETP Holder of NYSE 
Arca Equities or an OTP Holder or OTP Firm of NYSE Arca; and (5) for so 
long as NYSE Group directly or indirectly controls the Exchange or NYSE 
Market, neither such person nor its related persons is a member or 
member organization.
---------------------------------------------------------------------------

    \42\ In making such determinations, the board of directors of 
NYSE Group may impose any conditions and restrictions on such person 
and its related persons owning any shares of stock of NYSE Group 
entitled to vote on any matter as the board of directors of NYSE 
Group in its sole discretion deems necessary, appropriate or 
desirable in furtherance of the objectives of the Exchange Act and 
the governance of NYSE Group.
---------------------------------------------------------------------------

    NYSE Group Voting Limitation. The NYSE Group Amended and Restated 
Certificate of Incorporation also provides that no person, either alone 
or with its related persons, shall be entitled to (1) vote or cause the 
voting of shares of NYSE Group stock to the extent such shares 
represent in the aggregate more than 10% of the then outstanding votes 
entitled to be cast on any matter or (2) acquire the ability to vote 
more than 10% of the then outstanding votes entitled to be cast on any 
matter by virtue of agreements entered into with other persons not to 
vote their shares of NYSE Group's outstanding capital stock. The NYSE 
Group voting limitation, as described in clauses (1) and (2) above, 
shall apply unless and until (1) a person delivers to the board of 
directors of NYSE Group a notice in writing regarding such person's 
intention to vote shares of NYSE Group stock that would cause such 
person, either alone or together with its related persons, to violate 
the NYSE Group voting limitation, at least 45 days (or such shorter 
period as the board of directors of NYSE Group expressly consents to) 
prior to the intended vote and (2) such person, either alone or with 
its related persons, receives prior approval from the board of 
directors of NYSE Group and the SEC to exceed the NYSE Group voting 
limitation. Specifically, (1) the board of directors of NYSE Group must 
adopt a resolution approving such person and its related persons to 
exceed the NYSE Group voting limitation, (2) the resolution must be 
filed with the SEC under Section 19(b) of the Exchange Act and (3) such 
proposed rule change must be approved by the SEC and become effective 
thereunder.
    Subject to its fiduciary obligations under DGCL, before adopting 
any such resolution, the board of directors of NYSE Group must first 
determine that: (1) The exercise of such voting rights or the entering 
into of such agreement, plan or arrangement, as applicable, by such 
person, either alone or with its related persons, would not impair the 
ability of either NYSE Group or any of the U.S. Regulated Subsidiaries 
to discharge their respective responsibilities under the Exchange Act 
and the rules and regulations thereunder and is otherwise in the best 
interests of NYSE Group, its stockholders and the U.S. Regulated 
Subsidiaries; (2) the exercise of such voting rights or the entering 
into of such agreement, plan or arrangement would not impair the SEC's 
ability to enforce the Exchange Act; and (3) in case of a resolution to 
approve the exercise of voting rights in excess of 20% of the then 
outstanding votes entitled to be cast on such matter or the entering 
into of an agreement, plan or arrangement that would result in the 
ability to possess the right to vote or cause the voting of shares of 
stock of NYSE Group that would exceed 20% of the then outstanding votes 
entitled to be cast on such matter (a) such person and its related 
persons are not subject to any statutory disqualification (as defined 
in Section 3(a)(39) of the Exchange Act), (b) for so long as NYSE Group 
directly or indirectly controls NYSE Arca and NYSE Arca Equities or any 
facility of NYSE Arca, neither such person nor its related persons is 
an ETP Holder of NYSE Arca Equities or an OTP Holder or OTP Firm of 
NYSE Arca and (c) for so long as NYSE Group directly or indirectly 
controls the Exchange or NYSE Market, neither such person nor its 
related persons is a member or member organization. In making such 
determinations, the board of directors of NYSE Group may impose any 
conditions and restrictions on such person and its related persons 
owning any shares of NYSE Group stock entitled to vote on any matter as 
the board of directors of NYSE Group in its sole discretion deems 
necessary, appropriate or desirable in furtherance of the objectives of 
the Exchange Act and the governance of NYSE Group.
    Resolutions of the NYSE Group Board of Directors. In order to allow 
NYSE Euronext to wholly own and vote all of NYSE Group stock upon 
consummation of the Combination, on August 3, 2006, NYSE Euronext 
delivered a written notice to the board of directors of NYSE Group 
pursuant to the procedures set forth in the Amended and Restated 
Certificate of Incorporation of NYSE Group requesting approval of its 
ownership and voting of NYSE Group stock in excess of the NYSE Group 
ownership limitation and NYSE Group voting limitation.
    Among other things, in the notice, NYSE Euronext represented to the 
board of directors of NYSE Group that neither it, nor any of its 
related persons, are (1) ETP Holders of NYSE Arca Equities, OTP Holders 
or OTP Firms of NYSE Arca, (2) members or member organizations of the 
Exchange, or (3) subject to any statutory disqualification (as defined 
in Section 3(a)(39) of the Exchange Act).
    At a meeting duly convened on August 3, 2006, the board of 
directors of NYSE Group adopted a resolution approving NYSE Euronext's 
request that it be permitted, either alone or with its related persons, 
to exceed the NYSE Group ownership limitation and the NYSE Group voting 
limitation. In adopting such resolution, the board of directors of NYSE 
Group determined that: (1) the acquisition of beneficial ownership of 
100% of the outstanding shares of NYSE Group common stock and the 
exercise of voting rights with respect to 100% of the outstanding 
shares of NYSE Group common stock by NYSE Euronext, either alone or 
with its related persons, would not impair the ability of NYSE Group or 
any of the U.S. Regulated Subsidiaries to discharge their respective 
responsibilities under the Exchange Act and the rules and regulations 
thereunder and is otherwise in the best interests of NYSE Group, its 
stockholders and the U.S. Regulated Subsidiaries; (2) such acquisition 
of beneficial ownership and exercise of voting rights of NYSE Group 
common stock by NYSE Euronext, either alone or with its related 
persons, would not impair the SEC's ability to enforce the Exchange 
Act; (3) neither NYSE Euronext nor any of its related persons is 
subject to any statutory disqualification (as defined in Section 
3(a)(39) of the Exchange Act); and (4) neither NYSE Euronext nor any of 
its related persons is an ETP Holder of NYSE Arca Equities, OTP Holder 
or OTP Firm of NYSE Arca or member or member organization of the 
Exchange.
    The NYSE Group board of directors also approved the submission of 
this proposed rule change to the SEC. An extract with the relevant 
resolutions is attached as Exhibit 5K to the Proposed Rule Change and 
can be found on the Exchange's Web site and the SEC's Web site.
    Request for Approval. The Exchange hereby requests that the SEC 
allow NYSE Euronext to wholly own and vote all of the outstanding 
common stock of NYSE Group, either alone or with its related persons, 
except for any related person of NYSE Euronext which is an

[[Page 830]]

ETP Holder of NYSE Arca Equities, OTP Holder or OTP Firm of NYSE Arca, 
or member or member organization of the Exchange, upon the consummation 
of the Combination.
Regulation
    A core aspect of the structure of the Combination is local 
regulation of the marketplace and, therefore, that securities exchanges 
of NYSE Group and Euronext will continue to be regulated in the same 
manner as they are currently regulated. Accordingly, the Combination is 
premised on the notion that:
     NYSE Group and its subsidiaries will continue to be 
regulated by the SEC (but will not be regulated by the European 
Regulators unless NYSE Group and its subsidiaries engage in activities 
in Europe within the jurisdiction of the European Regulators), and 
Euronext and its subsidiaries will continue to be regulated by the 
European Regulators (but will not be regulated by the SEC unless 
Euronext and its subsidiaries engage in activities in the United States 
within the jurisdiction of the SEC);
     Companies 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;
     The Combination will not cause companies that currently 
trade only on a Euronext exchange and are not subject to the Sarbanes-
Oxley Act to become subject to the Sarbanes-Oxley Act unless those 
companies decide to list their securities on the Exchange, NYSE Arca or 
another U.S. securities exchange or register the sale of their 
securities under the Securities Act; and
     Members and member organizations of the Exchange, ETP 
Holders and Authorized Traders of NYSE Arca Equities, and OTP Firms and 
OTP Holders of NYSE Arca trading only on markets operated by the 
Exchange or NYSE Arca will not become newly subject to European rules 
or regulations as a result of the Combination, and members of the 
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.
Listing of NYSE Euronext Common Stock on the Exchange
Initial Listing
    NYSE Euronext intends to list its shares of common stock for 
trading on the Exchange, as well as on Euronext Paris. Pursuant to Rule 
497, any security of NYSE Euronext and its affiliates shall not be 
approved for listing on the Exchange unless NYSE Regulation finds that 
such securities satisfy the Exchange's rules for listing, and such 
finding is approved by the NYSE Regulation board of directors.
Continued Listing and Trading on the Exchange
    NYSE Regulation will be responsible for all Exchange listing-
compliance decisions with respect to NYSE Euronext as an issuer. NYSE 
Regulation will prepare a quarterly report, as described in Rule 
497(c)(1), summarizing its monitoring of NYSE Euronext common stock's 
compliance with such listing standards. This report will be provided to 
the NYSE Regulation board of directors and a copy will be forwarded 
promptly to the SEC. Once a year, an independent accounting firm will 
review NYSE Euronext's compliance with the Exchange's listing standards 
and a copy of its report will be forwarded promptly to the SEC. If NYSE 
Regulation determines that NYSE Euronext common stock is not in 
compliance with any applicable listing standard of the Exchange, NYSE 
Regulation shall notify NYSE Euronext promptly and request a plan for 
compliance. Within five business days of providing such notice to NYSE 
Euronext, NYSE Regulation shall file a report with the SEC identifying 
the date on which NYSE Euronext common stock was not in compliance with 
the listing standard at issue and any other material information 
conveyed to NYSE Euronext in the notice of non-compliance. Within five 
business days of receiving a plan of compliance from the issuer, NYSE 
Regulation will notify the SEC of such receipt, whether the plan was 
accepted by NYSE Regulation or what other action was taken with respect 
to the plan, and the time period provided to regain compliance with the 
Exchange's listing standard, if any.
Organizational Documents of NYSE Group, the Exchange, NYSE Market and 
NYSE Regulation
    Pursuant to the Combination, NYSE Group will merge with a wholly 
owned subsidiary of NYSE Euronext and the surviving corporation will be 
a wholly owned subsidiary of NYSE Euronext. Following the merger, the 
organizational documents of the surviving corporation (which shall be 
named ``NYSE Group, Inc.'' although the current NYSE Group may not be 
the surviving corporation) will be those currently in effect for NYSE 
Group, except that certain provisions will be amended to reflect that, 
after the Combination, NYSE Group will be an intermediate holding 
company. Specifically:
     The voting and ownership limitations of NYSE Group will 
not be applicable so long as NYSE Euronext and the Delaware trust 
collectively own all of the capital stock of NYSE Group. Instead, while 
NYSE Group is a wholly owned subsidiary of NYSE Euronext, there shall 
be no transfer of the shares of NYSE Group held by NYSE Euronext 
without the approval of the SEC. If NYSE Group ceases to be wholly 
owned by NYSE Euronext or the Delaware trust, the current voting and 
ownership limitations will apply;
     The transfer restrictions of NYSE Group will be eliminated 
because they now appear in the NYSE Euronext charter;
     The number of authorized shares of NYSE Group will be 
decreased;
     The director independence requirements will be eliminated; 
\43\
---------------------------------------------------------------------------

    \43\ The current NYSE Group Independence Policy will also be 
eliminated.
---------------------------------------------------------------------------

     A majority of the board must be U.S. Persons;
     Board vacancies may be filled by the remaining board 
members as well as the shareholders, and vacancies created by the 
departure of a U.S. Person must be filled with a U.S. Person;
     Directors may be removed at any time by the shareholders;
     Provisions requiring a supermajority vote of shareholders 
to amend or repeal certain sections of the charter of NYSE Group will 
be deleted;
     Provisions prohibiting NYSE Group shareholders from 
calling shareholder meetings, taking shareholder action by written 
consent and postponing shareholder meetings will be deleted;
     Provisions requiring advance notice from shareholders of 
shareholder director nominations or shareholder proposals will be 
eliminated; and
     Provisions relating to the mechanics of shareholders' 
meetings, such as the appointment of an inspector of elections, 
inspection of shareholder lists and opening and closing of polls will 
be deleted.
    The Proposed Rule Change includes modified versions of certain 
organizational documents of the Exchange, NYSE Market and NYSE 
Regulation so that certain references to NYSE Group become references 
to

[[Page 831]]

NYSE Euronext. Specifically, under the current organizational documents 
of the Exchange, NYSE Market and NYSE Regulation:
     A majority of the directors of each of the Exchange and 
NYSE Market must be directors of NYSE Group that satisfy the 
independence requirements of the board of directors of NYSE Group;
     All of the directors of NYSE Regulation (other than the 
chief executive officer of NYSE Regulation) must satisfy the 
independence requirements of the board of directors of NYSE Group; and
     The Nominating and Governance Committee of NYSE Group is 
responsible for nominating the candidates to the boards of directors of 
the Exchange and NYSE Market, and for determining the eligibility of 
such candidates to serve on such boards (including whether such person 
qualifies as independent under the independence policy of the NYSE 
Group board of directors, and whether such person is free of any 
statutory disqualification (as defined in section 3(a)(39) of the 
Exchange Act)).
    The Proposed Rule Change includes modified versions of the 
organizational documents of the Exchange, NYSE Market and NYSE 
Regulation so that the references to NYSE Group in the prior sentence 
will be replaced with NYSE Euronext. Accordingly, after the 
Combination:
     A majority of the directors of each of the Exchange and 
NYSE Market must be directors of NYSE Euronext that satisfy the 
independence requirements of the board of directors of NYSE Euronext;
     The Exchange's non-affiliated directors must qualify as 
independent under the NYSE Euronext Independence Policy;
     All of the directors of NYSE Regulation (other than the 
chief executive officer of NYSE Regulation) must satisfy the 
independence requirements of the board of directors of NYSE Euronext; 
and
     The Nominating and Governance Committee of NYSE Euronext 
will be responsible for nominating the candidates to the boards of 
directors of the Exchange and NYSE Market, and for determining the 
eligibility of such candidates to serve on such boards (including 
whether such person qualifies as independent under the independence 
policy of the NYSE Euronext board of directors, and whether such person 
is not a U.S. Disqualified Person).
    The Proposed Rule Change also includes modifications to the 
organizational documents of the Exchange, NYSE Market and NYSE 
Regulation so that the a transfer of the equity interests of the 
Exchange, NYSE Market and NYSE Regulation pursuant to the terms of the 
trust agreement for the Delaware trust is permitted under such 
organizational documents.
    The modified versions of the organizational documents of the 
Exchange, NYSE Market and NYSE Regulation contain a number of 
additional technical changes. The modified versions of the 
organizational documents of the Exchange, NYSE Market and NYSE 
Regulation also shorten the time period for member organizations to 
vote for ``fair representation'' candidates. Currently, if the number 
of ``fair representation'' candidates nominated for election to the 
boards of directors of each of the Exchange, NYSE Market and NYSE 
Regulation exceeds the number of available ``fair representation'' 
positions on such boards, member organizations of the Exchange have 
twenty business days to submit their votes for the ``fair 
representation'' candidates. Based on recent experience, the Exchange 
believes that twenty calendar days provides member organizations with 
ample time to vote for the ``fair representation'' candidates.
    The organizational documents of the Exchange, NYSE Market and NYSE 
Regulation will be modified to require that a majority of the directors 
of the boards of each of the Exchange, NYSE Market and NYSE Regulation 
be U.S. Persons and any vacancies on such boards created by the 
departure of a U.S. Person must be filled with a U.S. Person. 
Additionally, the organizational documents of the Exchange, NYSE Market 
and NYSE Regulation will be amended to state that any person not 
elected or appointed in accordance with the board qualifications of the 
relevant organizational documents will not be qualified to serve, and 
therefore will not be elected to serve, as a director.
    The Amended and Restated Operating Agreement of the Exchange, which 
currently provides that additional capital contributions may be made 
with the written consent of the limited liability company member, will 
be amended to state that the sole limited liability company member may 
make additional contributions in its sole discretion. The NYSE Market 
Bylaws, which currently provide that the chief executive officer of 
NYSE Group must be the chief executive officer of NYSE Market, will be 
amended to require that the chief executive officer of NYSE Market be a 
U.S. Person. The NYSE Market Bylaws, which currently provide that 
special stockholder meetings may be called by the Chairman of the 
Board, the President or the Secretary or by resolution of the board, 
will be amended to also allow the Chief Executive Officer of NYSE 
Market to call a special stockholder meeting.
    Finally, the NYSE Regulation Amended and Restated Bylaws will be 
modified to provide that any action required or permitted to be taken 
at any meeting of the NYSE Regulation board of directors or any 
committee thereof may be taken without a meeting if a written consent 
thereto is signed by all members of the NYSE Regulation board of 
directors or such committee (as opposed to a majority of such members, 
as the current NYSE Regulation Amended and Restated Bylaws 
provide).\44\
---------------------------------------------------------------------------

    \44\ This modification conforms to the provisions of the New 
York Not-for-Profit Corporation Law.
---------------------------------------------------------------------------

    The Exchange notes that, immediately following the Combination, 
none of the directors of NYSE Group, the Exchange, NYSE Market or NYSE 
Regulation who currently serve will have been elected or appointed 
pursuant to the modified processes described above (i.e., they will not 
have been elected or appointed by the Nominating and Governance 
Committee of NYSE Euronext). However, the Exchange represents that, 
with the exception of NYSE Group, the current board members of the 
Exchange, NYSE Market or NYSE Regulation--including the ``fair 
representation'' directors--will continue to be qualified to serve on, 
and will remain on, the boards of each of the Exchange, NYSE Market and 
NYSE Regulation following the consummation of the Combination. Upon the 
consummation of the Combination, the current directors of NYSE Group 
will resign and a three-person board composed of certain members of 
NYSE Group management will be appointed to serve on the board of NYSE 
Group.
Rules of the Exchange
    The Exchange proposes technical amendments to certain of the 
Exchange Rules to reflect the Combination, which, after the 
Combination, will remain the rules of the Exchange. The technical 
amendments consist of deleting all references to ``NYSE Group, Inc.'' 
or ``NYSE Group'' in the Exchange Rules and replacing those references 
with ``NYSE Euronext,'' which will be the parent company of the 
Exchange following the Combination. The Exchange also proposes to 
delete Exchange Rule 497T, which is now obsolete. In addition, the 
Exchange proposes to amend Exchange Rule 2B to clarify that, if a 
director of an affiliate

[[Page 832]]

of a member organization serves as a director of NYSE Euronext, this 
fact shall not cause such member organization to be an affiliate of the 
Exchange, or an affiliate of an affiliate of the Exchange. The proposed 
amended Exchange Rules are attached to the Proposed Rule Change as 
Exhibit 5L \45\ and can be found on the Exchange's Web site and on the 
SEC's Web site.
---------------------------------------------------------------------------

    \45\ The following Exchange Rules being amended in this filing 
are currently the subject of pending, proposed amendments previously 
filed with the SEC: (1) Rule 103B (see Exchange Act Release No. 
53602 (April 5, 2006), 71 FR 18791 (April 12, 2006) (SR-NYSE-2005-
40)) and (2) Rule 104 (see Exchange Act Release No. 51048 (January 
18, 2005), 70 FR 4171 (January 28, 2005) (SR-NYSE-2004-70)). See 
also SR-NYSE-2006-99 (filed on November 9, 2006); and SR-NYSE-2006-
100 (filed on November 9, 2006).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that this filing is consistent with Section 
6(b) of the Exchange Act,\46\ in general, and furthers the objectives 
of Section 6(b)(1) \47\ 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 associated with its exchange 
members, with the provisions of the Exchange Act, the rules and 
regulations thereunder, and the rules of the Exchange. The Exchange 
also believes that this filing furthers the objectives of Section 
6(b)(5) \48\ of the Exchange Act because the rules summarized herein 
would create 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 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.
---------------------------------------------------------------------------

    \46\ 15 U.S.C. 78f(b).
    \47\ 15 U.S.C. 78f(b)(1).
    \48\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

2. 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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 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 such 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 e-mail to [email protected]. Please include 
File Number SR-NYSE-2006-120 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9010.

All submissions should refer to File Number SR-NYSE-2006-120. This file 
number should be included on the subject line if e-mail 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 inspection and 
copying in the Commission's Public Reference Room. 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 available publicly. All submissions should refer to 
File Number SR-NYSE-2006-120 and should be submitted on or before 
January 29, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\49\
---------------------------------------------------------------------------

    \49\17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E7-17 Filed 1-5-07; 8:45 am]
BILLING CODE 8011-01-P