[Federal Register Volume 77, Number 3 (Thursday, January 5, 2012)]
[Notices]
[Pages 521-527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-33826]



[[Page 521]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66071; File Nos. SR-CBOE-2011-107 and SR-NSX-2011-14]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated and National Stock Exchange, Inc.; Order Granting 
Accelerated Approval to Proposed Rule Changes in Connection With the 
Proposed Acquisition of the National Stock Exchange, Inc. by CBOE Stock 
Exchange, LLC

December 29, 2011.

I. Introduction

    On November 28, 2011, each of the Chicago Board Options Exchange, 
Incorporated (``CBOE'') and the National Stock Exchange, Inc. (``NSX'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ proposed rule changes in 
connection with the proposed acquisition of NSX by CBOE Stock Exchange, 
LLC (``CBSX'') (the ``Transaction''). On December 2, 2011, the proposed 
rule changes were published for comment in the Federal Register.\3\ The 
Commission received no comments on either proposed rule change. This 
order approves each of the proposed rule changes on an accelerated 
basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release Nos. 65843 (November 28, 
2011), 76 FR 75577 (December 2, 2011) (SR-CBOE-2011-107) (``CBOE 
Notice'') and 65842 (November 28, 2011), 76 FR 75586 (December 2, 
2011) (SR-NSX-2011-14) (``NSX Notice'').
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II. Background

A. The Transaction

    Currently, NSX is wholly and directly owned by NSX Holdings, Inc. 
(``NSX Holdings''). Under a Purchase Agreement (the ``Purchase 
Agreement'') dated September 28, 2011 by and between NSX, NSX Holdings, 
and CBSX, CBSX would acquire all of the outstanding capital stock of 
NSX on the date of or after all conditions precedent to closing have 
been satisfied or waived, including approval by the Commission of these 
proposed rule changes.\4\
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    \4\ Conditions precedent to closing the Transaction are formal 
requirements set forth in the Purchase Agreement and include 
delivery of certain documents (such as officers' certificates, legal 
opinions, and agreements), compliance by each party with specified 
representations, warranties and covenants, and receipt of necessary 
approvals by each party. See NSX Notice, supra note 3, at note 1.
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    Following the completion of the Transaction, NSX would become a 
wholly-owned subsidiary of CBSX. NSX would remain a Delaware for-profit 
stock corporation, with the authority to issue 1,000 shares of common 
stock, 100 shares of which would be issued and would be held in their 
entirety by CBSX. At all times, all of the outstanding stock of NSX 
would be owned by CBSX. NSX would remain registered as a national 
securities exchange under Section 6 of the Act,\5\ and accordingly, NSX 
would remain a self-regulatory organization (``SRO'').\6\
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    \5\ 15 U.S.C. 78f.
    \6\ NSX would continue to adhere to the undertakings in the 
Order Instituting Administrative and Cease-and-Desist Proceedings 
Pursuant to Sections 19(h) and 21C of the Act, Making Findings, and 
Imposing Sanctions, including those related to a Regulatory 
Oversight Committee and the separation of the regulatory functions 
from the commercial interests of NSX. See Securities Exchange Act 
Release No. 51714 (May 19, 2005).
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    NSX has proposed to amend its Certificate of Incorporation and By-
Laws to reflect and address the acquisition of NSX by CBSX following 
the Transaction. In addition, NSX has proposed other changes to its 
governing documents that are not directly related to the Transaction to 
update and enhance the governing documents and generally make them 
consistent with parallel provisions contained in the governing 
documents of other SROs. These changes are discussed below.

B. CBSX

    In 2007, the Commission approved the establishment of CBSX as a 
facility \7\ of CBOE.\8\ As the SRO for CBSX, CBOE has regulatory 
responsibility for the activities of CBSX. CBSX administers the CBOE 
Stock Exchange, a fully automated trading platform for securities other 
than options (the ``CBSX Trading Facility''). As a limited liability 
company, the governance structure and operating authority of CBSX are 
set forth in the Operating Agreement of CBSX (``CBSX Operating 
Agreement'') and the CBSX Certificate of Formation. In connection with 
the establishment of the CBSX Trading Facility, CBOE adopted Rule 3.32 
pertaining to ownership concentration and affiliation limitations.\9\
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    \7\ 15 U.S.C. 78c(a)(2).
    \8\ See Securities Exchange Act Release No. 55389 (March 2, 
2007), 72 FR 10575 (March 8, 2007) (SR-CBOE-2006-110) (the ``CBSX 
Approval Order''). See also Securities Exchange Act Release No. 
55172 (January 25, 2007), 72 FR 4745 (February 1, 2007) (SR-CBOE-
2006-110) (the ``CBSX Notice of Filing'').
    \9\ CBOE Rule 3.32(a) provides, in part: For as long as CBSX LLC 
operates as a facility of CBOE, no Trading Permit Holder, either 
alone or together with its Affiliates, at any time, may own, 
directly or indirectly, of record or beneficially, an aggregate 
amount of Shares that would result in a greater than twenty percent 
(20%) Percentage Interest in CBSX LLC (the ``Concentration 
Limitation'').
    In addition, the Certificate of Incorporation of CBOE Holdings, 
Inc., the owner of CBOE (``CBOE Holdings''), provides that no person 
(either alone or together with its related persons) may beneficially 
own more than 20% of the total outstanding shares of CBOE Holdings 
stock. See Article Sixth (b) of the Amended and Restated Certificate 
of Incorporation of CBOE Holdings, Inc. See also Securities Exchange 
Act Release No. 62158 (May 24, 2010), 75 FR 30082 (May 28, 2010) 
(SR-CBOE-2008-88).
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    As a limited liability company, ownership of CBSX is represented by 
limited liability membership interests. The holders of such interests 
are referred to as ``Owners.'' CBOE is one of the Owners of CBSX and 
owns all outstanding ``Series A'' Voting Shares \10\ of CBSX, 
representing just under 50% of all outstanding shares of CBSX.\11\ The 
outstanding ``Series B'' Voting Shares of CBSX are held by nine broker-
dealers.
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    \10\ ``Voting Shares'' means those Shares entitled to vote on 
matters submitted to the Owners, which Voting Shares are held by the 
Voting Owners. See Section 2.1(a)(28) of the CBSX Operating 
Agreement.
    \11\ As noted in Section 3.2 of the CBSX Operating Agreement, it 
is the intention of the Owners that no other members of CBSX (other 
than Affiliates of CBOE) be owners of Series A Voting Shares, and 
that no additional Series A Voting Shares be authorized, created or 
issued for such purpose; provided however, that this provision is 
not intended to limit or restrict any rights of CBOE to transfer any 
of its Series A Voting Shares with the prior approval of the 
Commission as provided for in Article VI, including Section 6.14 of 
the CBSX Operating Agreement, or any other provision thereof, or any 
rights to be acquired by a transferee of those Shares as provided 
therein.
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    As provided in Section 8.9 of the CBSX Operating Agreement, the 
outstanding Series A Voting Shares, in the aggregate, are entitled to a 
number of votes equal to 50% of the total number of Voting Shares 
outstanding on each matter submitted to a vote of the Owners. Each 
outstanding Series B Voting Share is entitled to one vote on each 
matter submitted to a vote of the Owners.\12\
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    \12\ The CBSX Operating Agreement also provides for Series C 
Non-Voting Restricted Shares. Such Shares are not entitled to vote 
on any matter submitted to a vote of the Owners and there are 
currently no Series C shares outstanding. See Section 8.9 of the 
CBSX Operating Agreement.
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    The CBSX Approval Order and the CBSX Notice of Filing describe 
various characteristics of CBSX, including: the relationship between 
CBSX and CBOE; changes in control of CBSX; the regulatory jurisdiction 
of the Commission and CBOE over the controlling parties and the Owners; 
and the ownership and voting restrictions on Owners.\13\ These 
provisions, as

[[Page 522]]

contained in the CBSX Operating Agreement and applicable CBOE rules, 
will remain unchanged after the Transaction except as otherwise 
described below.
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    \13\ Section 6.12(a) of the CBSX Operating Agreement provides 
that no person (other than CBOE), either alone or together with its 
Affiliates, may directly or indirectly own an aggregate amount of 
Shares that would result in a greater than 20% Percentage Interest 
in CBSX. In addition, Section 8.10 provides that if an Owner of 
Series B Voting Shares that is also a CBOE member owns more than 20% 
of the outstanding Voting Shares (``Excess Shares''), alone or 
together with any Affiliate, such Owner will have no voting rights 
with respect to the Excess Shares.
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    In connection with the Transaction, CBOE proposes to amend and 
restate the CBSX Operating Agreement to be effective as of the closing 
of the Transaction. CBOE also proposes to adopt new CBOE Rule 2.50 
regarding its policy with respect to NSX. These changes are discussed 
below.

III. Discussion and Commission Findings

    After careful consideration, the Commission finds that each 
proposed rule change is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\14\ In particular, the Commission finds that the 
proposed rule changes are consistent with Section 6(b)(1) of the 
Act,\15\ which, among other things, requires a national securities 
exchange to be so organized and have the capacity to be able to carry 
out the purposes of the Act and to enforce compliance by its members 
and persons associated with its members with the provisions of the Act, 
the rules and regulations thereunder, and the rules of the exchange. 
Further, the Commission finds that the proposed rule changes are 
consistent with Section 6(b)(3) of the Act,\16\ which requires that the 
rules of a national securities exchange assure the fair representation 
of its members in the selection of its directors and administration of 
its affairs, and provide that one or more directors shall be 
representative of issuers and investors and not be associated with a 
member of the exchange, broker, or dealer. The Commission also finds 
that the proposed rule change are consistent with Section 6(b)(5) of 
the Act,\17\ which requires, among other things, that the rules of a 
national securities exchange be designed to prevent fraudulent and 
manipulative acts and practices; to promote just and equitable 
principles of trade; to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, and processing 
information with respect to, and facilitating transactions in 
securities; to remove impediments to and perfect the mechanism of a 
free and open market and a national market system; and, in general, to 
protect investors and the public interest.
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    \14\ In approving the proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \15\ 15 U.S.C. 78f(b)(1).
    \16\ 15 U.S.C. 78f(b)(3).
    \17\ 15 U.S.C. 78f(b)(5).
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    As noted above, following the Transaction, NSX will be a wholly-
owned subsidiary of CBSX. NSX will remain registered as a national 
securities exchange under Section 6 of the Act,\18\ and, accordingly, 
NSX will remain an SRO. The Commission believes that the ownership of 
NSX by CBSX would not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.\19\ Though CBSX 
is not itself an SRO, as a holding company of an SRO, its activities 
with respect to the operation of NSX must be consistent with, and must 
not interfere with, the self-regulatory obligations of NSX.
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    \18\ 15 U.S.C. 78f.
    \19\ 15 U.S.C. 78f(b)(8).
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A. CBOE-2011-107

1. Changes To Accommodate CBSX's Ownership of NSX
    CBOE's proposed rule change includes several amendments designed to 
accommodate CBSX's ownership of NSX. These amendments address the fact 
that CBSX will effectively serve as a holding company for NSX after the 
Transaction to the extent related to CBSX's control of NSX. The changes 
also clarify CBSX's rights and responsibilities relating to its role as 
a holding company of a registered national securities exchange. For 
example, CBOE's proposal amends Section 1.6 of the CBSX Operating 
Agreement to reflect CBSX's new purpose to act as a holding company of 
NSX (in addition to its current purpose to act as a trading market for 
securities other than options as a facility of CBOE). The proposal also 
amends several provisions in the CBSX Operating Agreement to clarify 
that certain references to CBSX include its subsidiaries, including 
NSX.\20\
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    \20\ See, e.g., Sections 1.6 and 9.15(a)(9) and (10) of the CBSX 
Operating Agreement.
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    In addition, the proposal amends Section 6.12 of the CBSX Operating 
Agreement to provide that the Ownership Concentration Limitation 
described in that section, which currently carves out CBOE (because 
CBOE owns greater than 20% of CBSX) does not apply to CBOE Holdings as 
well (because CBOE Holdings indirectly owns CBOE). It also expands the 
applicability of the Concentration Limitation to persons and the 
broader category of their ``Related Persons'' \21\ rather than to 
persons and their ``Affiliates.'' \22\ The proposal also amends Section 
6.12(c) and (e) of the CBSX Operating Agreement to impose on NSX equity 
trading permit holders the Ownership Concentration Limitation 
prohibitions described in those paragraphs, which are currently only 
imposed on CBOE Trading Permit Holders. This change recognizes CBSX's 
new ownership of NSX and is intended to guard against members of NSX 
obtaining an ownership stake in CBSX that could potentially be used to 
influence the performance by NSX of regulatory authority over such 
members or others. The Commission finds that these changes, which are 
necessary to reflect the change in ownership of NSX after the 
Transaction, are consistent with the Act.
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    \21\ See Section 2.1(a)(23) of the CBSX Operating Agreement 
defining ``Related Person.''
    \22\ Section 2.1(a)(1) of the CBSX Operating Agreement defines 
``Affiliate'' as, with respect to any person, any other person that 
directly, or indirectly through one or more intermediaries, 
controls, is controlled by, or is under common control with, such 
person. As used in this definition, ``control'' means the 
possession, directly or indirectly, of the power to direct or cause 
the direction of management and policies of a person, whether 
through the ownership of voting securities, by contract or otherwise 
with respect to such person.
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    The proposal makes similar amendments to Section 8.10 of the CBSX 
Operating Agreement to expand applicability of the voting restriction 
described in that section to persons and their Related Persons and to 
provide that if any person, not just a CBOE Trading Permit Holder, 
exceeds the Concentration Limitation set forth in Section 6.12 of the 
CBSX Operating Agreement, then the Owner and its Related Persons will 
have no voting rights with respect to the shares in excess of such 
limitation unless it satisfies certain requirements set forth in 
proposed Section 8.10(b) through (d) of the CBSX Operating Agreement. 
The proposed rule change also extends the applicability of the voting 
restriction in Section 8.10 of the CBSX Operating Agreement to cover 
voting agreements, plans, and arrangements.
    Further, the proposal amends Section 9.15(a)(9) of the CBSX 
Operating Agreement to clarify that with respect to the sale of 
material assets or ownership interests that requires approval pursuant 
to Section 9.15, ``material assets or ownership interests'' includes 
subsidiaries of CBSX. In addition, the proposed rule change adds 
Section 15.19 to the CBSX Operating Agreement

[[Page 523]]

to obligate CBSX, when voting as NSX's sole shareholder in an election 
of the NSX board of directors, to vote in favor of ETP Holder Directors 
(a certain class of directors defined in the NSX Bylaws that are 
intended to provide NSX members with fair representation in the 
governance of NSX consistent with the Act) that were nominated in 
accordance with the procedures set forth in NSX's governing documents.
2. Preservation of the Self-Regulatory Function of NSX
    After the Transaction, NSX would become a subsidiary of CBSX. 
Although CBSX is not an SRO and, therefore, does not itself have self-
regulatory functions, its activities with respect to the operation of 
NSX must be consistent with, and not interfere with, NSX's self-
regulatory obligations. To address this concern, the proposal adds 
various provisions to the CBSX Operating Agreement that are designed to 
protect the independence of the self-regulatory function of NSX and to 
clarify NSX's rights with respect to CBSX.
    For example, the proposed rule change adds Section 5.7(b) to the 
CBSX Operating Agreement, which, among other things:
     Requires CBSX Owners, the CBSX board of directors, CBSX 
officers, and CBSX employees (for so long as CBSX controls NSX and to 
the extent related to the activities of NSX) to give due regard to the 
preservation of the independence of the self-regulatory function of NSX 
and to NSX's obligations under the Act;
     Prohibits CBSX Owners, the CBSX board of directors, CBSX 
officers, and CBSX employees from taking any actions that would 
interfere with the effectuation of any decisions by the NSX board of 
directors relating to NSX's regulatory functions, including 
disciplinary matters, or with NSX's ability to carry out its 
responsibilities under the Act; and
     Requires CBSX to comply with federal securities laws and 
the rules and regulations thereunder, and requires CBSX and its 
officers, directors, employees, and agents to cooperate with the 
Commission and NSX pursuant to and to the extent of their regulatory 
authority.
    In addition, the proposed rule amends Section 6.15(a) of the CBSX 
Operating Agreement to reflect the acquisition by CBSX of the NSX SRO 
and to ensure access by NSX to the Owners of CBSX that is necessary for 
NSX to perform its responsibilities as an SRO.\23\ Specifically, the 
revisions:
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    \23\ Section 6.15(a) of the CBSX Operating Agreement currently 
provides: ``The Owners acknowledge that to the extent they are 
related to [CBSX's] activities, the books, records, premises, 
officers, directors, agents, and employees of the Owners shall be 
deemed to be the books, records, premises, officers, directors, 
agents, and employees of CBOE for the purpose of and subject to 
oversight pursuant to the Exchange Act.''
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     Clarify that the Owners acknowledge that the books, 
records, premises, officers, directors, agents, and employees of the 
Owners will be deemed to be the books, records, premises, officers, 
directors, agents, and employees of CBOE for the purpose of and subject 
to oversight pursuant to the Act, but only to the extent they are 
related to the CBSX Trading Facility; and
     Add a provision in which the Owners acknowledge that the 
books, records, premises, officers, directors, agents, and employees of 
the Owners will be deemed to be the books, records, premises, officers, 
directors, agents, and employees of NSX for the purpose of and subject 
to oversight pursuant to the Act, but only to the extent they are 
related to the activities of NSX.
    Similarly, the proposed rule change amends Section 6.15(b) of the 
CBSX Operating Agreement concerning access by NSX to CBSX personnel and 
records \24\ to add the provision that the books, records, premises, 
officers, directors, agents, and employees of CBSX will be deemed to be 
the books, records, premises, officers, directors, agents, and 
employees of NSX for the purpose of and subject to oversight pursuant 
to the Act, but only to the extent related to the activities of 
NSX.\25\
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    \24\ Section 6.15(b) of the CBSX Operating Agreement currently 
provides: ``The books, records, premises, officers, directors, 
agents, and employees of [CBSX] shall be deemed to be the books, 
records, premises, officers, directors, agents, and employees of 
CBOE for the purpose of and subject to oversight pursuant to the 
Exchange Act.''
    \25\ CBSX's complete records and books of account must be 
subject at all times to inspection and examination by CBOE (to the 
extent related to the CBSX Trading Facility), NSX (to the extent 
related to CBSX's control of NSX), and the Commission at no 
additional charge to CBOE, NSX, and the Commission, as applicable. 
See Section 13.2 of the CBSX Operating Agreement.
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    The proposal also amends Section 6.15(c) of the CBSX Operating 
Agreement to provide that CBSX and the Owners and their respective 
officers, directors, agents, and employees,\26\ irrevocably submit to 
the jurisdiction of the U.S. federal courts, the Commission, CBOE, and 
NSX for the purposes of any suit, action, or proceeding pursuant to 
U.S. federal securities laws or the rules or regulations thereunder, 
commenced or initiated by the Commission arising out of, or relating 
to, the CBSX Trading Facility or the CBSX's control of NSX, as 
applicable.
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    \26\ Revisions to Section 6.15(c) (consent to jurisdiction) and 
(d) (consent in writing to applicability) of the CBSX Operating 
Agreement also extend the requirements of these provisions to all 
agents and employees of CBSX and its Owners, rather than only agents 
and employees whose principal place of business and residence is 
outside of the United States.
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    In addition, the proposed rule change amends Sections 9.15(c) and 
9.16 of the CBSX Operating Agreement to provide that CBSX directors 
agree to comply with the federal securities laws and the rules and 
regulations thereunder, and to cooperate with the Commission, CBOE, and 
NSX pursuant to their regulatory authority, as applicable, and the 
provisions of the CBSX Operating Agreement. The proposal also amends 
Section 9.15(c) of the CBSX Operating Agreement to provide that CBSX 
directors will take into consideration whether any actions taken or 
proposed to be taken as a director for or on behalf of CBSX, or any 
failure or refusal to act, would constitute interference with CBOE's or 
NSX's regulatory functions and responsibilities, as applicable, in 
violation of the CBSX Operating Agreement or the Act.\27\ These 
provisions are designed to foster compliance with the federal 
securities laws and to emphasize the considerations that are necessary 
on the part of CBSX's directors to reflect NSX's responsibilities as an 
SRO.
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    \27\ Interference with respect to the CBSX Trading Facility will 
be determined by the CBSX board designees of CBOE. See Section 
9.15(c) of the CBSX Operating Agreement.
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    Additionally, the proposal amends Section 14.1(a) of the CBSX 
Operating Agreement to provide that, for so long as CBSX controls NSX, 
before any amendment, alteration, or repeal of any provision of the 
CBSX Operating Agreement, to the extent related to CBSX's control of 
NSX, will be effective, such amendment, alteration, or repeal must be 
submitted to the NSX board of directors, and if CBOE and the NSX board 
of directors determine that such amendment, alteration, or repeal must 
be filed with or filed with and approved by the Commission, then such 
amendment, alteration, or repeal will not become effective until filed 
with or filed with and approved by the Commission, as the case may be. 
The proposal also adds a 10-day notice provision for any amendment, 
alteration, or repeal of the CBSX Operating Agreement made pursuant to 
Section 14.1(a) to provide CBOE and NSX with sufficient opportunity to 
review any potential regulatory impacts

[[Page 524]]

of such amendment, alteration, or repeal before it becomes effective.
    Further, to ensure unencumbered access to all relevant information, 
regardless of whether such information is considered ``confidential,'' 
the proposal amends Section 15.2 of the CBSX Operating Agreement to 
provide that nothing in the CBSX Operating Agreement will be 
interpreted to limit or impede the rights of the Commission, CBOE, or 
NSX to access and examine any Confidential Information (as defined in 
the CBSX Operating Agreement) pursuant to the U.S. federal securities 
laws and the rules thereunder, or to limit or impede the ability of an 
Owner or an officer, director, agent, or employee of an Owner to 
disclose any Confidential Information to the Commission, CBOE, or NSX. 
Proposed Section 15.2 of the CBSX Operating Agreement also provides 
that the obligation of Owners not to disclose Confidential Information 
described in that section does not apply to CBOE's or NSX's 
communications with the Commission with respect to the conduct of the 
CBSX Trading Facility's business or NSX's business, respectively.
3. CBOE Rule 2.50
    The CBOE proposed rule change proposes to adopt new CBOE Rule 2.50, 
which is intended to foster and preserve the self-regulatory function 
of NSX. Specifically, CBOE Rule 2.50(a) proposes a policy that CBOE, as 
a controlling owner of CBSX, will not take any action related to NSX's 
activities that would interfere with NSX's efforts to carry out its 
self-regulatory obligations under the Act and the rules and regulations 
thereunder. Additionally, proposed CBOE Rule 2.50(b) provides that CBOE 
will ``exercise its powers as a partial owner of CBSX to support the 
fulfillment by NSX of its self-regulatory obligations, including the 
appropriate allocation by NSX of such financial, technological, 
technical and personnel resources as may be necessary or appropriate 
for NSX to meet its obligations under the [Act].'' The purpose of 
proposed CBOE Rule 2.50(a) is to provide that CBOE will, through its 
control interest in CBSX and consistent with its relationship with 
CBSX, work with NSX to establish and maintain adequate and appropriate 
resources to enable NSX to perform its self-regulatory obligations.
    CBOE Rule 2.50 is designed to facilitate NSX's ability to fulfill 
its self-regulatory obligations and, therefore, is consistent with the 
Act, including Section 6(b)(1) of the Act,\28\ which requires, among 
other things, that a national securities exchange be so organized and 
have the capacity to carry out the purposes of the Act, and to comply 
and enforce compliance by its members and persons associated with its 
members, with the provisions of the Act, the rules and regulations 
thereunder, and the rules of the exchange. Proposed Rule 2.50 
represents CBOE's commitment, as a controlling owner of CBSX, to 
support NSX in the fulfillment of NSX's role as an SRO.
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    \28\ 15 U.S.C. 78f(b)(1).
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4. CBOE Holdings and Regulated Securities Exchange Subsidiaries
    CBOE is wholly-owned by CBOE Holdings, and as discussed above, CBOE 
owns a controlling interest in CBSX. The CBOE Holdings Certificate of 
Incorporation contains provisions that are applicable to ``Regulated 
Securities Exchange Subsidiaries'' of CBOE Holdings, which entities are 
defined as ``any national securities exchange controlled, directly or 
indirectly, by [CBOE Holdings], including, but not limited to CBOE.'' 
\29\ Various provisions in the CBOE Holdings Certificate of 
Incorporation reference ``Regulated Securities Exchange Subsidiary,'' 
including Articles Sixth (voting and ownership limitations), Eleventh 
(amendments to the CBOE Holdings Certificate of Incorporation must be 
submitted to the board of each Regulated Securities Exchange 
Subsidiary), Twelfth (amendments to the CBOE Holdings Bylaws must be 
submitted to the board of each Regulated Securities Exchange 
Subsidiary), Fourteenth (submission to jurisdiction arising out of or 
relating to Regulated Securities Exchange Subsidiaries' activities), 
Fifteenth (confidential information of Regulated Securities Exchange 
Subsidiaries and access to CBOE Holdings' books and records by 
Regulated Securities Exchange Subsidiaries), and Sixteenth (cooperation 
with the SEC and each Regulated Securities Exchange Subsidiary, consent 
to applicability of various provisions, due regard to preservation of 
regulatory independence, and consideration of effect of actions on each 
Regulated Securities Exchange Subsidiary). NSX, to the extent it is 
indirectly controlled by CBOE Holdings by virtue of CBOE Holdings' 
control of CBOE and CBOE's controlling interest in CBSX, which in turn 
will wholly-own NSX after the consummation of the Transaction, would 
qualify as a ``Regulated Securities Exchange Subsidiary.''
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    \29\ See CBOE Holdings Certificate of Incorporation Article 
Fifth (a)(xi).
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5. Facility of CBOE
    The proposed rule change amends various provisions to clarify that 
the operations of CBSX that relate to the CBSX Stock Exchange trading 
facility are a facility of CBOE under the Act, while the aspect of CBSX 
that relates to its control of NSX will not be a ``facility'' of CBOE. 
For example, the proposal amends Section 1.7 of the CBSX Operating 
Agreement to clarify that the CBSX Trading Facility (and not CBSX to 
the extent it will act as a holding company for NSX) is a facility of 
CBOE under the Act, and therefore the CBSX Trading Facility will be 
subject to self-regulation by CBOE, with oversight by the 
Commission.\30\
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    \30\ See also Sections 1.8, 6.2(e), 6.15(c) and (d), 9.2(d), 
9.15(a)(14) and 14.1(a) for additional clarifications.
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6. Additional Changes
    Finally, the proposed rule change makes several non-substantive 
technical and conforming changes throughout the CBSX Operating 
Agreement, including: updating the name and date of the CBSX Operating 
Agreement; updating the current Owners and their current percentage 
interests and CBSX shares owned; \31\ replacing references to CBOE 
members with CBOE trading permit holders; \32\ updating the table of 
contents and section references; and adding new defined terms and 
renumbering the defined terms as necessary.\33\ In connection with the 
updates to reflect the current Owners, the proposed rule change amends 
the definition of ``Super Majority of the Owners'' to mean, subject to 
the regulatory requirements described in Section 1.8 of the CBSX 
Operating Agreement, the affirmative vote of both (i) all of the Owners 
of the Series A Voting Shares at the time, and (ii) Owners of the 
Series B Voting Shares who then retain ownership of Series B Voting 
Shares and represent at least a twenty (20%) percentage interest in 
CBSX, which more accurately corresponds to CBSX's current ownership 
structure.\34\ The Commission finds these non-substantive changes to be 
consistent with the Act as they are

[[Page 525]]

necessary to reflect the acquisition by CBSX of NSX following the 
Transaction.
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    \31\ See Section 3.2(d), signature page, and Exhibit A to the 
CBSX Operating Agreement.
    \32\ See Sections 6.12(c) and (e) and 8.10 of the CBSX Operating 
Agreement.
    \33\ See Section 2.1 of the CBSX Operating Agreement.
    \34\ See Section 2.1(a)(26). This change is consistent with the 
original structure of CBSX under which a super majority could be 
obtained with an affirmative vote of CBOE and two initial owners, 
who all initially had ten (10%) percentage interests in CBSX.
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B. NSX-2011-14

    NSX proposes to amend its Certificate of Incorporation and By-Laws 
to reflect and address NSX's proposed new ownership pursuant to which 
NSX will become wholly-owned by CBSX following the Transaction. In 
addition, NSX is making several other changes to its governing 
documents that are not directly related to the Transaction to update 
and enhance the governing documents and generally make them consistent 
with parallel provisions contained in the governing documents of other 
SROs. Certain provisions of the current NSX By-Laws that are historic 
in nature are also proposed to be deleted as no longer applicable.
    Except as described below, NSX's governing documents, rules, and 
manner of operation, including restrictions on ownership and transfer, 
registration as a national securities exchange under Section 6 of the 
Act, and the continuance of NSX as an SRO \35\ will remain 
unchanged.\36\
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    \35\ See 15 U.S.C. 78c(a)(26).
    \36\ See Securities Exchange Act Release No. 53963 (June 8, 
2006), 71 FR 34660 (June 15, 2006) (SR-NSX-2006-03) (Commission 
order approving NSX's demutualization).
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    In addition, the NSX proposal also contains the CBSX Operating 
Agreement, as revised in the contemporaneous rule filing CBOE-2011-107 
and as described above, since provisions in the CBSX Operating 
Agreement are relevant to NSX's structure and operations. The proposed 
amendments to the NSX governing documents and the CBSX Operating 
Agreement are intended to provide NSX with the authority and ability to 
effectively fulfill its self-regulatory duties pursuant to the Act and 
the rules promulgated thereunder. The proposed amendments also 
modernize and enhance the ownership and voting limitations in order to 
guard against undue influence over or interference with the NSX's 
regulatory functions and fulfillment of its regulatory obligations 
under the Act.
    The proposed Amended and Restated NSX Certificate of Incorporation 
(the ``A&R Certificate'') and Second Amended and Restated NSX By-Laws 
(the ``A&R By-Laws''), amended as described below, and NSX Rules (which 
are proposed to remain unchanged) would continue to govern the 
activities of NSX. These revised documents reflect NSX's status as a 
wholly-owned subsidiary of CBSX, continued management of NSX by the NSX 
Board of Directors (``NSX Board'') and designated officers, and the 
NSX's continuing self-regulatory responsibilities pursuant to NSX's 
registration under Section 6 of the Act.
    Currently, the NSX Board consists of thirteen director positions, 
of which seven are Independent, three are ETP Holder, two are At Large, 
and one is the NSX Chief Executive Officer. The Transaction 
contemplates that all current Exchange directors and committee members, 
including the Chief Executive Officer, will resign from the Board and 
committees, as applicable, effective upon closing. At such time, the 
vacancies on the Board and committees of the Board will be filled in 
accordance with applicable procedures contained in the A&R By-Laws. 
Candidates with the necessary qualifications will be appointed in 
accordance with Sections 3 or 5, as applicable, of the A&R By-Laws to 
fulfill the expired portion of any vacancies created by the 
resignation. Thereafter, directors and committee members will be 
nominated and elected in accordance with the A&R By-Laws.
1. Amended and Restated Certificate of Incorporation of NSX
    Under the proposed rule change, the requirement that NSX be at all 
times wholly-owned by NSX Holdings is proposed to be changed to allow 
for the consummation of the Transaction and acquisition of all of the 
outstanding NSX stock by CBSX. To make clear that NSX will be entirely 
owned by CBSX (regardless of whether outstanding NSX stock is voting or 
non-voting), the proposed A&R Certificate would be modified in Article 
IV to provide that, at all times, all of the outstanding stock of NSX 
shall be owned by CBSX.
    In addition, new language is proposed to be added to Articles VII 
and XI of the NSX Certificate of Incorporation designed to enable NSX 
Board and the Commission to continue to exercise oversight of NSX. In 
conformity with similar language in other governing documents of other 
exchanges,\37\ NSX proposes to add a provision to each of Articles VII 
and XI to make clear that before any amendment to, or repeal of, any 
provision of the NSX By-Laws and/or Certificate of Incorporation shall 
be effective, those changes shall be submitted to the NSX Board and, if 
such amendment or repeal must be filed with or filed with and approved 
by the Commission, then the proposed changes shall not become effective 
until filed with or filed with and approved by the Commission.\38\ For 
purposes of clarity regarding Commission approval of NSX proposed rule 
changes, specific reference to Section 19 of the Act and the rules 
promulgated thereunder is also introduced to Articles VII and XI.
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    \37\ See, e.g., Article 6 of the Certificate of Incorporation of 
EDGA Exchange, Inc. and Article 9 of the Certificate of 
Incorporation of C2 Options Exchange, Inc.
    \38\ See A&R Certificate of Incorporation, Articles Seventh and 
Eleventh.
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    Finally, consistent with similar provisions in the governing 
documents of other exchanges,\39\ the proposed A&R Certificate in 
Article V is amended to allow directors (other than ETP Holder 
Directors) to be removed with or without cause by a majority vote of 
stockholders. This amendment is intended to promote efficient NSX 
governance while continuing to protect and preserve the fair 
representation of ETP Holders through the ETP Holder Director election 
process contained in NSX's By-Laws.
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    \39\ See A&R Certificate of Incorporation, Article Fifth, (b). 
See also, e.g., Article II, Section 7(a) of the Amended and Restated 
By-Laws of BATS Exchange, Inc. and Article II, Section 7(a) of the 
Amended and Restated Bylaws of EDGA Exchange, Inc.
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    The Commission believes that the proposed A&R Certificate, as 
amended to accommodate the Transaction, is designed to facilitate the 
NSX's ability to fulfill its self-regulatory obligations and are, 
therefore, consistent with the Act. In particular, the Commission 
believes the changes are consistent with Section 6(b)(1) of the 
Act,\40\ which requires, among other things, that a national securities 
exchange be so organized and have the capacity to carry out the 
purposes of the Act, and to comply and enforce compliance by its 
members and persons associated with its members, with the provisions of 
the Act, the rules and regulations thereunder, and the rules of the 
exchange.
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

2. Second Amended and Restated By-Laws of NSX
    Under the proposed rule change, due to the transfer of ownership of 
NSX from NSX Holdings to CBSX, references in the NSX By-Laws specific 
to NSX Holdings are proposed to be replaced with references to CBSX. 
Specifically, Section 3.2(c) is proposed to be modified to provide that 
no two or more directors of NSX may be partners, officers, or directors 
of the same person or be affiliated with the same person, unless such 
affiliation is with a national securities exchange or CBSX. In 
addition, Section 10.2 is proposed to be modified to provide that in no 
event shall members of the CBSX Board who are not also members of the 
NSX Board,

[[Page 526]]

or any officers, staff, counsel, or advisors of CBSX who are not also 
officers, staff, counsel, or advisors of NSX (or any committees of 
NSX), be allowed to participate in any meetings of the NSX Board (or 
any committee of NSX) pertaining to the self-regulatory function of NSX 
(including disciplinary matters). These amendments recognize CBSX as 
direct owner of NSX while preserving a mechanism to prevent undue 
influence over NSX's self-regulatory functions.
    In connection with the ownership of NSX by CBSX, new Section 
10.1(b) will provide that, for so long as CBSX controls NSX, NSX shall 
promptly inform the CBSX board of directors, in writing, in the event 
that NSX has, or experiences, a deficiency related to its ability to 
carry out its obligations as a national securities exchange under the 
Act, including if NSX does not have or is not appropriately allocating 
such financial, technological, technical, and personnel resources as 
may be necessary or appropriate for NSX to meet its obligations under 
the Act. This provision will assist the CBSX board in its oversight of 
NSX, and will also assist CBOE, pursuant to CBOE Rule 2.50, in CBOE's 
commitment, as a controlling owner of CBSX, to support NSX in the 
fulfillment of NSX's role as an SRO.
    In addition, in conformity with the board composition provisions of 
other SROs,\41\ certain NSX Board composition changes are proposed in 
order to streamline and promote the efficiency and effectiveness of NSX 
Board governance. Specifically, By-Law provisions regarding the number 
of directors on the NSX Board are proposed to be amended to allow any 
number between (and including) seven (7) and twenty-five (25). In 
addition, the requirement that at least 50% of NSX Board members be 
``Independent'' Directors is proposed to be replaced with a requirement 
that at least 50% of NSX Board members be ``Non-Industry'' Directors, 
at least one of whom must qualify as Independent.\42\ The category of 
``At Large'' Directors, which under current By-Laws means directors who 
are not Independent, is eliminated.\43\ Finally, the category of CBOE 
Director, and corresponding provisions discussing CBOE ownership of 
Class B stock and related Board representation, are proposed to be 
deleted as obsolete.\44\
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    \41\ See, e.g., Third Amended and Restated Bylaws of the C2 
Options Exchange, Inc.; Second Amended and Restated By-Laws of CBOE; 
Amended and Restated By-Laws of BATS Exchange, Inc.; and the Amended 
and Restated Bylaws of EDGA Exchange, Inc.
    \42\ See A&R By-Laws Section 3.2 (Board composition 
requirements) and 1.1 (definitions of ``Industry Director'' and 
``Non-Industry Director''). See also e.g., Third Amended and 
Restated Bylaws of the C2 Options Exchange, Inc., Article III, 
Section 1; Second Amended and Restated Bylaws of the CBOE Article 
III, Section 1; and the Amended and Restated By-Laws of BATS 
Exchange, Inc., Article I.
    \43\ See A&R By-Laws Section 1.5 (definitions) and deletions to 
current By-Laws in Sections 3.2(b) and 3.4(e).
    \44\ See deletions to current By-Laws in Sections 1.5, 3.2(b), 
3.3, 3.4(d), 3.5(g) and 3.7.
---------------------------------------------------------------------------

    As a result, the proposed NSX Board composition after the closing 
of the Transaction will consist of not fewer than seven (7) and not 
more than twenty-five (25) directors \45\ and at all times shall 
include the Chief Executive Officer of NSX, at least 50% Non-Industry 
Directors (at least one of whom shall be an Independent Director), and 
such number of ETP Holder Directors as is necessary to comprise at 
least 20% of the NSX Board.\46\ For purposes of calculating the 
percentage of Non-Industry Directors, the Chief Executive Officer of 
NSX is excluded.\47\
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    \45\ See A&R By-Laws Section 3.2(a).
    \46\ See A&R By-Laws Section 3.2(b). See also Third Amended and 
Restated Bylaws of the C2 Options Exchange, Inc. Article III, 
Section 3.1; Second Amended and Restated Bylaws of CBOE Section III, 
Article 3.1; and the Amended and Restated By-Laws of BATS Exchange, 
Inc., Article III, Section 2.
    \47\ See Third Amended and Restated Bylaws of the C2 Options 
Exchange, Inc., Article III, Section 3.1; and Second Amended and 
Restated Bylaws of the CBOE. Section III, Article 3.1.
---------------------------------------------------------------------------

    By-Law provisions relating to the terms of office of each type of 
director are also amended from staggered three-year terms to one-year 
terms (other than the CEO Director, which individual's term expires 
upon ceasing to be Exchange Chief Executive Officer).\48\ NSX stated 
that the change to annual from staggered three-year director terms, 
which is consistent with provisions of other SROs,\49\ promotes 
efficient Exchange governance and effective ETP Holder 
representation.\50\
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    \48\ See A&R By-Laws Section 3.4(a) through (e).
    \49\ See Third Amended and Restated Bylaws of the C2 Options 
Exchange, Inc., Article III, Section 3.1; Second Amended and 
Restated Bylaws of the CBOE Article III, Section 3.1.
    \50\ See NSX Notice, supra note 3, at 76 FR 75589.
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    With respect to the filling of vacancies on the NSX Board,\51\ the 
A&R By-Laws are proposed to be amended to differentiate the procedure 
depending on whether the vacancy is of an ETP Holder Director or 
another type of director. Under current NSX By-Laws, no such 
distinction is made. NSX stated that it believes a distinction is 
necessary in order to promote, in the event of a vacancy of an ETP 
Holder Director, the fair representation of ETP Holders on the NSX 
Board.\52\ For non-ETP Holder Directors, the A&R By-Laws provide, 
consistent with current Exchange By-Laws, that any vacancy may be 
filled by vote of a majority of the directors then in office, although 
less than a quorum, or by a sole remaining director, provided such new 
director qualifies for the category in which the vacancy exists. A 
director elected to fill a vacancy shall hold office until the next 
annual meeting of stockholders, subject to the election and 
qualification of his or her successor and to his or her earlier death, 
resignation, disqualification, or removal.\53\ Regarding the filling of 
vacancies of ETP Holder Directors, the ETP Holder Director Nominating 
Committee shall either recommend an individual to the NSX Board to be 
elected to fill such vacancy or provide a list of recommended 
individuals to the NSX Board from which the NSX Board shall elect the 
individual to fill such vacancy. The NSX Board shall elect only 
individuals recommended by the ETP Holder Director Nominating 
Committee. The proposed amendments conform to analogous provisions of 
the governance documents of another exchange.\54\
---------------------------------------------------------------------------

    \51\ See A&R By-Laws Section 3.7. See also Third Amended and 
Restated Bylaws of the C2 Options Exchange, Inc., Article III, 
Section 3.5; Second Amended and Restated Bylaws of the CBOE Section 
III, Article 3.5; Amended and Restated By-Laws of BATS Exchange, 
Inc., Article III, Section 6; and Amended and Restated Bylaws of 
EDGA Exchange, Inc., Article III, Section 6.
    \52\ See NSX Notice, supra note 3, at 76 FR 75589.
    \53\ See A&R By-Laws Section 3.7(a)(i).
    \54\ See Third Amended and Restated Bylaws of the C2 Options 
Exchange, Inc., Article III, Section 3.5.
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    The Commission finds that the proposed changes regarding the 
composition of the Board are consistent with the Act, including Section 
6(b)(1) of the Act,\55\ which requires, among other things, that a 
national securities exchange be organized to carry out the purposes of 
the Act and comply with the requirements of the Act. The Commission 
notes that the proposed changes are consistent with the board 
composition provisions of other SROs.\56\
---------------------------------------------------------------------------

    \55\ 15 U.S.C. 78f(b)(1).
    \56\ See, e.g., Third Amended and Restated Bylaws of the C2 
Options Exchange, Inc.; Second Amended and Restated By-Laws of CBOE; 
Amended and Restated By-Laws of BATS Exchange, Inc.; and Amended and 
Restated Bylaws of EDGA Exchange, Inc.
---------------------------------------------------------------------------

    Certain other edits are proposed to the current NSX By-Laws to 
promote clarity and efficient governance. Such edits generally are 
intended to conform NSX's governing documents to analogous provisions 
contained in the governing documents of other exchanges.\57\ 
Specifically, in order to promote fair representation among all ETP 
Holders,

[[Page 527]]

A&R By-Laws Section 3.5(d) is proposed to be amended to provide that no 
ETP Holder, together with its affiliates, may account for more than 
fifty percent (50%) of the signatures endorsing a particular candidate, 
and any signatures of such ETP Holder, together with its affiliates, in 
excess of fifty percent (50%) limitation shall be disregarded. 
Similarly, in order to promote fair representation among all ETP 
Holders, in an election among ETP Holders of candidates for ETP Holder 
Director, A&R By-Laws Section 3.5(e) is proposed to be amended to 
provide that any vote must be cast for a person duly nominated on the 
list of candidates and that no ETP Holder, together with its 
affiliates, may account for more than twenty percent (20%) of the votes 
cast for a candidate, and any votes cast by such ETP Holder, together 
with its affiliates, in excess of such twenty percent (20%) limitation 
shall be disregarded. These provisions are intended to guard against 
the exercise of undue influence in the selection of ETP Holder 
directors.
---------------------------------------------------------------------------

    \57\ See A&R By-Laws Section 3.5(d) and (e). See also, e.g., 
Amended and Restated By-Laws of BATS Exchange, Inc., Article III, 
Section 4.
---------------------------------------------------------------------------

    In addition, the A&R By-Laws have been revised to include a fuller 
description of the composition and authority of Exchange 
committees.\58\ The description of the Executive Committee, which has 
authority to act on behalf of the full NSX Board under certain 
circumstances, is amended to clarify that the composition requirements 
of such committee must mirror the requirements applicable to the full 
Board.\59\ Regarding other Exchange committees, descriptions of the 
duties and composition requirements are included for each of the ETP 
Holder Director Nominating Committee, the Executive Compensation 
Committee, the Audit Committee, the Governance and Nominating 
Committee, the Appeals Committee, and the Business Conduct Committee. 
Reference to a Securities Committee was deleted.
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    \58\ See A&R By-Laws Sections 5.5 through 5.13. See also, e.g., 
Amended and Restated By-Laws of BATS Exchange, Inc., Article V, 
Section 6, and Article VI, Section 2.
    \59\ See A&R By-Laws Section 5.5(a), which provides, in part, 
that the Executive Committee at all times shall include the Chief 
Executive Officer of NSX, at least 50% Non-Industry Directors, at 
least one Independent Director and such number of ETP Holder 
Directors as is necessary to comprise at least 20% of the Executive 
Committee. See also, e.g., Amended and Restated By-Laws of BATS 
Exchange, Inc., Article V, Section 6(e).
---------------------------------------------------------------------------

    Consistent with analogous provisions contained in the governing 
documents of other exchanges, the procedures for amendments to NSX's 
By-Laws are proposed to be amended to provide for NSX Board review and, 
as necessary, Commission approval, prior to the effectiveness of any 
amendments to the Exchange's By-Laws.\60\
---------------------------------------------------------------------------

    \60\ See A&R By-Laws Section 8.1. See also, e.g., Amended and 
Restated By-Laws of BATS Exchange, Inc., Article IX, Section 1.
---------------------------------------------------------------------------

    Consistent with the proposed edits to the A&R Certificate and 
similar provisions in the governing documents of other exchanges,\61\ 
the proposed A&R By-Laws are further proposed to be modified to allow 
directors (other than ETP Holder Directors) to be removed with or 
without cause by a majority vote of stockholders. This amendment, 
consistent with a parallel proposed amendment to the NSX A&R 
Certificate, is intended to promote efficient Exchange governance while 
protecting the fair representation of ETP Holders through the ETP 
Holder Director election process as set forth in the A&R By-Laws.
---------------------------------------------------------------------------

    \61\ See A&R By-Laws Section 3.8. See also, e.g., Article II, 
Section 7(a) of the Amended and Restated By-Laws of BATS Exchange, 
Inc.; and Article II, Section 7(a) of the Amended and Restated 
Bylaws of EDGA Exchange, Inc.
---------------------------------------------------------------------------

    In addition, to clarify that the confidentiality provisions of 
Section 10.3 may not be interpreted to limit Commission jurisdiction 
over NSX books and records, a clarifying statement is proposed to be 
added to A&R By-Laws Section 10.3 to provide that nothing in Section 
10.3 shall be interpreted as to limit or impede the rights of the 
Commission to access and examine Exchange confidential information 
pursuant to the federal securities laws and the rules and regulations 
thereunder, or to limit or impede the ability of any officers, 
directors, employees, or agents of NSX to disclose such confidential 
information to the Commission.\62\
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    \62\ See A&R By-Laws Section 10.3.
---------------------------------------------------------------------------

    Finally, the proposed A&R By-Laws contain several other non-
substantive, conforming edits to the A&R By-Laws that are consistent 
with the principles discussed above, as well as the Act and the rules 
promulgated thereunder.\63\
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    \63\ Non-substantive, conforming edits to the A&R By-Laws are 
reflected in the following Sections of the A&R By-Laws: 3.2(d) 
(clarifying that directors may not serve if subject to statutory 
disqualification as such term is defined in the Act); 3.7(c) 
(providing that any grace periods for re-qualification of a director 
must be for only a reasonable length of time); 3.17(clarifying that 
NSX Board authority to interpret Exchange By-Laws remains subject to 
the Act); 5.2(clarifying that the composition requirements set forth 
in description of each committee in Article V control, and that 
responsibility for maintenance of committee composition in 
connection with new committee appointments resides with the 
Chairman); 5.6 (specifying that the Regulatory Oversight Committee 
shall at all times be comprised entirely of Non-Industry Directors); 
and 6.3 (clarifying that officer disqualification will terminate an 
officer's term of office). Relevant definitions are also added to 
Section 1.1.
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C. Accelerated Approval

    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\64\ for approving each of the proposed rule changes prior to 
the 30th day after the date of publication of notice in the Federal 
Register. Both the NSX Notice and the CBOE Notice were published in the 
Federal Register on December 2, 2011. Pursuant to Section 
19(b)(2)(C)(iii) of the Act,\65\ the Commission may not approve a 
proposed rule change earlier than 30 days after the date of publication 
thereof unless the Commission finds good cause for so doing. In the 
case of the CBOE and NSX proposals, the 30th day occurs in three days 
and falls on a non-business day (a Sunday). Further, the comment period 
on each proposal has closed, and the Commission has not received 
comment on either proposal. In light of the Commission's findings that 
the proposals are consistent with the Act, the Commission believes that 
good cause exists to accelerate approval of each proposal by a few days 
in order to accommodate the closing of the Transaction in calendar year 
2011.
---------------------------------------------------------------------------

    \64\ 15 U.S.C. 78s(b)(2).
    \65\ 15 U.S.C. 78s(b)(2)(C)(iii).
---------------------------------------------------------------------------

IV. Conclusion

    For the foregoing reasons, the Commission finds that each of the 
proposed rule changes are consistent with the Act and the rules and 
regulations thereunder applicable to a national securities exchange.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\66\ that the proposed rule changes (SR-CBOE-2011-107 and SR-NSX-
2011-14) be and hereby are approved on an accelerated basis.
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    \66\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\67\
---------------------------------------------------------------------------

    \67\ 17 CFR 200.30-3(a)(12).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-33826 Filed 1-4-12; 8:45 am]
BILLING CODE 8011-01-P