[Federal Register Volume 77, Number 14 (Monday, January 23, 2012)]
[Notices]
[Pages 3297-3307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-1177]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66171; File Nos. SR-EDGA-2011-34; SR-EDGX-2011-33; SR-
ISE-2011-69; SR-NYSE-2011-51; SR-NYSEAmex-2011-78; SR-NYSEArca-2011-72]


Self-Regulatory Organizations; EDGA Exchange, Inc.; EDGX 
Exchange, Inc.; International Securities Exchange, LLC; New York Stock 
Exchange LLC; NYSE Amex LLC; NYSE Arca, Inc.; Order Granting Approval 
of Proposed Rule Change Relating to a Corporate Transaction in Which 
Deutsche B[ouml]rse AG and NYSE Euronext Would Become Subsidiaries of 
Alpha Beta Netherlands Holding N.V.

January 17, 2012.

I. Introduction

    On October 12, 2011, each of EDGA Exchange, Inc (``EDGA''), EDGX 
Exchange, Inc. (``EDGX''), International Securities Exchange LLC 
(``ISE''), New York Stock Exchange LLC (``Exchange''), NYSE Amex LLC 
(``NYSE Amex''), and NYSE Arca, Inc. (``NYSE Arca''), filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 
(``Act''),\2\ and Rule 19b-4 thereunder,\3\ proposed rule changes in 
which their respective indirect parent owners will become subsidiaries 
of Alpha Beta Netherlands Holding N.V (``Holdco''). The proposed rule 
changes were published for comment in the Federal Register on October 
20, 2011.\4\ The Commission received three comment letters, one each on 
the NYSE, NYSE Amex, and NYSE Arca proposals, from one commenter.\5\ 
The Exchange filed a response to these comments on January 5, 2012.\6\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release Nos. 65562 (October 14, 
2011), 76 FR 65288 (October 20, 2011) (SR-NYSE-2011-51) 
(``Notice''); 65563 (October 14, 2011), 76 FR 65272 (October 20, 
2011) (SR-NYSEAmex-2011-78) (``NYSE Amex Notice''); 65564 (October 
14, 2011), 76 FR 65264 (October 20, 2011) (SR-EDGA-2011-34) (``EDGA 
Notice''); 65565 (October 14, 2011), 76 FR 65255 (October 20, 2011) 
(SR-EDGX-2011-33) (``EDGX Notice''); 65566 (October 14, 2011), 76 FR 
65247 (October 20, 2011) (SR-ISE-2011-69) (``ISE Notice''); 65567 
(October 14, 2011), 76 FR 65230 (October 20, 2011) (SR-NYSEArca-
2011-72) (``NYSE Arca Notice'').
    \5\ See Letters to Commission, from Andrew Rothlein, dated 
November 2, 2011 (``Rothlein Letters'').
    \6\ See letter from Janet McGinniss, Senior Vice President, 
Legal & Corporate Secretary, NYSE, to Elizabeth M. Murphy, 
Secretary, Commission, dated January 5, 2012 (``NYSE Response to 
Comments''). On January 9, 2012, the Commission received three 
rebuttal letters to the NYSE Response to Comments (the ``Rothlein 
Rebuttal Letters'').

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[[Page 3298]]

    The Commission has reviewed carefully the proposed rule change, the 
comment letters, and finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\7\ In 
particular, the Commission finds that the proposed rule changes are 
consistent with Section 6(b) of the Act,\8\ 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, and 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. Section 6(b) of the Act \9\ also requires 
that the rules of the exchange be designed 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.
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    \7\ In approving the proposed rule changes, the Commission has 
considered their impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b).
    \9\ Id.
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II. Discussion

    The Exchange, NYSE Amex and NYSE Arca (each a ``NYSE Exchange'') 
and ISE, EDGA and EDGX (each a ``DB Exchange'' or a ``DB U.S. Regulated 
Subsidiary'') have submitted their proposed rule changes in connection 
with the proposed business combination (the ``Combination'') of NYSE 
Euronext, a Delaware corporation (``NYSE Euronext''), and Deutsche 
B[ouml]rse AG, an Aktiengesellschaft organized under the laws of the 
Federal Republic of Germany (``Deutsche B[ouml]rse'').
    NYSE Euronext owns 100% of the equity interest of NYSE Group, Inc., 
a Delaware corporation (``NYSE Group''), which in turn directly or 
indirectly owns (1) 100% of the equity interest of the NYSE Exchanges 
and (2) 100% of the equity interest of NYSE Market, Inc. (``NYSE 
Market''), NYSE Regulation, Inc. (``NYSE Regulation''), NYSE Arca 
L.L.C. (``NYSE Arca LLC'') and NYSE Arca Equities, Inc. (``NYSE Arca 
Equities'') (the NYSE Exchanges, together with NYSE Market, NYSE 
Regulation, NYSE Arca LLC and NYSE Arca Equities, the ``NYSE U.S. 
Regulated Subsidiaries'' and each, a ``NYSE U.S. Regulated 
Subsidiary'').
    Deutsche B[ouml]rse indirectly owns 50% of the equity interest of 
International Securities Exchange Holdings, Inc. (``ISE Holdings''), 
which in turn holds 100% of the equity interest of ISE. ISE Holdings 
also holds 31.54% of the equity interest of Direct Edge Holdings LLC 
(``Direct Edge Holdings''), which in turn indirectly holds 100% of the 
equity interest of EDGA and EDGX.\10\
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    \10\ Following a corporate transaction in 2007 (the ``2007 
Transaction''), ISE Holdings became a wholly-owned subsidiary of 
U.S. Exchange Holdings, Inc. (``U.S. Exchange Holdings''), which is 
wholly-owned by Eurex Frankfurt AG (``Eurex Frankfurt,'' and, with 
Deutsche B[ouml]rse, the ``German Upstream Owners''). Eurex 
Frankfurt is a wholly-owned subsidiary of Eurex Z[uuml]rich AG 
(``Eurex Z[uuml]rich''), which, in turn, is jointly owned by 
Deutsche B[ouml]rse and SIX Swiss Exchange AG (``SWX''), a wholly-
owned subsidiary of SIX Group AG (SIX Group AG, SWX, and Eurex 
Z[uuml]rich are referred to collectively as the ``Swiss Upstream 
Owners,'' and the Swiss Upstream Owners and the German Upstream 
Owners are referred to collectively as the ``non-U.S. Upstream 
Owners''). As a result of ISE Holdings' purchase of an equity 
interest in Direct Edge Holdings, the non-U.S. Upstream Owners, U.S. 
Exchange Holdings (together with the non-U.S. Upstream Owners, the 
``Upstream Owners''), and ISE Holdings acquired indirect ownership 
and voting interests in EDGX and EDGA. See Securities Exchange Act 
Release No. 59135 (December 22, 2008), 73 FR 79954 (December 30, 
2008) (File No. SR-ISE-2008-85) (order relating to ISE Holdings' 
purchase of an ownership interest in Direct Edge Holdings); see 
also, Securities Exchange Act Release No. 56955 (December 13, 2007), 
72 FR 71979 (December 19, 2007) (SR-ISE-2007-101) (order relating to 
Eurex Frankfurt's acquisition of an indirect interest in ISE 
Holdings) (``Eurex Order'').
    In connection with the 2007 Transaction, each of the non-U.S. 
Upstream Owners adopted corporate resolutions (collectively, the 
``2007 Resolutions'') designed to maintain the independence of the 
regulatory functions of ISE. See Eurex Order. In 2007, the non-U.S. 
Upstream Owners were Eurex Frankfurt, Deutsche B[ouml]rse AG, Eurex 
Z[uuml]rich, SWX, SWX Group, and Verein SWX Swiss Exchange. The 2007 
Resolutions and the corporate governing documents of U.S. Exchange 
Holdings and ISE Holdings related to ISE and, by their terms, did 
not apply to additional national securities exchanges, such as EDGX 
and EDGA, that the Upstream Owners and ISE Holdings might control, 
directly or indirectly, as a result of a subsequent transaction. To 
maintain the independence of the regulatory function of EDGX and 
EDGA, in connection with EDGX's and EDGA's Form 1 Applications, each 
of the non-U.S. Upstream Owners adopted supplemental resolutions 
(the ``Supplemental Resolutions'') that apply the 2007 Resolutions 
to EDGX and EDGA in the same manner and to the same extent as the 
2007 Resolutions apply to ISE. Accordingly, the Supplemental 
Resolutions extend to EDGX and EDGA the commitments that the non-
U.S. Upstream Owners made in the 2007 Resolutions with respect to 
ISE. See Securities Exchange Act Release No. 61698 (March 12, 2010), 
75 FR 13151 (March 18, 2010) (File Nos. 10-194 and 10-196).
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    As a result of the Combination, the businesses of NYSE Euronext and 
Deutsche B[ouml]rse, including the NYSE U.S. Regulated Subsidiaries and 
the DB U.S. Regulated Subsidiaries (together, the ``U.S. Regulated 
Subsidiaries'' and each, a ``U.S. Regulated Subsidiary''), would be 
held under a single, publicly traded holding company organized under 
the laws of the Netherlands (``Holdco'').\11\ The proposed rule changes 
are necessary to effectuate the consummation of the Combination and 
will not be operative until the date of the consummation of the 
Combination (the ``Closing Date''). The proposed rule changes and 
exhibits thereto contain modifications to the underlying corporate 
governance documents of the U.S. Regulated Subsidiaries and their 
respective direct and indirect owners that reflect the current 
structure of the Combination. The Commission notes that any changes to 
the structure of the Combination that are made subsequent to the date 
of this approval order but prior to the Closing Date may be considered 
additional proposed rule changes required to be filed with and approved 
by the Commission pursuant to Section 19 of the Act.\12\ In addition, 
the Commission notes that, if the Combination is not consummated, the 
proposed rule changes will not become effective.
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    \11\ Holdco is currently named ``Alpha Beta Netherlands Holding 
N.V.,'' but it is expected that Holdco will be renamed prior to the 
completion of the Combination to a name agreed between NYSE Euronext 
and Deutsche B[ouml]rse. Each of EDGA, EDGX, ISE, NYSE, NYSE Amex 
and NYSE Arca would amend their respective rules and corporate 
documents to reflect Holdco's new name.
    \12\ 15 U.S.C. 78s.
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A. Corporate Structure

    Following the Combination, Holdco would be a for-profit, publicly 
traded corporation formed under the laws of the Netherlands and would 
act as the holding company for the businesses of NYSE Euronext and 
Deutsche B[ouml]rse, with NYSE Euronext and Deutsche B[ouml]rse each 
being a separate subsidiary of Holdco. Holdco would hold all of the 
equity interests in NYSE Euronext, which would hold (1) 100% of the 
equity interest of NYSE Group (which, in turn, would continue to 
directly or indirectly hold 100% of the equity interests of the NYSE 
U.S. Regulated Subsidiaries) and (2) 100% of the equity interest of 
Euronext N.V. (which, in turn, directly or indirectly holds 100% of the 
equity interests of trading markets in Belgium, France, the 
Netherlands, Portugal, and the United Kingdom). Holdco would also hold 
a majority of the equity interests in Deutsche B[ouml]rse,

[[Page 3299]]

which would indirectly hold 50% of the equity interest of ISE Holdings 
(which, in turn, would continue to hold (1) 100% of the equity interest 
of ISE and (2) 31.54% of the equity interest of Direct Edge Holdings). 
Direct Edge Holdings would continue to indirectly hold 100% of the 
equity interest of EDGA and EDGX. Holdco intends to list its ordinary 
shares on the New York Stock Exchange, the regulated market of the 
Frankfurt Stock Exchange, and the regulated market segment of Euronext 
Paris. Holdco and its subsidiaries will have dual headquarters in 
Frankfurt and New York.
    In Europe, NYSE Euronext, Deutsche B[ouml]rse and their respective 
subsidiaries own several European exchanges, including trading 
operations on regulated and non-regulated markets for cash products in 
Germany, France, Belgium, the Netherlands, and Portugal and derivatives 
in the United Kingdom and in the five above-mentioned locations. As a 
result, the activities of the NYSE Euronext and Deutsche B[ouml]rse 
European markets are or may be subject to the jurisdiction and 
authority of a number of European regulators, including the German 
Federal Financial Supervisory Authority (Bundesanstalt f[uuml]r 
Finanzdienstleistungsaufsicht), the Hessian Exchange Supervisory 
Authority, the Dutch Minister of Finance, the French Minister of the 
Economy, the French Financial Market Authority (Autorit[eacute] des 
March[eacute]s Financiers), the French Prudential Supervisory Authority 
(Autorit[eacute] de Contr[ocirc]le Prudentiel), the Netherlands 
Authority for the Financial Markets (Autoriteit Financi[euml]le 
Markten), the Belgian Financial Services and Markets Authority 
(Autorit[eacute] des Services et March[eacute]s Financiers), the 
Portuguese Securities Market Commission (Comiss[atilde]o do Mercado de 
Valores Mobili[aacute]rios--CMVM), and the U.K. Financial Services 
Authority (FSA).
    The NYSE Exchanges and DB Exchanges represent that the Combination 
will have no effect on the ability of any party to trade securities on 
the NYSE Exchanges or DB Exchanges. Other than as described herein, the 
NYSE Exchanges and the DB Exchanges also represent that Holdco will not 
make any changes to the regulated activities of the U.S. Regulated 
Subsidiaries in connection with the Combination. If Holdco determines 
to make any such changes to the regulated activities of any U.S. 
Regulated Subsidiary, it will seek the approval of the Commission.
    A core aspect of the structure of the Combination is local 
regulation of the marketplace, members, and issuers. Therefore, 
securities exchanges, members, and issuers of the U.S. Regulated 
Subsidiaries will continue to be regulated in the same manner as they 
are currently regulated. The Commission notes that this conclusion 
(i.e., that securities exchanges, members, and issuers of the U.S. 
Regulated Subsidiaries will continue to be regulated in the same manner 
as they are currently regulated) is based on the structure of the 
Combination as described in this proposal.
1. Holdco
    Following the Combination, Holdco will be a for-profit, publicly 
traded corporation that will act as a holding company for the 
businesses of NYSE Euronext and Deutsche B[ouml]rse. Holdco will hold 
(i) all of the equity interests in NYSE Euronext, which in turn, 
directly or indirectly holds 100 percent of the equity interests of the 
NYSE U.S. Regulated Subsidiaries, and (ii) a majority of the equity 
interests in Deutsche B[ouml]rse, which indirectly holds interests in 
ISE, EDGA, and EDGX. Section 19(b) of the Act and Rule 19b-4 thereunder 
require a self-regulatory organization (``SRO'') to file proposed rule 
changes with the Commission. Although Holdco is not an SRO, certain 
provisions of its proposed Deed of Amendment of Articles of Association 
(the ``Holdco Articles''), along with other corporate documents, are 
rules of an exchange \13\ if they are stated policies, practices, or 
interpretations, as defined in Rule 19b-4 under the Act, of the 
exchange, and must be filed with the Commission pursuant to Section 
19(b)(4) of the Act and Rule 19b-4 thereunder. Accordingly, the NYSE 
Exchanges and DB Exchanges have filed the proposed Holdco Articles, 
along with other corporate documents, with the Commission.
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    \13\ See Section 3(a)(27) of the Act, 15 U.S.C. 78c(a)(27). If 
Holdco decides to change the Holdco Articles, Holdco must submit 
such change to the board of directors of the U.S. Regulated 
Subsidiaries, and if any or all of such board of directors shall 
determine that such amendment must be filed with or filed with and 
approved by the Commission pursuant to Section 19 of the Act and the 
rules thereunder, such change shall not be effective until filed 
with or filed with and approved by the Commission, as applicable. 
See proposed Holdco Articles, Section 36.2.
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Voting and Ownership Limitations
    The proposed Holdco Articles include restrictions on the ability to 
vote and own shares of stock of Holdco. Under the proposed Holdco 
Articles, no person (either alone or together with its related persons) 
\14\ will be entitled to vote or cause the voting of shares of stock of 
Holdco 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 20% of the then outstanding votes entitled to be cast on such 
matter. No person (either alone or together with its related persons) 
may acquire the ability to vote more than 20% 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 
Holdco's outstanding capital stock. Holdco shall disregard any such 
votes purported to be cast in excess of these limitations.\15\
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    \14\ See proposed Holdco Articles, Section 34.1 and Section 34.8 
for the definition of ``related person.''
    \15\ See proposed Holdco Articles, Section 34.1.
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    In addition, no person (either alone or together with its related 
persons) may at any time beneficially own shares of stock of Holdco 
representing in the aggregate more than 40% of the then outstanding 
votes entitled to be cast on any matter, except that a 20% restriction 
would apply to any person, either alone or with its related person, 
that is a member of an NYSE Exchange or DB Exchange.\16\ In the event 
that a person, either alone or together with its related persons, 
beneficially owns shares of stock of Holdco in excess of the 40% 
threshold, such person and its related persons will be obligated to 
offer for sale and to transfer that number of shares necessary so that 
such person shall beneficially own a number of shares entitling the 
holder thereof to cast votes on any matter which is in the aggregate no 
more than 40% of the then outstanding votes entitled to be cast on any 
matter.\17\ If such person(s) fails to comply within two weeks, Holdco 
will be irrevocably authorized to act on behalf of such person(s) in 
order to ensure compliance with the Holdco transfer obligation.\18\
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    \16\ See proposed Holdco Articles, Section 35.1.
    \17\ See proposed Holdco Articles, Sections 35.1, 35.4.
    \18\ See proposed Holdco Articles of Association, Section 35.7.
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    Furthermore, the Holdco Articles would provide that in the event 
any person, either alone or together with its related persons, exceeds 
the Holdco ownership restriction (any such person(s), a ``Non-Compliant 
Owner''), the Non-Compliant Owner would cease to have certain rights to 
the extent that its shareholding exceeds the Holdco ownership 
restriction. Specifically, the Non-Compliant Owner's rights to vote, to 
attend general meetings of Holdco shareholders and to receive dividends 
or other distributions attached to such shares in excess of the Holdco

[[Page 3300]]

ownership restriction would be suspended for so long as the Holdco 
ownership restriction is exceeded.\19\
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    \19\ See proposed Holdco Articles, Section 35.6.
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    Further, the Holdco Articles would permit the Holdco board of 
directors to require any person and its related persons that the board 
reasonably believes to be subject to the voting or ownership 
limitations summarized above, or owning in the aggregate 5% or more of 
the then issued and outstanding shares of Holdco entitled to vote on 
any matter, which ownership has not been reported to Holdco, to provide 
Holdco information regarding such ownership upon the request of the 
Holdco board of directors.\20\
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    \20\ See proposed Holdco Articles, Section 35.9.
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    The Holdco board of directors may waive the provisions regarding 
voting and ownership limits, subject to a determination by the Holdco 
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 U.S. Regulated 
Subsidiaries, Holdco, NYSE Group, or ISE Holdings to discharge their 
respective responsibilities under the Act and the rules and regulations 
thereunder;
     Will not impair the ability of any of the European Market 
Subsidiaries, Holdco, or Euronext to discharge their respective 
responsibilities under the European Exchange Regulations; \21\
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    \21\ See proposed Holdco Articles, Sections 34.3, 35.3, and 
Section 1.1 for the definitions of ``European Exchange Regulations'' 
and ``European Market Subsidiary.''
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     Is otherwise in the best interest of Holdco, its 
shareholders, the U.S. Regulated Subsidiaries, and the European Market 
Subsidiaries; and
     Will not impair the Commission's ability to enforce the 
Act or the European Regulators' ability to enforce the European 
Exchange Regulations.\22\
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    \22\ See Proposed Holdco Articles, Section 1.1, for the 
definition of ``European Regulator.''
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    Such resolution expressly permitting such voting or ownership must 
be filed with and approved by the Commission under Section 19 of the 
Act \23\ and filed with and approved by each European Regulator having 
appropriate jurisdiction and authority.
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    \23\ 15 U.S.C. 78s.
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    In addition, for so long as Holdco directly or indirectly controls 
the Exchange, NYSE Market, NYSE Arca, or NYSE Arca Equities or any 
facility of NYSE Arca, NYSE Amex, ISE, EDGA, or EDGX, the Holdco board 
of directors cannot waive the voting and ownership limits above the 20% 
threshold for any person if such person or its related persons is a 
member of NYSE, an ETP Holder of NYSE Arca Equities, or an OTP Holder 
or an OTP Firm of NYSE Arca,\24\ a member of Amex, a member of ISE, a 
member of EDGA, or a member of EDGX.\25\ Further, the Holdco board of 
directors also cannot waive the voting and ownership limits above the 
20% threshold if such person or its related persons is subject to any 
statutory disqualification (as defined in Section 3(a)(39) of the 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'').\26\
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    \24\ ``ETP Holder'' is defined in the NYSE Arca Equities rules 
of NYSE Arca. ``OTP Holder'' and ``OTP Firm'' are defined in the 
rules of NYSE Arca.
    \25\ See Holdco Articles at 34.3 and 35.3.
    \26\ See id.
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    Members that trade on an exchange traditionally have had ownership 
interests in such exchange. As the Commission has noted in the past, 
however, a member's interest in an exchange could become so large as to 
cast doubt on whether the exchange can fairly and objectively exercise 
its self-regulatory responsibilities with respect to that member.\27\ A 
member that is a controlling shareholder of an exchange might be 
tempted to exercise that controlling influence by directing the 
exchange to refrain from, or the exchange may hesitate to, diligently 
monitor and surveil the member's conduct or diligently enforce its 
rules and the federal securities laws with respect to conduct by the 
member that violates such provisions.
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    \27\ See, e.g., Securities Exchange Act Release Nos. 62716 
(August 13, 2010), 75 FR 51295 (August 19, 2010) (File No. 10-198) 
(order approving registration application of BATS Y-Exchange, Inc. 
as a national securities exchange); 61698 (March 12, 2010), 75 FR 
13151 (March 18, 2010) (File Nos. 10-194 and 10-196) (order 
approving registration applications of EDGX Exchange, Inc. and EDGA 
Exchange, Inc. as national securities exchanges); 58375 (August 18, 
2008), 73 FR 49498 (August 21, 2008) (File No. 10-182) (order 
approving registration application of BATS Exchange, Inc. as a 
national securities exchange); 55293 (February 14, 2007), 72 FR 8033 
(February 22, 2007) (SR-NYSE-2006-120) (order approving proposed 
combination between NYSE Group, Inc. and Euronext N.V.); 53382 
(February 27, 2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77) 
(order approving merger of New York Stock Exchange, Inc. and 
Archipelago, and demutualization of New York Stock Exchange, Inc. 
(``NYSE Inc.-Archipelago Merger Order'')); 53128 (January 13, 2006), 
71 FR 3550 (January 23, 2006) (File No. 10-131); 51149 (February 8, 
2005), 70 FR 7531 (February 14, 2005) (SR-CHX-2004-26); 49718 (May 
17, 2004), 69 FR 29611 (May 24, 2004) (SR-PCX-2004-08); 49098 
(January 16, 2004), 69 FR 3974 (January 27, 2004) (SR-Phlx-2003-73); 
and 49067 (January 13, 2004), 69 FR 2761 (January 20, 2004) (SR-BSE-
2003-19).
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    The Commission finds the ownership and voting restrictions in the 
proposed Holdco Articles are consistent with the Act. These 
requirements should minimize the potential that a person could 
improperly interfere with or restrict the ability of the Commission, 
the Exchange, or its subsidiaries to effectively carry out their 
regulatory oversight responsibilities under the Act.
2. NYSE Euronext and NYSE Group
    Following the Combination, NYSE Euronext will be a wholly-owned 
subsidiary of Holdco. Furthermore, NYSE Euronext will no longer be a 
publicly-held company and the NYSE Exchanges have proposed certain 
changes to reflect that NYSE Euronext will become a wholly owned 
subsidiary and will no longer be publicly held.\28\

[[Page 3301]]

NYSE Euronext will act as a holding company for the businesses of the 
NYSE Group and Euronext. NYSE Euronext will own all of the equity 
interests in NYSE Group and its subsidiaries, including the Exchange, 
NYSE Arca, and NYSE Amex and all of the equity interests in Euronext 
and its respective subsidiaries. Section 19(b) of the Act and Rule 19b-
4 thereunder require a SRO to file proposed rule changes with the 
Commission. Although NYSE Euronext and NYSE Group are not SROs, certain 
provisions of the current NYSE Euronext's Amended and Restated 
Certificate of Incorporation (``NYSE Euronext Certificate of 
Incorporation''), NYSE Euronext's Amended and Restated Bylaws (``NYSE 
Euronext Bylaws''), NYSE Group's Amended and Restated Certificate of 
Incorporation (``NYSE Group Certificate of Incorporation''), and NYSE 
Group's Amended and Restated Bylaws (``NYSE Bylaws'') are rules of an 
exchange \29\ if they are stated policies, practices, or 
interpretations, as defined in Rule 19b-4 under the Act, of the 
exchange, and must be filed with the Commission pursuant to Section 
19(b)(4) of the Act and Rule 19b-4 thereunder. Accordingly, the NYSE 
Exchanges have filed the proposed NYSE Euronext Certificate of 
Incorporation, the proposed NYSE Euronext Bylaws, the proposed NYSE 
Group Certificate of Incorporation, and the proposed NYSE Group Bylaws 
with the Commission.
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    \28\ The NYSE Exchanges propose to amend certain provisions of 
NYSE Euronext's organizational documents to reflect that, after the 
Combination, NYSE Euronext will be an intermediate holding company 
and will no longer be a publicly-held company. The NYSE Euronext 
Certificate and the NYSE Euronext Bylaws would be amended to (1) 
simplify and provide for a more efficient governance and capital 
structure that is appropriate for a wholly-owned subsidiary; (2) 
conform certain provisions to analogous provisions of the 
organizational documents of NYSE Group, which will likewise be an 
indirect wholly-owned subsidiary of Holdco following completion of 
the Combination; and (3) make certain clarification and technical 
edits (for example, to conform the use of defined terms and other 
provisions, and to update cross-references to sections, consistent 
with the other amendments to the NYSE Euronext Certificate and the 
NYSE Euronext Bylaws set forth in this Proposed Rule Change). In 
addition, the current Independence Policy of the NYSE Euronext board 
of directors would cease to be in effect.
    Generally, the NYSE Exchanges propose, in part, the following 
changes to the NYSE Euronext Certificate and Bylaws: (i) decreasing 
the number of authorized shares of NYSE Euronext, (ii) allowing 
shareholders to call special meetings, take shareholder action by 
written consent, and to postpone such meetings, (iii) allowing 
shareholders to fill board vacancies, (iv) deleting provisions 
requiring a supermajority vote of shareholders to amend or repeal 
certain sections of the NYSE Euronext certificate of incorporation, 
(v) clarifying that notice of shareholder meetings is not required 
if waived, (vi) deleting the requirement that directors be elected 
by a majority of the votes cast, (vii) deleting provisions requiring 
advance notice from shareholders of shareholder director nominations 
or shareholder proposals, (viii) deleting provisions relating to the 
mechanics of shareholders' meetings, such as the appointment of an 
inspector of elections, (ix) clarifying that NYSE Euronext may not 
have a Nominating and Governance Committee, and (x) deleting the 
requirement that 75% of the Euronext board must be independent.
    Generally, the NYSE Exchanges propose, in part, the following 
changes to NYSE Group's Certificate and Bylaws: (i) Amending the 
issuance and certificate of designations for preferred stock; (ii) 
clarifying the ability to fix the number of directors and making the 
board's ability to remove directors subject to the rights of holder 
of preferred stock; (iii) clarifying that notice of shareholder 
meetings is not required if waived in accordance with the NYSE Group 
Bylaws; (iv) clarifying that a list of shareholders would be 
deleted; (v) deleting a reference to a special meeting of 
shareholders; (vi) clarifying that notice of any special meeting of 
directors is not required if waived and updating methods of delivery 
of notice; (vii) deleting restrictions on telephonic participation 
in meetings; (viii) revising the persons authorized to execute 
contracts; (ix) simplifying certain aspects of the indemnification 
and expense advancement provisions in light of the fact that there 
are not expected to be any independent, non-executive directors of 
NYSE Group; (x) amending and clarifying the manner in which the NYSE 
Group Bylaws may be amended, repealed, or adopted; and (xi) amending 
the definition of ``Regulated Subsidiary'' in the NYSE Group Bylaws.
    \29\ See Section 3(a)(27) of the Act, 15 U.S.C. 78c(a)(27). If 
NYSE Euronext decides to change its Certificate of Incorporation or 
Bylaws, NYSE Euronext must submit such change to the board of 
directors of the Exchange, NYSE Market, NYSE Regulation, NYSE Amex, 
NYSE Arca Equities, and NYSE Arca, and if any or all of such board 
of directors shall determine that such amendment or repeal must be 
filed with or filed with and approved by the Commission pursuant to 
Section 19 of the Act and the rules thereunder, such change shall 
not be effective until filed with or filed with and approved by the 
Commission, as applicable. See current NYSE Euronext Certificate of 
Incorporation, Article X and current NYSE Euronext Bylaws, Article 
X, Section 10.10(C); see also, proposed NYSE Euronext Certificate of 
Incorporation, Article X and proposed NYSE Euronext Bylaws, 
10.10(C). If NYSE Group decides to change its Certificate of 
Incorporation or Bylaws, NYSE Group must submit such change to the 
board of directors of the Exchange, NYSE Market, NYSE Regulation, 
NYSE Amex, NYSE Arca Equities, and NYSE Arca, and if any or all of 
such board of directors shall determine that such amendment or 
repeal must be filed with or filed with and approved by the 
Commission pursuant to Section 19 of the Act and the rules 
thereunder, such change shall not be effective until filed with or 
filed with and approved by the Commission, as applicable. See 
current NYSE Group Certificate of Incorporation, Article XII and 
current NYSE Group Bylaws, Section 7.9(A); see also proposed NYSE 
Group Certificate of Incorporation, Article XII and proposed NYSE 
Group Bylaws, Section 7.9(b).
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Voting and Ownership Limitations; Changes in Control
    The NYSE Exchanges have proposed changing the voting and ownership 
limitations of NYSE Euronext to include a statement that such 
limitations would not be applicable as long as Holdco owned all of the 
issued and outstanding shares of NYSE Euronext and only for so long as 
NYSE Euronext directly or indirectly controls any NYSE U.S. Regulated 
Subsidiary or any European Market Subsidiary.\30\ Instead, while NYSE 
Euronext is a wholly-owned subsidiary of Holdco, there shall be no 
transfer of the shares of NYSE Euronext without the approval of the 
Commission.\31\ If NYSE Euronext ceases to be wholly owned by Holdco, 
but directly or indirectly controls any NYSE U.S. Regulated Subsidiary 
or any European Market Subsidiary, the voting and ownership limitations 
would apply.
---------------------------------------------------------------------------

    \30\ See proposed NYSE Euronext Certificate of Incorporation, 
Article V, Introduction.
    \31\ See proposed NYSE Euronext Certificate of Incorporation, 
Article IV, Section 4.
---------------------------------------------------------------------------

    In addition, the NYSE Exchanges propose amending the voting and 
ownership restrictions in the proposed NYSE Euronext Certificate. The 
NYSE Exchanges propose amending the NYSE Euronext Certificate to: (i) 
Change the 10% percent threshold for the voting restriction to a 20% 
threshold, (ii) change the 20% percent threshold for the ownership 
restriction to a 40% restriction, except that the 20% threshold would 
continue to apply to any person who is (or with respect to whom a 
related person is) \32\ a member of the Exchange or NYSE Amex, an ETP 
Holder, or an OTP Holder or OTP Firm; and (iii) incorporate NYSE Amex 
into certain provisions. The NYSE Euronext board of directors would be 
unable to waive the voting and ownership limits above the 20% threshold 
if such person or its related persons is a member of the Exchange or 
NYSE Amex, an ETP Holder, an OTP Holder or an OTP Firm.\33\ Similar 
changes have been proposed for NYSE Group.\34\ Moreover, the NYSE 
Exchanges have proposed changing the voting and ownership limitations 
of NYSE Group so that such limitations would apply only for so long as 
NYSE Group directly or indirectly controls any NYSE U.S. Regulated 
Subsidiary or any European Market Subsidiary.\35\
---------------------------------------------------------------------------

    \32\ See proposed NYSE Euronext Certificate of Incorporation, 
Article V, Section 1(L) for the definition of ``related person.''
    \33\ See proposed NYSE Euronext Certificate of Incorporation, 
Article V, Section 2(A).
    \34\ See proposed NYSE Group Certificate of Incorporation, 
Article IV, Sections 4(b)(1)(A)(y) and 2(C).
    \35\ See proposed NYSE Group Certificate of Incorporation, 
Article IV, Section 4(b).
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    The Commission finds that the changes to the ownership and voting 
restrictions in the proposed NYSE Euronext Certificate and the proposed 
NYSE Group Certificate, as well as the change in control provisions in 
the NYSE Euronext Certificate are consistent with the Act. The 
Commission notes that the proposed ownership and voting percentage 
restrictions are consistent with thresholds previously approved by the 
Commission.\36\ Moreover, the transfer, ownership and voting 
restrictions should minimize the potential that a person could 
improperly interfere with or restrict the ability of the Commission, 
the NYSE U.S. Regulated Subsidiaries to effectively carry out their 
regulatory oversight responsibilities under the Act.
---------------------------------------------------------------------------

    \36\ See e.g., Securities Exchange Release Nos. 34-49718 (May 
17, 2004) (File No. SR-PCX-2004-08), 69 FR 29611 (approval of rule 
change proposed by the Pacific Exchange, Inc.); 49098 (January 16, 
2004) (File No. SR-PHLX-2003-73), 69 FR 3974 (approval of rule 
change proposed by the Philadelphia Stock Exchange, Inc.); and 50170 
(August 9, 2004) (File No. SR-PCX-2004-56), 69 FR 50419 (approval of 
rule change proposed by the Pacific Exchange, Inc. relating to 
initial public offering of parent of Archipelago Exchange, L.L.C.).
---------------------------------------------------------------------------

    In addition, to allow Holdco to wholly own and vote all of NYSE 
Euronext stock upon consummation of the Combination, Holdco delivered a 
written notice to the board of directors of NYSE Euronext pursuant to 
the procedures set forth in the current NYSE Euronext Certificate of 
Incorporation requesting approval of its ownership and voting of NYSE 
Euronext stock in excess of the NYSE Euronext voting restriction and 
NYSE Euronext ownership restriction.\37\ The board of directors of NYSE 
Euronext must resolve to expressly permit ownership or voting in excess 
of the NYSE

[[Page 3302]]

Euronext voting restriction limitation and NYSE Euronext ownership 
restriction. Such resolution of the NYSE Euronext board of directors 
must be filed with and approved by the Commission under Section 19(b) 
of the Act, and become effective thereunder. Further, the board of 
directors may not approve any voting or ownership in excess of the 
limitations unless it determines that such ownership or exercise of 
voting rights (i) will not impair the ability of the NYSE U.S. 
Regulated Subsidiaries, NYSE Euronext, and NYSE Group to discharge 
their respective responsibilities under the Act and the rules and 
regulations thereunder, (ii) will not impair the ability of any 
European Market Subsidiary, NYSE Euronext, or Euronext to discharge 
their respective responsibilities under the European Exchange 
Regulations, (iii) is otherwise in the best interests of NYSE Euronext, 
its shareholders, and the NYSE U.S. Regulated Subsidiaries, and (iv) 
will not impair the Commission's ability to enforce the Act or the 
European Regulators' ability to enforce the European Exchange 
Regulations.\38\ For so long as NYSE Euronext directly or indirectly 
controls the Exchange or NYSE Market, NYSE Arca, NYSE Arca Equities, 
any facility of NYSE Arca, or NYSE Amex, the NYSE Group board of 
directors cannot waive the voting and ownership limits above the 20% 
threshold if such person or its related persons is a member 
Exchange,\39\ an ETP Holder, an OTP Holder or an OTP Firm,\40\ or 
member of NYSE Amex.\41\ Further, the NYSE Euronext board of directors 
cannot waive the voting and ownership limits above the 20% threshold if 
such person or its related persons is a U.S. Disqualified Person or a 
European Disqualified Person.
---------------------------------------------------------------------------

    \37\ Prior to permitting any person to exceed the ownership 
limitation and voting limitation, such person must deliver notice of 
such person's intention to own or vote shares in excess of the 
ownership limitation or voting limitation to the NYSE Euronext board 
of directors. See current NYSE Euronext Certificate of 
Incorporation, Article V, Sections 1(C) and 2(C).
    \38\ See proposed NYSE Euronext Certificate of Incorporation, 
Article V, Sections 1(C) and 2(C).
    \39\ See proposed NYSE Group Certificate of Incorporation, 
Article IV, Sections 4(b)(1)(A)(y) and 4(b)(2)(C)(v).
    \40\ See proposed NYSE Group Certificate of Incorporation, 
Article IV, Sections 4(b)(1)(A)(y) and 4(b)(2)(C)(iv).
    \41\ See proposed NYSE Group Certificate of Incorporation, 
Article IV, Sections 4(b)(1)(A)(y) and 4(b)(2)(C)(vi).
---------------------------------------------------------------------------

    The notice from Holdco included representations that neither 
Holdco, nor any of its related persons, is: (1) A NYSE Member; (2) an 
Amex Member; (3) an ETP Holder, an OTP Holder or an OTP Firm; or (4) a 
U.S Disqualified Person or a European Disqualified Person. The NYSE 
Euronext board of directors adopted a resolution approving Holdco's 
request that it be permitted, either alone or with its related persons, 
to exceed the NYSE Euronext voting restriction and the NYSE Euronext 
ownership restriction.\42\
---------------------------------------------------------------------------

    \42\ Such resolutions of the NYSE Euronext board of directors 
were filed as part of the proposed rule change. See e.g., Exhibit A 
to the Notice, which exhibit is available on the Commission's Web 
site (http://www.sec.gov/rules/sro.shtml), at the Commission's 
Public Reference Room, at the NYSE, and on the NYSE's Web site 
(http://www.nyse.com).
---------------------------------------------------------------------------

    The Commission believes it is consistent with the Act to allow 
Holdco to wholly own and vote all of the outstanding common stock of 
NYSE Euronext. The Commission notes that Holdco represents that neither 
Holdco nor any of its related persons is subject to any statutory 
disqualification (as defined in Section 3(a)(39) of the Act), or is a 
member of the Exchange or NYSE Amex, an ETP Holder, an OTP Holder or an 
OTP Firm, or a European Disqualified Person. Moreover, Holdco has 
comparable voting and ownership limitations to ISE Holdings.\43\ Holdco 
has also included in its corporate documents certain provisions 
designed to maintain the independence of the NYSE U.S. Regulated 
Subsidiaries' self-regulatory functions from Holdco, NYSE Euronext and 
NYSE Group.\44\ Accordingly, the Commission believes that the 
acquisition of ownership and exercise of voting rights of NYSE Euronext 
common stock by Holdco will not impair the ability of the Commission or 
any of the NYSE U.S. Regulated Subsidiaries to discharge their 
respective responsibilities under the Act.
---------------------------------------------------------------------------

    \43\ See supra notes 12-18 and accompanying text.
    \44\ See infra notes 58-69 and accompanying text.
---------------------------------------------------------------------------

3. Proposed Amendments to Board Composition Requirements for the 
Exchange, NYSE Amex, NYSE Market and NYSE Regulation
    The Third Amended and Restated Operating Agreement, dated as of 
April 1, 2009, of the Exchange (the ``Exchange Operating Agreement''), 
currently provides that (1) a majority of the members of the Exchange's 
board of directors must be U.S. persons and members of the board of 
directors of NYSE Euronext who satisfy the independence requirements of 
the NYSE Euronext board, and (2) at least 20% of the Exchange's board 
members must be persons who are not board members of NYSE Euronext but 
who qualify as independent under the independence policy of the NYSE 
Euronext board of directors (the ``Non-Affiliated Exchange 
Directors'').\45\ The nominating and governance committee of the NYSE 
Euronext board of directors is required to designate as Non-Affiliated 
Exchange Directors the candidates recommended jointly by the Director 
Candidate Recommendation Committees of each of NYSE Market and NYSE 
Regulation or, in the event there are Petition Candidates (as such term 
is defined in the Exchange Operating Agreement), the candidates that 
emerge from a specified process will be designated as the Non-
Affiliated Exchange Directors.\46\
---------------------------------------------------------------------------

    \45\ See Third Amended and Restated Operating Agreement of New 
York Stock Exchange LLC, Section 2.03(a).
    \46\ See id.
---------------------------------------------------------------------------

    Under the Proposed Rule Change, these provisions would be amended 
(i) to provide that the independent members of the Exchange's board of 
directors, rather than the nominating and governance committee of the 
NYSE Euronext board of directors, will designate the Non-Affiliated 
Exchange Directors and make the other related determinations that were 
previously to be made by the nominating and governance committee of the 
NYSE Euronext board of directors; (ii) to provide that instead of using 
the independence policy of the NYSE Euronext board of directors to 
assess the independence of the Exchange's board members, the Exchange 
will have its own independence policy (the ``SRO Director Independence 
Policy''); (iii) in light of the fact that the board of directors of 
NYSE Euronext will be decreased in size once it becomes a wholly-owned 
subsidiary of Holdco, the requirement that a majority of the members of 
the Exchange's board of directors must be members of the board of 
directors of NYSE Euronext would be eliminated; and (iv) to provide 
that at least 20% of the Exchange's directors must be persons who are 
not members of the board of directors of Holdco (rather than referring 
to the board of directors of NYSE Euronext). Substantially the same 
revisions would be made to the analogous provisions of the Amended and 
Restated Operating Agreement of NYSE Amex, the Amended and Restated 
Bylaws of NYSE Market and the Third Amended and Restated Bylaws of NYSE 
Regulation.
    The SRO Director Independence Policy to be adopted by each of the 
Exchange, NYSE Market, NYSE Regulation and NYSE Amex under the Proposed 
Rule Change would be substantially similar to the current Independence 
Policy of the NYSE Euronext board of directors, except that certain 
conforming changes would be made, including the deletion of provisions 
that currently apply only to NYSE Euronext directors and expressly do 
not apply to directors of these NYSE U.S. Regulated Subsidiaries. In

[[Page 3303]]

particular, (i) references to NYSE Euronext would refer instead to the 
relevant NYSE U.S. Regulated Subsidiary or Holdco, as applicable; (ii) 
the requirement that at least three-fourths of the directors must be 
independent would be deleted, since the organizational documents of 
these NYSE U.S. Regulated Subsidiaries contain the independence and 
other qualification requirements for directors; (iii) the requirement 
in the Independence Policy of NYSE Euronext that the board consider the 
special responsibilities of a director in light of NYSE Euronext's 
ownership of NYSE U.S. Regulated Subsidiaries and European regulated 
entities would be deleted, because unlike NYSE Euronext, these NYSE 
U.S. Regulated Subsidiaries are not holding companies; (iv) the 
requirement for directors to inform the Chairman of the Nominating and 
Governance Committee of certain relationships and interests would be 
deleted, since the boards of these NYSE U.S. Regulated Subsidiaries do 
not have a Nominating and Governance Committee, except that in the SRO 
Director Independence Policy to be adopted by NYSE Regulation, this 
provision would reference the Nominating and Governance Committee of 
NYSE Regulation, Inc.; (v) references to NYSE Alternext, Inc. would 
refer instead to NYSE Amex, because of this entity's name change; (vi) 
because the current Independence Policy of NYSE Euronext provides that 
a director of an affiliate of a Member Organization cannot qualify as 
an independent director of these NYSE U.S Regulated Subsidiaries, the 
conflicting language stating that a director of an affiliate of a 
Member Organization shall not per se fail to be independent would be 
deleted; and (vii) because language in the current Independence Policy 
of NYSE Euronext provides that an executive officer of an issuer whose 
securities are listed on a NYSE Exchange cannot qualify as an 
independent director of these NYSE U.S Regulated Subsidiaries, the 
conflicting language providing an exception applicable only to NYSE 
Euronext directors would be deleted. In addition, the ``additional 
independence requirements'' at the end of the current Independence 
Policy of NYSE Euronext, which provides that executive officers of 
foreign private issuers, executive officers of NYSE Euronext and 
directors of affiliates of member organizations must together comprise 
no more than a minority of the total board, would be eliminated. This 
provision is designed to ensure that although persons who are directors 
of an affiliate of a Member Organization or who are executive officers 
of a ``foreign private issuer'' listed on a NYSE Exchange may in some 
circumstances qualify as independent for purposes of NYSE Euronext 
board membership, such persons may not, together with executive 
officers of NYSE Euronext, constitute more than a minority of the total 
NYSE Euronext directors. Under the proposed SRO Director Independence 
Policy, such persons could not be deemed to be independent directors of 
the relevant NYSE U.S. Regulated Subsidiary and, accordingly, this 
limitation on the number of such persons who may serve on the board is 
unnecessary.
    The Commission finds that these proposals, taken together, are 
consistent with the Act, particularly Section 6(b)(1),\47\ which 
requires an exchange to be so organized and have the capacity to carry 
out the purposes of the Act. Further, the Commission notes that the 
NYSE Exchanges are not proposing to change any of the provisions 
relating to (i) the fair representation of the members of each of the 
NYSE Exchanges in the selection of its directors and administration of 
its affairs or (ii) one or more of the directors of each of the NYSE 
Exchanges being representative of issuers and investors and not being 
associated with a member of the exchange or with a broker dealer, each 
as required under Section 6(b)(3) of the Act.\48\
---------------------------------------------------------------------------

    \47\ 15 U.S.C. 78f(b)(1).
    \48\ 15 U.S.C. 78f(b)(3).
---------------------------------------------------------------------------

4. Deutsche B[ouml]rse/ISE Holdings
    Following the Combination, ISE Holdings's indirect parent, Deutsche 
B[ouml]rse, will become a subsidiary of Holdco. Deutsche B[ouml]rse 
will own all of the equity interests in ISE and approximately 31.54% 
interest in EDGA and EDGX. Section 19(b) of the Act and Rule 19b-4 
thereunder require a self-regulatory organization (``SRO'') to file 
proposed rule changes with the Commission. Although ISE Holdings is not 
an SRO, certain provisions of its Amended and Restated Certificate of 
Incorporation (the ``ISE Holdings Certificate'') and Amended and 
Restated Bylaws of ISE Holdings (``the ISE Holdings Bylaws'') are rules 
of an exchange \49\ if they are stated policies, practices, or 
interpretations, as defined in Rule 19b-4 under the Act, of the 
exchange, and must be filed with the Commission pursuant to Section 
19(b)(4) of the Act and Rule 19b-4 thereunder. Accordingly, the DB U.S. 
Regulated Subsidiaries have filed a proposed change to the ISE Holdings 
Bylaws with the Commission.\50\
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    \49\ See Section 3(a)(27) of the Act, 15 U.S.C. 78c(a)(27). If 
ISE Holdings decides to change its Bylaws, ISE Holdings must submit 
such change to the board of directors of ISE, EDGA and EDGX, and if 
any or all of such board of directors shall determine that such 
amendment or repeal must be filed with or filed with and approved by 
the Commission pursuant to Section 19 of the Act and the rules 
thereunder, such change shall not be effective until filed with or 
filed with and approved by the Commission, as applicable. See ISE 
Bylaws, Article X, Section 10.1.
    \50\ See proposed Second Amended and Restated Bylaws of 
International Securities Holdings, Inc. attached as Exhibit A to the 
EDGA Notice, EDGX Notice and ISE Notice which exhibit is available 
on the Commission's Web site (http://www.sec.gov/rules/sro.shtml) 
and at the Commission's Public Reference Room.
---------------------------------------------------------------------------

Voting and Ownership Limitations; Changes in Control of the Exchange
    The proposed Second Amended and Restated Bylaws of ISE Holdings 
(``Proposed ISE Bylaws'') include restrictions on the ability to vote 
and own shares of stock of ISE Holdings. Under the ISE Holdings 
Certificate, no person (either alone or together with its related 
persons) \51\ will be entitled to vote or cause the voting of shares of 
stock of ISE Holdings 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 20% of the then outstanding votes entitled to be cast on such 
matter. No person (either alone or together with its related persons) 
may acquire the ability to vote more than 20% 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 ISE 
Holdings's outstanding capital stock.
---------------------------------------------------------------------------

    \51\ See ISE Holdings Certificate, Article IIB, Sections 
III(a)(i) and (b)(i).
---------------------------------------------------------------------------

    In addition, no person (either alone or together with its related 
persons) may at any time beneficially own shares of stock of ISE 
Holdings representing in the aggregate more than 40% of the then 
outstanding votes entitled to be cast on any matter.\52\ If a person 
were to obtain a voting or ownership interest in excess of the voting 
or ownership restrictions without obtaining the approval of the 
Commission, the shares of ISE Holdings would automatically transfer to 
a statutory trust established under and pursuant to the provisions of 
the Delaware Statutory Trust Act, 12 Del. C. Sec. Sec.  3801 et seq. 
(``ISE Trust''). The ISE Holdings Certificate and the ISE Holdings 
Bylaws provide that the board of directors of ISE Holdings may waive

[[Page 3304]]

these voting and ownership restrictions in an amendment to the ISE 
Holdings Bylaws if it makes certain findings and the amendment to the 
ISE Holdings Bylaws has been filed with, and approved by, the 
Commission under Section 19(b) of the Act.\53\
---------------------------------------------------------------------------

    \52\ See ISE Holdings Certificate, Article FOURTH, Section 
III(a)(1)(A) and (b) and ISE Holdings Bylaws Article XI.
    \53\ 15 U.S.C. 78s(b).
---------------------------------------------------------------------------

    The ISE Holdings board of directors may waive these voting and 
ownership restrictions in an amendment to the ISE Holdings Bylaws if, 
in connection with the adoption of such amendment, the board of 
directors in its sole discretion adopts a resolution stating that it is 
the determination of the board of directors that such amendment:
     Will not impair the ability of ISE Holdings and any of the 
DB U.S. Regulated Subsidiaries, or facility thereof, to carry out their 
respective responsibilities under the Act and the rules and regulations 
thereunder;
     Is otherwise in the best interest of ISE Holdings, its 
stockholders and the DB U.S. Regulated Subsidiaries;
     Will not impair the Commission's ability to enforce the 
Act;
     For so long as ISE Holdings directly or indirectly 
controls the Exchange, neither such person nor any of its related 
persons is an ISE Member, EDGA Member or EDGX Member; and
     Neither such person nor any of its related persons is 
subject to any ``statutory disqualification'' (as such term is defined 
in Section 3(a)(39) of the Act).\54\
---------------------------------------------------------------------------

    \54\ See Amended and Restated Certificate of Incorporation of 
ISE Holdings, Article FOURTH, Section III, and Amended and Restated 
Bylaws of ISE Holdings, Article XI.
---------------------------------------------------------------------------

    Such amendment shall not be effective unless it has been filed with 
and approved by the Commission under Section 19(b) of the Act.\55\
---------------------------------------------------------------------------

    \55\ 15 U.S.C. 78s(b).
---------------------------------------------------------------------------

    In addition, to allow Holdco to indirectly own 50% of the 
outstanding common stock of ISE Holdings upon consummation of the 
Combination, Holdco has delivered written notice to the board of 
directors of ISE Holdings pursuant to the procedures set forth in the 
ISE Holdings Certificate requesting approval of its voting and 
ownership of ISE Holdings shares in excess of the ISE Holdings Voting 
Restriction and the ISE Holdings Ownership Restriction. Among other 
things, in this notice, Holdco represented to the board of directors of 
ISE Holdings that neither it, nor any of its related persons, is (1) an 
ISE Member; (2) EDGA Member; (3) EDGX Member; or (4) subject to any 
``statutory disqualification.''
    The Commission believes it is consistent with the Act to allow 
Holdco to indirectly own 50% of the outstanding common stock of ISE 
Holdings. The Commission notes that Holdco represents that neither 
Holdco nor any of its related persons, is (1) an ISE Member; (2) EDGA 
Member; (3) EDGX Member; or (4) subject to any ``statutory 
disqualification.''
    Holdco has also included in its corporate documents certain 
provisions designed to maintain the independence of the DB U.S. 
Regulated Subsidiaries' self-regulatory functions from Holdco and 
Deutsche B[ouml]rse.\56\ Accordingly, the Commission believes that the 
acquisition of ownership and exercise of voting rights of ISE Holdings 
common stock by Holdco will not impair the ability of the Commission or 
any of the DB U.S. Regulated Subsidiaries to discharge their respective 
responsibilities under the Act.
---------------------------------------------------------------------------

    \56\ See infra notes 58-69 and accompanying text.
---------------------------------------------------------------------------

B. Relationship of Holdco, NYSE Euronext, Deutsche B[ouml]rse, SWX, ISE 
Holdings, NYSE Group, and the U.S. Regulated Subsidiaries; Jurisdiction 
Over Holdco

    Although Holdco itself will not carry out regulatory functions, its 
activities with respect to the operation of any of the U.S. Regulated 
Subsidiaries must be consistent with, and not interfere with, the U.S. 
Regulated Subsidiaries' self-regulatory obligations. The proposed 
Holdco corporate documents include certain provisions that are designed 
to maintain the independence of the U.S. Regulated Subsidiaries' self-
regulatory functions from Holdco, NYSE Euronext, ISE Holdings and NYSE 
Group, enable the U.S. Regulated Subsidiaries to operate in a manner 
that complies with the U.S. federal securities laws, including the 
objectives and requirements of Sections 6(b) and 19(g) of the Act,\57\ 
and facilitate the ability of the U.S. Regulated Subsidiaries and the 
Commission to fulfill their regulatory and oversight obligations under 
the Act.\58\
---------------------------------------------------------------------------

    \57\ 15 U.S.C. 78f(b) and 15 U.S.C. 78s(g).
    \58\ See proposed Holdco Articles Section 3.2.
---------------------------------------------------------------------------

    For example, under the proposed Holdco Articles, Holdco shall 
comply with the U.S. federal securities laws, the European Exchange 
Regulations, and the respective rules and regulations thereunder; shall 
cooperate with the Commission, the European Regulators, and the U.S. 
Regulated Subsidiaries.\59\ Also, each director, officer, and employee 
of Holdco, to the extent in discharging his or her responsibilities 
shall comply with the U.S. federal securities laws and the rules and 
regulations thereunder, cooperate with the Commission, and cooperate 
with the U.S. Regulated Subsidiaries.\60\ In addition, in discharging 
his or her responsibilities as a member of the board, each director of 
Holdco must, to the fullest extent permitted by applicable law, take 
into consideration the effect that Holdco's actions would have on the 
ability of the U.S. Regulated Subsidiaries to carry out their 
responsibilities under the 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 the U.S. Regulated Subsidiaries, NYSE Group, ISE 
Holdings and Holdco (i) to engage in conduct that fosters and does not 
interfere with the ability of the U.S. Regulated Subsidiaries, NYSE 
Group, ISE Holdings and Holdco to prevent fraudulent and manipulative 
acts and practices in the securities markets; (ii) to promote just and 
equitable principles of trade in the securities markets; (iii) to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities; (iv) to remove impediments to 
and perfect the mechanisms of a free and open market in securities and 
a U.S. national securities market system; and (v) in general, to 
protect investors and the public interest.\61\ For so long as Holdco 
directly or indirectly controls any U.S. Regulated Subsidiary, Holdco, 
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 the European Market 
Subsidiaries (to the extent of each European Market Subsidiaries' self-
regulatory function).\62\ Further, Holdco agrees to keep confidential 
all confidential information pertaining to: (1) The self-regulatory 
function of the any U.S. Regulated Subsidiary (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

[[Page 3305]]

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, and not use such 
information for any commercial \63\ purposes.\64\
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    \59\ See proposed Holdco Articles Section 3.2(a) and (b).
    \60\ See proposed Holdco Articles Section 3.2(l).
    \61\ See proposed Holdco Articles, Section 3.2(k).
    \62\ See proposed Holdco Articles, Sections 3.2(i) and 3.2(j).
    \63\ The Commission believes that any non-regulatory use of such 
information would be for a commercial purpose.
    \64\ See Holdco Articles Section 3.2(h).
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    In addition, Holdco's books and records shall be subject at all 
times to inspection and copying by the Commission, the European 
Regulators, any U.S. Regulated Subsidiary (provided that such books and 
records are related to the activities 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 any European 
Market Subsidiary (provided that 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).\65\ Holdco's books 
and records related to U.S. Regulated Subsidiaries shall be maintained 
within the United States, and Holdco'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.\66\ 
The Holdco Articles also provide that if and to the extent that any of 
Holdco's books and records may relate to both European Market 
Subsidiaries and U.S. Regulated Subsidiaries (each such book and record 
an ``Overlapping Record''), Holdco shall be entitled to maintain such 
books and records either in the home jurisdiction of one or more 
European Market Subsidiaries or in the United States.\67\
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    \65\ See proposed Holdco Articles Section 3.2(e).
    \66\ See proposed Holdco Articles Section 3.2(g).
    \67\ See id.
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    In addition, for so long as Holdco directly or indirectly controls 
any U.S. Regulated Subsidiary, the books, records, premises, officers, 
directors, and employees of Holdco 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 Act, and for so long as Holdco directly or indirectly 
controls any European Market Subsidiary, the books, records, premises, 
officers, directors, and employees of Holdco 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.\68\
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    \68\ See proposed Holdco Articles, Section 3.2(f)(i) and (ii).
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    Holdco and its directors and, to the extent they are involved in 
the activities of the U.S. Regulated Subsidiaries, Holdco's officers 
and employees whose principal place of business and residence is 
outside of the United States irrevocably submit to the jurisdiction of 
the U.S. federal courts and the Commission with respect to activities 
relating to the U.S. Regulated Subsidiaries, and to the jurisdiction of 
the European Regulators and European courts with respect to activities 
relating to the European Market Subsidiaries.\69\
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    \69\ See proposed Holdco Articles, Sections 3.2 (c) and (d).
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    Holdco would also sign an irrevocable agreement and consent for the 
benefit of each U.S. Regulated Subsidiary that it will comply with 
provisions in the Holdco Articles regarding (i) cooperation with the 
Commission and such U.S. Regulated Subsidiaries; (ii) compliance with 
U.S. federal securities laws; (iii) inspection and copying of Holdco's 
books, records and premises; (iv) Holdco's books, records, premises, 
officers, directors and employees being deemed to be those of U.S. 
Regulated Subsidiaries; (v) maintenance of books and records in the 
United States; (vi) confidentiality of information regarding the U.S. 
Regulated Subsidiaries' self-regulatory function; (vii) preservation of 
the independence of the self-regulatory function of the U.S. Regulated 
Subsidiaries; and (viii) taking reasonable steps to cause Holdco's 
officers, directors and employees to consent to the applicability to 
them of the Holdco Articles.
    Further, Holdco acknowledges that it is responsible for referring 
possible rule violations to the NYSE Exchanges and the DB Exchanges. 
Holdco will become a party to the agreement among NYSE Euronext, NYSE 
Group, the Exchange, NYSE Market and NYSE Regulation to provide 
adequate funding for NYSE Regulation.\70\ In addition, Holdco will 
become a party to the agreement among Deutsche B[ouml]rse, Eurex 
Frankfurt, Eurex Z[uuml]rich, SIX (formerly SWX), SIX Group (formerly 
SWX Group), Verein SIX Swiss Exchange (formerly SWX Swiss Exchange), 
U.S. Exchange Holdings, Inc., ISE Holdings and ISE to provide for 
adequate funding for ISE's regulatory responsibilities.\71\
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    \70\ See, e.g., Notice at 65293.
    \71\ See, e.g., ISE Notice at 65250.
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    Finally, the proposed Holdco Articles require that, for so long as 
Holdco controls, directly or indirectly, any of the U.S. Regulated 
Subsidiaries, any changes to the proposed Holdco Articles be submitted 
to the board of directors of such U.S. Regulated Subsidiaries, and if 
any such boards of directors determines that such amendment is required 
to be filed with or filed with and approved by the Commission pursuant 
to Section 19 of the Act \72\ and the rules thereunder, such change 
shall not be effective until filed with or filed with and approved by, 
the Commission.\73\
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    \72\ 15 U.S.C. 78s.
    \73\ See proposed Holdco Articles, Section 36.2.
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    The Commission finds that these provisions are consistent with the 
Act, and that they are intended to assist the Exchange in fulfilling 
its self-regulatory obligations and in administering and complying with 
the requirements of the Act. With respect to the maintenance of books 
and records of Holdco, the Commission notes that while Holdco has the 
discretion to maintain Overlapping Records in either the United States 
or the home jurisdiction of one or more of the European Market 
Subsidiaries, Holdco is liable for any books and records it is required 
to produce for inspection and copying by the Commission that are 
created outside the United States and where the law of a foreign 
jurisdiction prohibits Holdco from providing such books and records to 
the Commission for inspection and copying. Moreover, the Commission 
notes that Deutsche B[ouml]rse and NYSE Euronext, the two indirect 
entities currently controlling the U.S. Regulated Subsidiaries, are 
under existing obligations to make their books and records available in 
compliance with the requirements of Rule 17a-1(b).\74\ The Commission 
notes that the respective obligations of NYSE Euronext and Deutsche 
B[ouml]rse established in these prior orders remain in effect.\75\ The

[[Page 3306]]

Commission also notes that the trusts established under the prior 
orders also remain in effect unchanged, other than revising the 
reference in the NYSE Euronext trust agreement (``NYSE Trust'') from 
the nominating and governance committee of NYSE Euronext to the 
nominating and governance committee of Holdco.\76\ In addition, the 
Commission also notes that the 2007 Resolutions and Supplemental 
Resolutions remain in effect.
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    \74\ See Securities Exchange Act Release Nos. 55293 (February 
14, 2007), 72 FR 8033 (February 22, 2007) (SR-NYSE-2006-120) and 
56955 (Dec. 13, 2007), 72 FR 71979 (December 19, 2007) (SR-ISE-2007-
101).
    \75\ NYSE Euronext is currently required to maintain in the 
United States originals or copies of books and records that relate 
to both the NYSE U.S. Regulated Subsidiaries and its European market 
subsidiaries covered by Rule 17a-1(b) promptly after creation of 
such books and records. See supra, note 74, 72 FR 8041, 8042. The 
Commission notes that NYSE Euronext is liable for any books and 
records it is required to produce for inspection and copying by the 
Commission that are created outside the United States and where the 
law of a foreign jurisdiction prohibits NYSE Euronext from providing 
such books and records to the Commission for inspection and copying. 
See supra, note 75, 72 FR at 8041. If Deutsche B[ouml]rse fails to 
make its books and records available to the Commission, the 
Commission could bring an action under, among other provisions, 
Section 17 of the Act and Rule 17a-1(b) thereunder against the DB 
U.S. Regulated Subsidiaries pursuant to Section 19(h) of the Act. 
See supra, note 75, 72 FR at 71984.
    \76\ The ISE Trust would hold capital stock of ISE Holdings in 
the event that a person obtains an ownership or voting interest in 
ISE Holdings in excess of the ownership voting limits set forth in 
ISE's corporate governance documents. In addition, the ISE Trust 
would hold capital stock of ISE Holdings in the event of a Material 
Compliance Event. A ``Material Compliance Event'' is defined under 
the ISE Trust agreement as any state of facts, development, event, 
circumstance, condition, occurrence, or effect that results in the 
failure of any of the non-U.S. Upstream Owners to adhere to its 
respective commitments under the Resolutions in any material 
respect. The Trust holds a call option over Holdings capital stock, 
which may be exercised if a Material Compliance Event has occurred 
and continues to be in effect. See surpa, note 75, 72 FR at 71984.
    The NYSE Trust was created, in part, 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 exchange, or any 
NYSE Group securities exchange. See supra, note 75, 72 FR at 8042.
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    Under Section 20(a) of the Act,\77\ any person with a controlling 
interest in the U.S. Regulated Subsidiaries shall be jointly and 
severally liable with and to the same extent that the U.S. Regulated 
Subsidiaries are liable under any provision of the Act, unless the 
controlling person acted in good faith and did not directly or 
indirectly induce the act or acts constituting the violation or cause 
of action. In addition, Section 20(e) of the Act \78\ creates aiding 
and abetting liability for any person who knowingly provides 
substantial assistance to another person in violation of any provision 
of the Act or rule thereunder. Further, Section 21C of the Act \79\ 
authorizes the Commission to enter a cease-and-desist order against any 
person who has been ``a cause of'' a violation of any provision of the 
Act through an act or omission that the person knew or should have 
known would contribute to the violation. These provisions are 
applicable to Holdco's dealings with the U.S. Regulated Subsidiaries.
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    \77\ 15 U.S.C. 78t(a).
    \78\ 15 U.S.C. 78t(e).
    \79\ 15 U.S.C. 78u-3.
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C. Holdco Director Independence Policy

    Under the Proposed Rule Change, Holdco would adopt the Holdco 
Independence Policy, which would be substantially similar to the 
current Independence Policy of the NYSE Euronext board of directors, 
except that, in part, (i) a majority (as opposed to 75%) of the board 
of Holdco would be required to be independent; (ii) executive officers 
of listed companies would no longer be prohibited from being considered 
independent for purposes of the Holdco board; (iii) the ``additional 
independence requirements'' at the end of the current Independence 
Policy of NYSE Euronext, which provide that executive officers of 
foreign private issuers, executive officers of NYSE Euronext and 
directors of affiliates of member organizations must together comprise 
no more than a minority of the total board, would be eliminated; (iv) 
the Holdco Independence Policy would not be applicable to NYSE 
Regulation, Inc., the Exchange, NYSE Amex or NYSE Market, which would 
have their own director independence policy; and (v) references to the 
independence standards and criteria in the Dutch Corporate Governance 
Code would be added, because such standards and criteria would apply to 
Holdco, a Dutch company, and would supplement (rather than supersede or 
limit) the other independence standards and criteria set forth in the 
Holdco Independence Policy.
    The Commission finds that these proposals, taken together, are 
consistent with the Act, particularly Section 6(b)(1),\80\ which 
requires an exchange to be so organized and have the capacity to carry 
out the purposes of the Act. The Commission notes that a majority of 
Holdco's Board would still need to be independent. In addition, the 
Commission notes that as a company listed on the Exchange, Holdco's 
board of directors must also satisfy the independence requirements 
applicable to a listed company's board of directors as contained in the 
Exchange's Listed Company Manual. Further, the Commission notes that 
there are requirements in Holdco's Independence Policy that independent 
directors may not be or have been within the last year, and may not 
have an immediate family member who is or within the last year was, a 
member of the Exchange, NYSE Arca or NYSE Amex.
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    \80\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

D. Listing of Holdco's Securities

    Holdco intends to list its shares of common stock for trading on 
the Exchange, and apply for admission of its shares to trading on the 
regulated market of the Frankfurt Stock Exchange and the regulated 
market segment of the Euronext Paris. Pursuant to NYSE Rule 497, any 
security of Holdco and its affiliates shall not be approved for listing 
on the Exchange unless NYSE Regulation determines that such securities 
satisfy the Exchange's rules for listing, and such finding is approved 
by the NYSE Regulation board of directors. The Commission finds that 
the proposed procedure for the initial listing of Holdco common stock 
is consistent with the Act.
    NYSE Regulation will be responsible for all Exchange listing-
compliance decisions with respect to Holdco as an issuer. NYSE 
Regulation will prepare a quarterly report, as described in Rule 
497(c)(1) summarizing its monitoring of Holdco'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 
Commission. Once a year, an independent accounting firm will review 
Holdco's compliance with the Exchange's listing standards and a copy of 
its report will be forwarded promptly to the Commission. If NYSE 
Regulation determines that Holdco is not in compliance with any 
applicable listing standard of the Exchange, NYSE Regulation will 
notify Holdco promptly and request a plan for compliance. Within five 
business days of providing such notice to Holdco, NYSE Regulation will 
file a report with the Commission identifying the date on which Holdco 
is not in compliance with the listing standard at issue and any other 
material information conveyed to Holdco in the notice of non-
compliance. Within five business days of receiving a plan of compliance 
from the issuer, NYSE Regulation will notify the Commission 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. The 
Commission believes that the procedures for monitoring of the listing 
of and trading of Holdco's securities are consistent with the Act.

E. Options Trading Rights

    The Commission received three similar comment letters \81\ on the 
proposed rule changes regarding certain

[[Page 3307]]

Option Trading Rights (``OTRs'') that were separated from full New York 
Stock Exchange, Inc. \82\ seats (``Separated OTRs''). All New York 
Stock Exchange seat ownership (with or without OTRs) was extinguished 
in the 2006 demutualization of New York Stock Exchange, Inc.\83\ 
Although the commenter takes no position on the merits of the 
Combination, the commenter opposes the Combination on the grounds that 
the Exchange does not fully own all of the assets being transferred. 
Specifically, the commenter contends that the owners of Separated OTRs 
retained their Separated OTRs, even after the New York Stock Exchange, 
Inc. exited the options business in 1997, with the expectation that 
their ownership of the Separated OTRs would afford them full rights to 
trade options under the auspices of New York Stock Exchange, Inc. or 
its successor entity. The commenter contends that such ownership gives 
a right to trade options on NYSE Market and NYSE Arca, and after the 
Combination, Euronext. The commenter refers to its comment letters in 
connection with the demutualization of New York Stock Exchange, Inc. in 
its merger with Archipelago as well as the combination of NYSE Group 
and Euronext N.V.\84\ The commenter asked that reserves be put aside 
for the Exchange to meet its obligations to Separated OTR holders. The 
NYSE Response to Comments states that the issue of the rights of owners 
of Separated OTRs is not before the Commission in the context of the 
NYSE Exchanges' proposed rule filings and notes that the NYSE Exchanges 
are not proposing in their respective filings a change in the trading 
rights on the Exchange, NYSE Amex or NYSE Arca, respectively.\85\
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    \81\ See Rothlein Letters, supra note 5.
    \82\ New York Stock Exchange, Inc. is the predecessor entity to 
NYSE. See NYSE Inc.-Archipelago Merger Order, supra note 27.
    \83\ See NYSE Inc.-Archipelago Merger Order, supra note 27.
    \84\ See Rothlein Letters, supra note 5. The Commission notes 
that the commenter reiterated these points in its rebuttal to the 
NYSE Response to Comments, continuing to argue, in part, that it 
still retains an interest in certain trading rights and that the 
proposed rule changes do not comport with fair and equitable 
principles of trade. See Rothlein Rebuttal Letters, supra note 6.
    \85\ See NYSE Response to Comments, supra note 6.
---------------------------------------------------------------------------

    The issue of the rights of owners of Separated OTRs is not before 
the Commission in the context of this rule filing. Pursuant to Section 
19(b)(1) of the Act,\86\ an SRO (such as NYSE) is required to file with 
the Commission any proposed rule or any proposed change in, addition 
to, or deletion from the rules of such SRO. Further, pursuant to 
Section 19(b)(2) of the Act,\87\ the Commission shall approve a 
proposed rule change filed by an SRO if the Commission finds that such 
proposed rule change is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to the SRO.
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    \86\ 15 U.S.C. 78s(b)(1).
    \87\ 15 U.S.C. 78s(b)(2).
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III. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change is 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 
\88\ that the proposed rule changes (SR-EDGA-2011-34; SR-EDGX-2011-33; 
SR-ISE-2011-69; SR-NYSE-2011-51; SR-NYSEAmex-2011-78; SR-NYSEArca-2011-
72), are approved.
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    \88\ Id.
    \89\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\89\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-1177 Filed 1-20-12; 8:45 am]
BILLING CODE 8011-01-P