[Federal Register Volume 77, Number 152 (Tuesday, August 7, 2012)]
[Notices]
[Pages 47161-47162]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19217]
[[Page 47161]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67564; File Nos. SR-NYSE-2012-17; SR-NYSEArca-2012-59;
SR-NYSEMKT-2012-07]
Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE
Arca, Inc.; NYSE MKT LLC; Order Granting Approval of Proposed Rule
Changes Amending Independence Policy of the Board of Directors of NYSE
Euronext and Creating a New Independence Policy for Boards of Directors
of the New York Stock Exchange LLC, NYSE MKT LLC, NYSE Regulation,
Inc., and NYSE Market, Inc.
August 1, 2012.
I. Introduction
On June 6, 2012, New York Stock Exchange LLC (``Exchange''), and on
June 8, 2012, NYSE Arca, Inc. (``NYSE Arca''), and NYSE MKT LLC (``NYSE
MKT'' and, together with the Exchange and NYSE Arca, the ``NYSE
Exchanges''), 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 amending the Independence Policy of the board of
directors (the ``NYSE Euronext Board'') of NYSE Euronext (the ``NYSE
Euronext Director Independence Policy'') and creating a new
Independence Policy (the ``Regulated Subsidiary Director Independence
Policy'') for each of the boards of directors of the Exchange, NYSE
MKT, NYSE Regulation, Inc. (``NYSE Regulation''), and NYSE Market, Inc.
(``NYSE Market'' and, together with NYSE Regulation, the Exchange, and
NYSE MKT, the ``Regulated Subsidiaries''). The proposed rule changes
were published for comment in the Federal Register on June 18, 2012.\4\
The Commission received no comment letters on the proposal.
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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. 67185 (June 12,
2011), 77 FR 36321 (SR-NYSE-2012-17); 67186 (June 12, 2012), 77 FR
36307 (SR-NYSEArca-2012-59); 67184 (June 12, 2012), 77 FR 36324 (SR-
NYSEMKT-2012-07).
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The Commission has reviewed carefully the proposed rule changes and
finds that the proposed rule changes are consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange.\5\ In particular, the
Commission finds that the proposed rule changes are consistent with
Section 6(b) of the Act,\6\ 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 \7\ 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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\5\ 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).
\6\ 15 U.S.C. 78f(b).
\7\ Id.
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II. Discussion
NYSE Euronext Director Independence Policy
Under the proposed rule changes, the NYSE Exchanges would amend the
NYSE Euronext Director Independence Policy and create the Regulated
Subsidiary Director Independence Policy.\8\ Under the proposed rule
changes, the NYSE Euronext Director Independence Policy would be
amended to reflect that (i) a majority (as opposed to 75%) of the NYSE
Euronext Board 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 NYSE Euronext 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) references to certain European regulatory authorities
would be updated, because their names have changed; (v) references to
NYSE Alternext US LLC and NYSE Amex LLC would refer instead to NYSE MKT
LLC, because of this entity's previous name changes; and (vi) footnote
2 would be deleted because the NYSE Euronext Director Independence
Policy would not be applicable to the Regulated Subsidiaries, each of
which is proposed to have its own director independence policy.
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\8\ In addition, the Exchange proposes to amend the Amended and
Restated Bylaws of NYSE Euronext, the Amended and Restated Bylaws of
NYSE Market, Inc., Third Amended and Restated Bylaws of NYSE
Regulation, Inc., the Third Amended and Restated Operating Agreement
of New York Stock Exchange LLC and the Second Amended and Restated
Operating Agreement of NYSE MKT LLC to make certain conforming
changes.
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The Commission finds that these proposals, taken together, are
consistent with the Act, particularly Section 6(b)(1),\9\ which
requires an exchange to be so organized and have the capacity to carry
out the purposes of the Act. The Commission previously considered and
approved these changes to the NYSE Euronext Director Independence
Policy in connection with the previously proposed combination of NYSE
Euronext and Deutsche B[ouml]rse AG (the ``Combination'').\10\ The
Commission notes that a majority of NYSE Euronext's Board would still
need to be independent. In addition, the Commission notes that as a
company listed on the Exchange, NYSE Euronext'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 the NYSE Euronext Director 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 MKT.
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\9\ 15 U.S.C. 78f(b)(1).
\10\ See Securities Exchange Act Release No. 34-66171 (January
17, 2012) 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), 77
FR 3297 (January 23, 2012). The Combination was not completed and,
therefore, the proposed rule changes conditionally approved by the
Commission did not become effective. See, e.g., Securities Exchange
Act Release No. 66662 (March 26, 2012), 77 FR 19396 (March 30, 2012)
(SR-NYSE-2012-08).
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Regulated Subsidiary Director Independence Policy
The Regulated Subsidiary Director Independence Policy to be adopted
by each of the Exchange, NYSE Market, NYSE Regulation and NYSE MKT
under the proposed rule changes would be substantially similar to the
current Independence Policy of the NYSE Euronext Board, except that
certain conforming changes would be made,
[[Page 47162]]
including the deletion of provisions that currently apply only to NYSE
Euronext directors and expressly do not apply to directors of these
Regulated Subsidiaries. In particular, (i) references to NYSE Euronext
would refer instead to the relevant Regulated Subsidiary; (ii) the
requirement that at least three-fourths of the directors must be
independent would be deleted, since the organizational documents of
these 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 U.S. regulated subsidiaries and European regulated
entities would be deleted, because unlike NYSE Euronext, the 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 Regulated Subsidiaries do not have a
Nominating and Governance Committee, except that in the Regulated
Subsidiary Director Independence Policy to be adopted by NYSE
Regulation, this provision would reference the Nominating and
Governance Committee of NYSE Regulation; (v) references to NYSE
Alternext, Inc. and NYSE Amex LLC would refer instead to NYSE MKT LLC,
because of this entity's previous name changes; (vi) because the
current Independence Policy of NYSE Euronext provides that a director
of an affiliate of a Member Organization'' (as defined in the Regulated
Subsidiary Director Independence Policy) cannot qualify as an
independent director of these 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 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 Regulated Subsidiary
Director Independence Policy, such persons could not be deemed to be
independent directors of the relevant 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),\11\ 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.\12\
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\11\ 15 U.S.C. 78f(b)(1).
\12\ 15 U.S.C. 78f(b)(3).
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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
\13\ that the proposed rule changes (SR-NYSE-2012-17; SR-NYSEArca-2012-
59; SR-NYSEMKT-2012-07), are approved.
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\13\ Id.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19217 Filed 8-6-12; 8:45 am]
BILLING CODE 8011-01-P