[Federal Register Volume 80, Number 28 (Wednesday, February 11, 2015)]
[Notices]
[Pages 7659-7661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-02747]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74209; File No. SR-NYSEMKT-2015-09]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Part 8 of the NYSE MKT 
Company Guide to (i) Require the Chief Executive Officers of Listed 
Companies to Provide Annual Certification with Respect to the Company's 
Compliance with the Requirements of Part 8 of the Company Guide, (ii) 
Require Listed Companies to Submit Annual and Interim Written 
Affirmations, and (iii) Make Certain Other Clarifying Changes

 February 5, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on February 3, 2015, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Part 8 of the NYSE MKT Company Guide 
(the ``Company Guide'') to (i) require the chief executive officers 
(each, a ``CEO'') of listed companies to provide annual certification 
with respect to the company's compliance with the requirements of Part 
8 of the Company Guide, (ii) require listed companies to submit annual 
and interim written affirmations, and (iii) make certain other 
clarifying changes. The text of the proposed rule change is available 
on the Exchange's Web site at www.nyse.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NYSE MKT proposes to amend Part 8 of the Company Guide to (i) 
require the CEOs of listed companies to provide annual certification 
with respect to the company's compliance with the requirements of Part 
8 of the Company Guide, (ii) require listed companies to submit annual 
and interim written affirmations, and (iii) make certain other 
clarifying changes. Part 8 of the Company Guide sets forth the 
Exchange's requirements with respect to listed company corporate 
governance, including majority board independence, independence 
requirements for audit committee and compensation committee members, 
and that executive compensation and director nominations must be under 
the jurisdiction of fully independent compensation and nominating 
committees or be determined by a majority of the independent directors 
acting as a group.
    The Exchange proposes to add a new Section 810(a) to Part 8 of the 
Company Guide that would require each listed company CEO, subject to 
certain exceptions discussed below, to certify to the Exchange each 
year that he or she is not aware of any violation by the listed company 
of the NYSE MKT corporate governance listing standards set forth in 
Part 8 of the Company Guide, qualifying the certification to the extent 
necessary to reflect any violations of which the CEO is aware. A blank 
copy of the CEO certification form required by Section 810(a) will be 
posted on the Exchange's Web site.
    The Exchange proposes to add a new Section 810(b) to Part 8 of the 
Company Guide that would require each listed company CEO to promptly 
notify the Exchange in writing after any executive officer of the 
listed company becomes aware of any noncompliance with any applicable 
provisions of Part 8.
    The Exchange proposes to add a new Section 810(c) to Part 8 of the 
Company Guide that would require each listed company to submit an 
executed written affirmation of compliance with Part 8 of the Company 
Guide annually to the Exchange. In addition, each listed company would 
be required to promptly submit an interim written affirmation after 
becoming aware of any noncompliance with Part 8 of the Company Guide or 
in the event of any change in the composition of its board of directors 
or the audit, compensation or nominating committees thereof. If the 
interim written affirmation relates to noncompliance with Part 8 of the 
Company Guide and is being submitted to the Exchange to satisfy the 
notice requirement of Section 810(b), it must be signed by the 
company's CEO. Blank copies of the affirmation forms required by 
Section 810(c) will be posted on the Exchange's Web site.
    The Exchange believes that the proposed additions to Part 8 of the 
Company Guide will focus the CEO and senior management of listed 
companies on compliance with the Exchange's corporate governance 
requirements. Commentary to the proposed Section 810(a) would include a 
statement to this effect. The Exchange notes that proposed Section 810 
is comparable to Section 303A.12 of the NYSE Listed Company Manual and 
that part of the rationale for adopting proposed Section 810 is to 
harmonize NYSE MKT's requirements more closely with those of the NYSE, 
as the two exchanges are under common ownership and regulated by the 
same staff in NYSE Regulation.
    With certain exceptions noted below, Part 8 of the Company Guide is 
generally not applicable to asset-backed issuers and other passive 
business organizations (such as royalty trusts) or to derivatives and 
special purpose securities listed pursuant to Exchange Rules 1000, and 
1200 and Sections 106, 107 and 118B as well as to issuers that only 
have debt or preferred stock listed on the Exchange. However, to the 
extent Rule 10A-3 under the Act requires such issuers to comply with 
Section 803 of the Company Guide, the Exchange proposes to amend 
Sections 801(c) and 801(g) to clarify that such issuers must also 
comply with new Sections 810(b) and 810(c). Because such issuers need 
only comply with Section 803 to the extent required by Rule 10A-3 under 
the Act, the Exchange will be able to obtain all relevant information 
to

[[Page 7660]]

monitor their compliance via the submissions required by Sections 
810(b) and 810(c). In the Exchange's view, it is therefore not 
necessary to subject such issuers to Section 810(a). Section 801(d) 
would be amended to clarify that registered management investment 
companies (including closed-end funds and open-end funds) would be 
subject to proposed Section 810. Section 801(f) would be amended to 
make clear that foreign issuers would be subject to Section 810, 
notwithstanding any exemptions from the requirements of Part 8 they may 
receive pursuant to Section 110.
    The Exchange also proposes to amend Section 801 to delete the text 
which provides that each listed company must provide prompt 
notification to the Exchange after an executive officer of the listed 
company becomes aware of any material noncompliance by the listed 
company with the applicable requirements specified or referenced in 
Part 8. This text would be redundant upon adoption of proposed Section 
810(b), which contains a comparable requirement that the Exchange be 
provided with prompt notification of any noncompliance with the 
applicable provisions of Part 8 of the Company Guide, although Section 
810(b) will require that a company's CEO provide this notification 
while the current rule only states that it be provided by the listed 
issuer. The Exchange proposes to delete a similar redundant 
notification requirement from Section 802(b).
    The Exchange proposes to amend Section 801(d) to correct an 
erroneous cross-reference. The reference to Section 803B(5) is amended 
to refer to Section 803B(4), which is the section containing the 
provision referenced in Section 801(d) (i.e., requiring audit 
committees for investment companies to establish procedures for the 
confidential, anonymous submission of concerns regarding questionable 
accounting or auditing matters by employees of the investment adviser, 
administrator, principal underwriter, or any other provider of 
accounting related services for the investment company, as well as 
employees of the investment company). Also, the Exchange proposes to 
amend Section 801(d) to clarify that, in addition to Section 803B(1) as 
the rule currently states, closed end funds are subject to Section 
803B(4) and to any of the other provisions of Section 803 to the extent 
required by Rule 10A-3 under the Exchange Act.
    Finally, the Exchange proposes to amend Section 803(B)(1)(b) to 
correct an obsolete reference. Specifically, the Exchange proposes to 
delete the reference to Independence Standards Board Standard 1 and 
replace it with a reference to The Public Company Accounting Oversight 
Board Rule 3526 which has superseded the deleted text.\4\
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    \4\ See Securities Exchange Act Release No. 58415 (August 22, 
2008), 73 FR 50843 (August 28, 2008) (PCAOB-2008-03).
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    The Exchange proposes to implement the changes discussed herein on 
February 4, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \5\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5) \6\ of the Act, in particular in that it 
is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
The Exchange believes that the proposed amendment is consistent with 
the investor protection objectives of the Act in that its purpose is to 
enable the Exchange's regulatory staff to more effectively monitor 
listed companies' compliance with the Exchange's corporate governance 
requirements as an integral part of the Exchange's responsibilities as 
a self-regulatory organization and to encourage companies to focus more 
thoroughly on their compliance with the applicable requirements.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed amendments to Part 8 of the Company Guide are comparable in 
substance to Section 303A.12 of the NYSE Listed Company Manual and are 
designed to permit the Exchange's regulatory staff to more effectively 
monitor listed companies' compliance with the Exchange's corporate 
governance requirements. Because the purpose of the proposed amendment 
is to adopt corporate governance affirmation requirements comparable to 
those of the NYSE, the Exchange does not believe that the proposed rule 
change will impose any burden on competition.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.\9\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
believes that the proposal will enable its regulatory staff to more 
effectively monitor listed companies' compliance with the Exchange's 
corporate governance requirements and will also encourage companies to 
focus more thoroughly on their fulfillment of these requirements. The 
Commission believes that advancing these goals benefits investors and 
serves the public interest by helping assure that listed companies 
adhere to sound governance practices. The Commission further notes that 
the Exchange's proposed approach to monitoring listed companies'

[[Page 7661]]

compliance is comparable, though not identical, to the approach used by 
the New York Stock Exchange. Thus the Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Therefore, the Commission hereby 
waives the operative delay and designates the proposed rule change 
operative upon filing.\12\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \13\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEMKT-2015-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2015-09. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSEMKT-2015-09 and should be submitted on or before 
March 4, 2015.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Brent J. Fields,
Secretary.
[FR Doc. 2015-02747 Filed 2-10-15; 8:45 am]
BILLING CODE 8011-01-P