[Federal Register Volume 80, Number 126 (Wednesday, July 1, 2015)]
[Notices]
[Pages 37695-37698]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16089]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75301; File No. SR-NYSEMKT-2015-44]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending the Members'
Schedule as Defined in the Amended and Restated Limited Liability
Company Agreement of NYSE Amex Options LLC Dated as of May 14, 2014 in
Order to Reflect Changes to the Capital Structure of the Company
June 25, 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 June 17, 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 the Members' Schedule (as defined in
the Amended and Restated Limited Liability Company Agreement of NYSE
Amex Options LLC (the ``Company'') dated as of May 14, 2014 (the ``LLC
Agreement'')) in order to reflect changes to the capital structure of
the Company based on two transactions (such amendment, the ``Proposed
Rule Change''). The first transaction involved the issuance of Annual
Incentive Shares (as defined in the Members Agreement (as defined
below)) to the Founding Firms (as defined below) consistent with the
formula set forth in Section 2.1 of that certain Amended and Restated
Members Agreement, dated as of May 14, 2014, by and among the Company,
NYSE MKT, NYSE Holdings LLC (formerly known as NYSE Euronext) (``NYSE
Holdings''), NYSE Market (DE), Inc. (formerly known as NYSE Market,
Inc.) (``NYSE Market (DE)''), Banc of America Strategic Investments
Corporation (``BAML''), Barclays Electronic Commerce Holdings Inc.
(``Barclays''), Citadel Securities LLC (``Citadel''), Citigroup
Financial Strategies, Inc. (``Citigroup''), Goldman,
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Sachs & Co. (``Goldman Sachs''), Datek Online Management Corp. (``TD
Ameritrade'') and UBS Americas Inc. (``UBS'') (collectively, excluding
the Company, NYSE MKT, NYSE Holdings and NYSE Market (DE), the
``Founding Firms'') (the ``Members Agreement''). The second transaction
will involve the transfer of Interests (as defined in the LLC
Agreement) by the Founding Firms to NYSE Market (DE), an affiliate of
the Exchange, as soon as reasonably practicable following June 15, 2015
pursuant to Article XI of the LLC Agreement and Section 3.1 of the
Members Agreement. 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Members' Schedule as set forth
herein. The amendment reflects changes to the capital structure of the
Company due to (i) the issuance of Annual Incentive Shares to the
Founding Firms pursuant to Section 2.1 of the Members Agreement and
(ii) the transfer of Interests by the Founding Firms to NYSE Market
(DE) pursuant to Article XI of the LLC Agreement and Section 3.1 of the
Members Agreement.
Issuance of Annual Incentive Shares
Pursuant to Section 2.1 of the Members Agreement, each year until
this year (unless extended by the board of directors of the Company),
the Company must issue a number of Class B Common Interests (as defined
in the LLC Agreement) equal to thirty percent (30%) of the then-
outstanding Class B Common Interests as Annual Incentive Shares. These
Annual Incentive Shares are allocated among the Members (as defined in
the LLC Agreement) holding Class B Common Interests (such Members, the
``Class B Members'') based on each Class B Member's contribution to the
volume of the Exchange relative to such Class B Member's Individual
Target (as defined in the Members Agreement). The Annual Incentive
Shares may change the relative economic and voting rights among the
Class B Members but have no effect on the relative economic and voting
rights as between Members holding Class A Common Interests (as defined
in the LLC Agreement) and Class B Members.
Effective February 28, 2015, the Company issued 10.5456 Annual
Incentive Shares in the aggregate to the Founding Firms (the ``Issuance
of Annual Incentive Shares''). Five of the Founding Firms did not
achieve their Individual Targets, which reduced the five Founding
Firms' economic and voting interests in the Company relative to the
other Founding Firms. In addition, because only two Founding Firms
exceeded their Individual Targets, 1.0309 unallocated Reallocation
Shares (as defined in the Members Agreement) were included in an
Unearned Class B Shares Pool (as defined in the Members Agreement). In
accordance with Section 2.2 of the Members Agreement, the board of
directors of the Company allocated such Class B Shares between those
two Founding Firms that exceeded their Individual Targets, effective
February 28, 2015. The Exchange proposes to amend the Members' Schedule
as set forth in Exhibit 5A attached hereto \4\ (marked against the
Members' Schedule in effect prior to such issuance) to reflect the
issuance of Annual Incentive Shares, including the allocation of the
Reallocation Shares included in the Unearned Class B Shares Pool.
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\4\ The Commission notes that Exhibit 5A is attached to the
filing, not to this Notice.
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Founding Firm Transfer
Pursuant to Article XI of the LLC Agreement and Section 3.1 of the
Members Agreement, a Member may transfer Interests to a third party or
to another Member in accordance with the conditions and limitations set
forth therein. The Exchange is filing this Proposed Rule Change, in
part, to provide notice that the Founding Firms collectively intend to
transfer an aggregate equity interest [sic] 16.0000% in the Company to
NYSE Market (DE), an affiliate of the Exchange (the ``Founding Firm
Transfer''). Upon consummation of the Founding Firm Transfer and the
acquisition by NYSE Market (DE) of the Class B Common Interests
transferred by the Founding Firms, such Class B Common Interests will
automatically convert into an appropriate number of Class A Common
Interests.
Immediately following the Founding Firm Transfer, NYSE MKT will own
an equity interest of 47.2000% in the Company, NYSE Market (DE) will
own an equity interest of 52.8000%, and the Founding Firms,
collectively, will no longer have an equity interest in the Company.
The Exchange proposes, upon consummation of the Founding Firm Transfer,
to amend the Members' Schedule as set forth in Exhibit 5B attached
hereto \5\ (marked against the Members' Schedule following the Issuance
of Annual Incentive Shares) to reflect the Founding Firm Transfer.
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\5\ The Commission notes that Exhibit 5B is attached to the
filing, not to this Notice.
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2. Statutory Basis
The Proposed Rule Change is consistent with Section 6(b) \6\ of the
Act,\7\ in general, and furthers the objectives of Section 6(b)(1) \8\
of the Act, which requires a national securities exchange to be so
organized and have the capacity to carry out the purposes of the Act
and to comply, and to enforce compliance by its members and persons
associated with its members, with the provisions of the Act, the rules
and regulations promulgated thereunder and the rules of the Exchange.
The Proposed Rule Change does not modify the Company's trading or
compliance rules and preserves the existing mechanisms for ensuring the
Exchange's and the Company's compliance with the Act, the rules and
regulations promulgated thereunder and the rules of the Exchange. The
Proposed Rule Change also retains NYSE MKT's regulatory control over
the Company and the provisions specifically designed to ensure the
independence of its self-regulatory function and to ensure that any
regulatory determinations by NYSE MKT, as the Company's SRO, are
controlling with respect to the actions and decisions of the Company.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78.
\8\ 15 U.S.C. 78f(b)(1).
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Additionally, the Proposed Rule Change continues to require the
Company, its Members and its directors to comply with the federal
securities laws and the rules and regulations promulgated thereunder
and to engage in conduct that fosters and does not interfere with the
Exchange's or the Company's ability to carry out its
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respective responsibilities under the Act.
The Proposed Rule Change is also consistent with, and furthers the
objectives of, Section 6(b)(5) \9\ of the Act, in that it preserves all
of NYSE MKT's existing rules and mechanisms to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanisms 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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\9\ 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
have any impact on competition. The Proposed Rule Change solely relates
to changes in the equity interests among the Members of the Company
pursuant to provisions of the LLC Agreement and Members Agreement that
have been previously filed and approved by the Commission. In addition,
neither the Issuance of Annual Incentive Shares nor the Founding Firm
Transfer implicates the Commission's policies with respect to
permissible ownership. Furthermore, because the Proposed Rule Change
does not affect the availability or pricing of any goods or services,
the Proposed Rule Change will not affect competition either between the
Exchange and others that provide the same goods and services as the
Exchange or among market participants.
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 \10\ and Rule 19b-4(f)(6) thereunder.\11\
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)(iii) thereunder.
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and 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. The
Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission
may 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 stated that
an immediate operative date is necessary to permit the efficient
consummation of both the Issuance of Annual Incentive Shares and the
Founding Firm Transfer. According to the Exchange, accomplishing the
Founding Firm Transfer requires that the Members have certainty as to
the amount of Common Interests owned by each, which in turn requires
timely consummation of the Issuance of Annual Incentive Shares. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because such waiver would allow the Company to consummate the Issuance
of Annual Incentive Shares and the Founding Firm Transfer in an
efficient and predictable manner. Accordingly, the Commission hereby
grants the Exchange's request and designates the proposal operative
upon filing.\14\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ 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) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\15\ 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-2015-44 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2015-44. 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 such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make publicly available. All
submissions should refer to File Number SR-NYSEMKT-2015-44 and should
be submitted on or before July 22, 2015.
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\16\ 17 CFR 200.30-3(a)(12).
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-16089 Filed 6-30-15; 8:45 am]
BILLING CODE 8011-01-P