[Federal Register Volume 81, Number 139 (Wednesday, July 20, 2016)]
[Notices]
[Pages 47184-47187]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17096]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78326; File No. SR-NYSE-2016-37]


Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Rule Change Removing From Its Rules Certain Internal 
Procedures Regarding the Use of Fine Income

July 14, 2016.

I. Introduction

    On May 13, 2016, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') 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\ a 
proposed rule change to remove internal procedures regarding the use of 
fine income, as described below. The proposed rule change was published 
for comment in the Federal Register on May 31, 2016.\4\ The Commission 
received one comment letter on the proposed rule change \5\ and a 
response to the comment letter from the Exchange.\6\ This order 
approves the proposed rule change.
---------------------------------------------------------------------------

    \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 No. 77899 (May 24, 
2016), 81 FR 34393 (``Notice'').
    \5\ See letter from Michael Walsh, Attorney, received by the 
Commission on June 7, 2016 (``Walsh Letter'').
    \6\ See letter from Martha Redding, Associate General Counsel 
and Assistant Secretary, NYSE, to Brent J. Fields, Secretary, 
Commission, dated June 16, 2016 (``NYSE Response Letter'').
---------------------------------------------------------------------------

II. Description of the Proposal

    NYSE proposes to remove as Exchange rules internal procedures 
regarding the use of fine income, which were approved by the Commission 
in 2007 (``Fine Income Procedures'' or ``Procedures'') \7\ in 
connection with the 2006 merger between New York Stock Exchange, Inc. 
and Archipelago Holdings, Inc. (``Archipelago Merger'').\8\ The 
Exchange explains that, at that time, it had delegated certain of its 
regulatory functions to its then subsidiary, NYSE Regulation, Inc. 
(``NYSE Regulation'') \9\ pursuant to a delegation agreement 
(``Delegation Agreement'').\10\ As a result, as originally approved, 
the Fine Income Procedures referred to actions to be taken by NYSE 
Regulation and NYSE Regulation's board of directors (``NYSE Regulation 
Board''). However, following termination of the Delegation Agreement, 
the Regulatory Oversight Committee (``ROC'') of the Exchange's board of 
directors (``Board'') assumed responsibility for providing independent 
oversight of the regulatory function of the Exchange.\11\ The Exchange 
explains that, in addition to the restrictions in the Fine Income 
Procedures, Section 4.05 of the Exchange's Operating Agreement 
(``Section 4.05'') contains limitations on the use of regulatory assets 
and income, including fine income.\12\ Specifically, Section 4.05 
prohibits the Exchange from: (i) Using any regulatory assets or any 
regulatory fees, fines or penalties collected by its regulatory staff 
for commercial purposes; or (ii) distributing such assets, fees, fines 
or penalties to NYSE Group, Inc. (``NYSE Group''), i.e., the member of 
New York Stock Exchange LLC, or any other entity.\13\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 55216 (January 31, 
2007), 72 FR 5779 (February 7, 2007) (``Order Approving the Fine 
Income Procedures'').
    \8\ The Exchange states that the Archipelago Merger had the 
effect of ``demutualizing'' New York Stock Exchange, Inc. by 
separating equity ownership from trading privileges, and converting 
it to a for-profit entity. See Notice, supra note 4, at 34394 n.5 
(citing Securities Exchange Act Release No. 53382 (February 27, 
2006), 71 FR 11251, 11254 (March 6, 2006) (``Merger Approval 
Order'')).
    \9\ See Notice, supra note 4, at 34394. The Exchange states 
that, as approved, the Fine Income Procedures provide that fines 
would play no role in the annual NYSE Regulation budget process and 
that the use of fine income by NYSE Regulation would be subject to 
specific review and approval by the NYSE Regulation Board. See id.; 
see also Securities Exchange Act Release No. 55003 (December 22, 
2006), 71 FR 78497, 78498 (December 29, 2006) (``Fine Income 
Procedures Proposing Release''). The Exchange notes that, in 
approving the Fine Income Procedures, the Commission expressed that 
the Fine Income Procedures would ``guard against the possibility 
that fines may be assessed to respond to budgetary needs rather than 
to serve a disciplinary purpose.'' See Order Approving the Fine 
Income Procedures, supra note 7, at 5780.
    \10\ The Delegation Agreement terminated as of February 16, 
2016. See Notice, supra note 4, at 34394; see also Securities 
Exchange Act Release No. 75991 (September 28, 2015), 80 FR 59837, 
59839 (October 2, 2015) (``NYSE Approval Order'').
    \11\ See Notice, supra note 4, at 34394.
    \12\ See id.; see also Ninth Amended and Restated Operating 
Agreement of New York Stock Exchange LLC (``Operating Agreement''), 
Art. IV, Sec. 4.05; NYSE Approval Order, supra note 10, at 59839.
    \13\ See Operating Agreement, Art. IV, Sec. 4.05; see also NYSE 
Approval Order, supra note 10, at 59839.
---------------------------------------------------------------------------

    The Exchange proposes to delete the Fine Income Procedures, noting 
that the Exchange would continue to remain subject to the restrictions 
of Section 4.05, which, coupled with the Operating Agreement provisions 
governing the ROC,\14\ the Exchange believes are sufficient to address 
concerns about its power to fine member organizations and the proper 
use of such funds.\15\ The

[[Page 47185]]

Exchange also believes that limitations on the use of such funds are 
not the most effective way to assure the proper exercise by Exchange 
regulatory staff of the Exchange's power to fine member organizations; 
in fact, the Exchange states that ``usage limitations on fine income do 
not provide oversight of regulatory performance.'' \16\ Rather, the 
Exchange believes that the responsibility to assure proper exercise by 
its regulatory staff of the Exchange's power to fine member 
organizations more properly lies with the ROC, which is responsible for 
overseeing the Exchange's regulatory and self-regulatory organization 
responsibilities and assessing its regulatory performance.\17\
---------------------------------------------------------------------------

    \14\ The Exchange explains that ``the ROC is specifically 
charged with reviewing the regulatory budget of the Exchange and 
inquiring into the adequacy of resources available in the budget for 
regulatory activities.'' See Notice, supra note 4, at 34395 (citing 
Operating Agreement, Art. II, Sec. 2.03(h)(ii)).
    \15\ See Notice, supra note 4, at 34395.
    \16\ Id.
    \17\ Id. (citing the Operating Agreement, Art. II, Sec. 
2.03(h)(ii)).
---------------------------------------------------------------------------

    Moreover, the Exchange believes that its disciplinary procedures, 
and specifically the appellate process contained therein, serve as ``a 
powerful check on the improper exercise by Exchange regulatory staff of 
the power to fine members and member organizations.''\18\ The Exchange 
notes that in the event of an adverse hearing panel determination, 
members first have the opportunity to appeal the decision to a Board 
committee comprised of independent directors and individuals associated 
with member organizations of the Exchange (``Committee for Review'' or 
``CFR''), which recommends a disposition to the Board, and then can 
appeal the decision to the Commission, whose decision in turn can be 
challenged in federal court.\19\
---------------------------------------------------------------------------

    \18\ See id. at 34395.
    \19\ Id.
---------------------------------------------------------------------------

    In support of its position that the protections in Section 4.05 are 
sufficient to ensure the proper use by the Exchange of fine income, the 
Exchange states that Section 4.05 is in fact ``wider in scope than the 
Fine Income Procedures,'' explaining that ``because Section 4.05 
encompasses all regulatory assets and income, not just fines, it 
ensures the proper use by the Exchange of a broader range of regulatory 
funds, by prohibiting their use for commercial purposes or 
distributions.'' \20\ The Exchange adds that Section 4.05 also guards 
against the possibility that other regulatory income, such as 
examination, access, registration, qualification, arbitration, dispute 
resolution and regulatory fees, or regulatory assets could be used or 
assessed to respond to the Exchange's budgetary needs.\21\
---------------------------------------------------------------------------

    \20\ Id.
    \21\ Id.
---------------------------------------------------------------------------

    The Exchange also believes that the circumstances that led to the 
creation of the Fine Income Procedures no longer exist.\22\ The 
Exchange states that when the Fine Income Procedures were adopted, a 
predecessor to Section 4.05 was in effect that directly bound the 
Exchange but not the entity--NYSE Regulation--actually performing the 
Exchange's regulatory functions at the time.\23\ Following NYSE's 
reintegration of its regulatory functions and the corresponding 
termination of the Delegation Agreement, the Exchange itself is the 
entity that fines member organizations and is directly subject to the 
limits of Section 4.05.\24\ Accordingly, the Exchange believes that 
removing the Fine Income Procedures and relying on Section 4.05, as 
well as the provisions governing the ROC,\25\ would provide adequate 
protections against the use of regulatory assets, or assessment of 
regulatory income, to respond to budgetary needs.\26\
---------------------------------------------------------------------------

    \22\ Id.
    \23\ Id. The Exchange notes that the Commission, when approving 
the Archipelago Merger, stated in the approval order that while 
``NYSE Regulation had the obligation under the Delegation Agreement 
to assure compliance with the rules of the Exchange, . . . the Fine 
Income Procedures provided a more direct commitment by NYSE 
Regulation to ensure the proper exercise of NYSE Regulation's power 
to fine member organizations and the proper use by NYSE Regulation 
of fines collected.'' Id. (citing the Merger Approval Order).
    \24\ See Notice, supra note 4, at 34394; see also NYSE Approval 
Order, supra note 10.
    \25\ See Operating Agreement, Art. II, Sec. 2.03(h)(ii).
    \26\ See Notice, supra note 4, at 34395.
---------------------------------------------------------------------------

    Furthermore, NYSE explains that the proposed change would have the 
benefit of bringing the Exchange's restrictions on the use of 
regulatory assets and income into greater conformity with those of its 
affiliates, NYSE MKT LLC and NYSE Arca, Inc., and would be consistent 
with limitations on the use of regulatory assets and income of other 
self-regulatory organizations (``SROs'').\27\ The Exchange surveyed the 
rules of other SROs and found that no other SRO limits the use of fine 
income to extra-budgetary use or subjects the use of fine income to 
specific review and approval by a regulatory oversight committee or any 
other body. \28\ Rather, the Exchange found that other SROs' 
limitations on the use of regulatory funds are largely similar to 
Section 4.05, by generally limiting the use of regulatory funds to the 
funding of an SRO's legal, regulatory and (in some cases) surveillance 
operations, and prohibiting the SRO from making a distribution to its 
member or stockholder, as applicable.\29\ In support of its position, 
the Exchange references the limitations on the use of regulatory funds 
by NYSE MKT LLC; NYSE Arca, Inc.; BOX Options Exchange LLC; 
International Securities Exchange, LLC; ISE Gemini, LLC; ISE Mercury, 
LLC; BATS BZX Exchange, Inc.; BATS BYX Exchange, Inc.; BATS EDGX 
Exchange, Inc.; EDGA Exchange, Inc.; Miami International Securities 
Exchange, LLC; National Stock Exchange, Inc.; NASDAQ Stock Market LLC; 
and Boston Stock Exchange, Inc. (n/k/a NASDAQ BX, Inc.).\30\
---------------------------------------------------------------------------

    \27\ See id. at 34395-96.
    \28\ See id. at 34396.
    \29\ See id.
    \30\ See id. at 34395-96 nn.18-26 and accompanying text.
---------------------------------------------------------------------------

    As noted above, the Commission received one comment letter on the 
proposed rule change.\31\ The commenter objects to the proposed rule 
change, citing both substantive and procedural bases.\32\ The commenter 
enumerates the following specific concerns with the proposal: (1) The 
Exchange's proposal is deficient because it does not include a 
``redline'' of the rule text to allow interested persons to review the 
proposed changes; \33\ (2) the Exchange's argument that the proposed 
rule change would bring it closer in line with other SROs' rules is 
objectionable because NYSE, as an industry leader, should be held to a 
higher standard and ``leading the way for other exchanges;'' \34\ (3) 
the Exchange, as an SRO, is both a market participant and a regulator, 
and the Fine Income Procedures ``are important because they provide an 
objectively justifiable arms-length limitation to separate business 
from regulation;'' \35\ (4) the Exchange's argument that its 
disciplinary process, including, in particular, the appellate process, 
provides safeguards is insufficient and does not provide the same 
``checks and balances'' as the Fine Income Procedures do;\36\ (5) the 
rule of statutory construction that the ``specific provision prevails 
over the general'' makes ``the Fine Income Procedures superior to 
Section 4.05;'' \37\ and (6) the Exchange's argument that the 
circumstances that led to the Fine Income Procedures no longer exist 
fails to explain what circumstances changed and what prevents their 
reoccurrence.\38\
---------------------------------------------------------------------------

    \31\ See Walsh Letter, supra note 5.
    \32\ See id. at 1.
    \33\ See id.
    \34\ See id. at 1-2.
    \35\ See id. at 2-4.
    \36\ See id. at 4-5.
    \37\ See id. at 5.
    \38\ See id.
---------------------------------------------------------------------------

    The Exchange submitted a letter responding to the issues raised by 
the

[[Page 47186]]

commenter.\39\ With respect to the commenter's assertion that the 
proposal was insufficient because the Exchange's proposal omitted a 
redline of the rule text, the Exchange explains that the Fine Income 
Procedures are internal rules that are not included in its published 
rulebook or governing documents, but the content of the rules are set 
forth in its proposal.\40\
---------------------------------------------------------------------------

    \39\ See NYSE Response Letter, supra note 6.
    \40\ See id. at 3-4. The Commission notes that the Fine Income 
Procedures were reproduced in the Notice. See Notice, supra note 4, 
at 34394.
---------------------------------------------------------------------------

    With respect to the commenter's claim that the Exchange should be 
held to a higher standard than other SROs and should not be permitted 
to delete the Fine Income Procedures simply because it would bring NYSE 
closer in line with the limitations of other SROs, the Exchange 
explains that it cited to other SROs' provisions relating to use of 
fine income to demonstrate that there are mechanisms other than the 
Fine Income Procedures that the Commission has found appropriate for 
ensuring that an SRO uses its regulatory funds properly.\41\ The 
Exchange contends that ``[j]ust as the Commission found that the 
provisions in these other SROs' governing documents were consistent 
with the Act, the Exchange believes that the Commission should conclude 
that Section 4.05, as an alternative to the Fine Income Procedures, is 
consistent with the Act.'' \42\ The Exchange further states that it 
would be inappropriate to hold NYSE to a higher standard than other 
SROs (as the commenter has urged) because ``[a]s a national securities 
exchange, the Exchange is subject to the same obligations and 
requirements under the Act as other national securities exchanges.'' 
\43\ Moreover, the Exchange maintains that to ``hold individual 
exchanges to different standards based on their size, economic worth, 
leadership or any of the other factors that the comment letter cites 
would be contrary to just and equitable principles of trade, would 
create impediments to a free and open market and national market 
system, and would impede the protection of investors and the public 
interest.'' \44\
---------------------------------------------------------------------------

    \41\ See id. at 5.
    \42\ Id.
    \43\ Id.
    \44\ Id.
---------------------------------------------------------------------------

    Regarding the commenter's statement that the Fine Income Procedures 
are a means to ensure the separation of the Exchange's business from 
its regulation, the Exchange states that it does not rely on the Fine 
Income Procedures to ensure the independence of its self-regulatory 
responsibilities and regulatory performance from its business 
interests, and instead notes how its corporate structure, including the 
required compositions of the Board, ROC, and CFR help to ensure the 
independence of its regulatory obligations.\45\ The Exchange also notes 
that the Fine Income Procedures are in fact limited in scope and thus 
the ROC and Section 4.05 in combination are more effective means in 
providing adequate protections against the use of regulatory assets, or 
the assessment of regulatory income, to respond to the budgetary needs 
of the Exchange.\46\
---------------------------------------------------------------------------

    \45\ See id. at 6.
    \46\ See id. at 6-7.
---------------------------------------------------------------------------

    With respect to the commenter's statement that the disciplinary 
process, and the appellate process in particular, alone does not 
provide sufficient safeguards against potential conflicts of interest, 
the Exchange disagrees with the commenter's assertion that the Fine 
Income Procedures provide a greater check on regulatory misbehavior 
than the appellate process.\47\ The Exchange reiterates its view that 
the Fine Income Procedures do not provide oversight of regulatory 
performance and simply monitor how the resulting fine income is 
spent.\48\ In addition, the Exchange describes how its appellate 
process provides an independent check on the disciplinary process and 
the possibility of improper exercise by Exchange regulatory staff of 
the power to fine members and member organizations in light of the 
CFR's composition, which requires the inclusion of both independent 
directors as well as representatives of Exchange members.\49\
---------------------------------------------------------------------------

    \47\ See id. at 7-8.
    \48\ See id.
    \49\ See id. at 8.
---------------------------------------------------------------------------

    The Exchange also addresses the commenter's statutory construction 
argument that deletion of the ``more specific provision'' (i.e., Fine 
Income Procedures) could imply that the conduct prohibited by the Fine 
Income Procedures is no longer prohibited. In response, the Exchange 
notes that both the Fine Income Procedures and Section 4.05 apply to 
the use of fine income. The Exchange notes that, if the Fine Income 
Procedures are deleted, Section 4.05 would still apply to the use of 
the Exchange's fine income and other regulatory assets.\50\
---------------------------------------------------------------------------

    \50\ See id.
---------------------------------------------------------------------------

    Finally, the Exchange takes issue with the commenter's assertion 
that it did not address ``what circumstances occurred that will not 
occur again.'' The Exchange states that the Fine Income Procedures 
provided a more direct commitment by NYSE Regulation to ensure the 
proper exercise of NYSE Regulation's power to fine member organizations 
and the proper use by NYSE Regulation of fines collected.\51\ The 
Exchange notes that because the Delegation Agreement is no longer in 
effect, it is the Exchange itself that fines member organizations, and 
the Exchange is subject to the limitations of Section 4.05.
---------------------------------------------------------------------------

    \51\ See id. at 8-9.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, 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.\52\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(1) of the Act, which requires an 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 Act, the rules and 
regulations thereunder, and the rules of the exchange.\53\ In addition, 
the Commission finds that the proposal is consistent with Section 
6(b)(5) of the Act, which requires that the rules of the exchange be 
designed, among other things, to prevent fraudulent and manipulative 
acts and practices, 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.\54\
---------------------------------------------------------------------------

    \52\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \53\ 15 U.S.C. 78f(b)(1).
    \54\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As the Exchange notes, it implemented the Fine Income Procedures in 
connection with the Archipelago Merger, which had the effect of 
demutualizing New York Stock Exchange, Inc. (the predecessor to New 
York Stock Exchange LLC) by separating NYSE's equity ownership from 
trading privileges and converting it to a for-profit entity.\55\ 
According to the Exchange, at that time it had delegated certain of its 
regulatory functions to its then subsidiary, NYSE Regulation, pursuant 
to the Delegation Agreement. In September 2015, the Commission approved 
the Exchange's proposal to revise its regulatory structure by amending 
various Exchange rules and the Operating Agreement, including to 
establish as a committee of the Board a ROC, to be composed of at least 
three

[[Page 47187]]

members who satisfy the Exchange's independence requirements.\56\ The 
Delegation Agreement recently was terminated in connection with the 
Exchange's reorganization of its regulatory structure that had resulted 
in the creation of the ROC. Because the Fine Income Procedures were 
instituted in connection with the delegation of certain of the 
Exchange's regulatory functions to NYSE Regulation, the Commission 
believes that it is appropriate for the Exchange to remove the 
Procedures because NYSE Regulation no longer performs any regulatory 
services on behalf of the Exchange. Further, given that the Exchange 
has reintegrated its regulatory functions under the oversight of the 
ROC, the Commission believes that Section 4.05 should continue to help 
ensure that the Exchange does not inappropriately use its regulatory 
assets, fees, fines or penalties for commercial purposes or to 
distribute such assets, fees, fines or penalties to its direct parent, 
NYSE Group, Inc., or to any other entity. Finally, the Commission 
believes that creation of the ROC, along with its responsibilities 
under Section 2.03(h)(ii) of the Operating Agreement, should help to 
ensure the proper oversight of the Exchange's regulatory program, 
including the exercise by the Exchange's regulatory staff of its power 
to fine member organizations, and the use of regulatory assets, fees, 
fines and penalties collected by the Exchange's regulatory staff.
---------------------------------------------------------------------------

    \55\ See supra note 8.
    \56\ See NYSE Approval Order, supra note 10.
---------------------------------------------------------------------------

    As noted above, the commenter raises several concerns regarding the 
Exchange's proposal, including by asserting that the proposal was 
insufficient because it did not include rule text indicating the 
deletion of the Procedures. The Exchange responds that the Procedures 
are available in the Exchange's filing and on the Exchange's Web site. 
The Commission believes that, because the Fine Income Procedures were 
internal procedures of the Exchange and were not part of the Exchange's 
rulebook or governing documents, it was appropriate for the Exchange to 
include the Procedures in its Form 19b-4 describing the proposed rule 
change, which were published by the Commission as part of the 
Notice.\57\
---------------------------------------------------------------------------

    \57\ See Notice, supra note 4, at 34394.
---------------------------------------------------------------------------

    The commenter remarks that the NYSE should be ``held to a higher 
standard'' than other exchanges. In response, the Exchange states that, 
as a national securities exchange, treating it differently than any 
other national securities exchange based on its size, prominence or any 
of the other factors noted in the comment letter, among other things, 
would be contrary to just and equitable principles of trade.\58\ The 
Commission previously found that Section 4.05 is consistent with the 
Act \59\ and continues to believe that it is consistent with the Act, 
and that it is substantially similar to requirements relating to the 
use of regulatory assets, fees, fines and penalties that were approved 
by the Commission with respect to other exchanges, including the 
Exchange's affiliates--NYSE MKT LLC and NYSE Arca, Inc.\60\
---------------------------------------------------------------------------

    \58\ See NYSE Response Letter, supra note 6, at 5.
    \59\ See NYSE Approval Order, supra note 10, at 59842-43.
    \60\ See Notice, supra note 4, at 34395-96 nn.18-26 and 
accompanying text.
---------------------------------------------------------------------------

    The commenter also expresses the view that deleting the Fine Income 
Procedures would remove rules that serve to separate the Exchange's 
business function from its regulatory obligations, and that the 
Exchange's disciplinary process did not provide an adequate safeguard 
against ``regulator misbehavior.'' The Commission believes that the 
Exchange has adopted several measures to ensure the independence of its 
regulatory functions including, among other things, creating a ROC, 
which is composed entirely of directors of the Exchange who satisfy the 
Exchange's independence requirements, and the CFR, which is composed of 
Exchange members and directors who satisfy the Exchange's independence 
requirements.\61\
---------------------------------------------------------------------------

    \61\ See NYSE Approval Order, supra note 10, at 59838-41.
---------------------------------------------------------------------------

    The commenter further expresses concern that deleting the Fine 
Income Procedures may imply that the conduct banned by the Procedures 
no longer is prohibited. The Commission believes, however, that even 
with the deletion of the Fine Income Procedures, given the scope of 
Section 4.05, the Exchange would continue to be prohibited from using 
regulatory assets, fees, fines or penalties for other than regulatory 
purposes.
    Finally, the commenter states that Exchange did not adequately 
describe why the circumstances that existed at the time the Fine Income 
Procedures were adopted no longer exist. The Commission notes that the 
Exchange's proposal states that NYSE Regulation no longer performs 
regulatory services on behalf of the Exchange.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-NYSE-2016-37) is approved.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\62\
Jill M. Peterson,
Assistant Secretary.
---------------------------------------------------------------------------

    \62\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. 2016-17096 Filed 7-19-16; 8:45 am]
 BILLING CODE 8011-01-P