[Federal Register Volume 83, Number 108 (Tuesday, June 5, 2018)]
[Notices]
[Pages 26136-26138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11981]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83344; File No. SR-NYSENAT-2018-06]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the 
Intercontinental Exchange, Inc. Director Independence Policy

May 30, 2018.
    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 May 22, 2018, NYSE National, Inc. (the ``Exchange'' or 
``NYSE National'') 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 Intercontinental Exchange, Inc. 
director independence policy in connection with a transaction whereby 
Chicago Stock Exchange, Inc. and its direct parent, CHX Holdings, Inc., 
would become indirect subsidiaries of Intercontinental Exchange, Inc., 
the ultimate parent of the Exchange. The proposed rule change is 
available on the Exchange's website 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
    The Exchange proposes to amend the Independence Policy in 
connection with the Transaction. CHX Holdings,\4\ ICE and Kondor Merger 
Sub, Inc. (``Merger Sub''), entered into a Merger Agreement dated April 
4, 2018 (``Merger Agreement''). Merger Sub is a wholly-owned subsidiary 
of NYSE Group, Inc. (``NYSE Group''). Pursuant to the Merger Agreement, 
Merger Sub would merge with and into CHX Holdings, with CHX Holdings 
continuing as the surviving corporation (``Merger''). Upon the Merger, 
NYSE Group would hold all of the outstanding and issued shares of CHX 
Holdings, and CHX Holdings would continue to be the record and 
beneficial owner of all of the issued and outstanding shares of capital 
stock of CHX and the sole member of CHXBD, LLC (``CHXBD''), the 
Exchange's affiliated routing broker.
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    \4\ CHX became a wholly-owned subsidiary of CHX Holdings 
pursuant to the Exchange's demutualization as approved by the 
Commission in February 2005. See Securities Exchange Act Release No. 
51149 (February 8, 2005), 70 FR 7531 (February 14, 2005) (SR-CHX-
2004-26).
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    NYSE Group owns all of the equity interest in the Exchange and its 
national securities exchange affiliates, the New York Stock Exchange 
LLC (``NYSE''), NYSE Arca, Inc. (``NYSE Arca''), and NYSE American LLC 
(``NYSE American''). In turn, NYSE Group is a wholly-owned subsidiary 
of NYSE Holdings LLC, which is wholly owned by Intercontinental 
Exchange Holdings, Inc. (``ICE Holdings''). ICE Holdings is wholly 
owned by ICE.\5\
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    \5\ ICE is a publicly traded company listed on the NYSE.
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    Following the Transaction, CHX would continue to be registered as a 
national securities exchange and as a separate self-regulatory 
organization. As

[[Page 26137]]

such, CHX would continue to have separate rules, membership rosters, 
and listings that would be distinct from the rules, membership rosters, 
and listings of the four registered national securities exchanges and 
self-regulatory organizations owned by NYSE Group, namely, the NYSE, 
NYSE American, NYSE Arca, and NYSE National (together, the ``NYSE 
Exchanges'').
    The proposed rule changes would become operative simultaneously 
with the Merger that effectuates the Transaction (``Closing'').
Amendments to the Independence Policy
    The Independence Policy was adopted at the time that the Exchange's 
national securities exchange affiliates were acquired by ICE \6\ and 
amended to reflect the NYSE Group acquisition of the Exchange.\7\ In 
connection with the Transaction, the Independence Policy would be 
amended to provide similar protections to CHX as are currently provided 
to the NYSE Exchanges by the policy, by making technical and conforming 
amendments.\8\ In addition, the Exchange proposes to remove or update 
obsolete references.
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    \6\ See Securities Exchange Act Release No. 70210 (August 15, 
2013), 78 FR 51758, 511764-511765 [sic] (August 21, 2013) (SR-NYSE- 
2013-42; SR-NYSEMKT-2013-50; SR- NYSEArca-2013-62). At the time of 
the acquisition, ``ICE'' was called ``IntercontinentalExchange 
Group, Inc.'' See Securities Exchange Act Release No. 72158 (May 13, 
2014), 79 FR 28784 (May 19, 2014) (SR-NYSE-2014-23).
    \7\ See Securities Exchange Act Releases No. 79901 (January 30, 
2017), 82 FR 9251 (February 3, 2017) (SR-NYSE-2016-90; SR-NYSEArca-
2016-167; SR-NYSEMKT-2016-122), and 79902 (January 30, 2017), 82 FR 
9258 (February 3, 2017) (SR-NSX-2016-16).
    \8\ The Exchange's affiliates NYSE, NYSE American, and NYSE Arca 
have each submitted substantially the same proposed rule change to 
the Independence Policy as described herein. See SR-NYSE-2018-19, 
SR-NYSEAmer-2018-17, and SR-NYSEArca-2018-27.
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    The proposed amendments are as follows:
     Under ``Independence Qualifications,'' references to the 
CHX would be added to categories (1)(b) and (c) that refer to 
``members,'' as defined in section 3(a)(3)(A)(i), 3(a)(3)(A)(ii), 
3(a)(3)(A)(iii) and 3(a)(3)(A)(iv) of the Exchange Act.\9\ References 
to the CHX would also be added to subsections (4) and (5) of the 
section. As CHX does not have terms equivalent to ``allied members'' or 
``approved persons,'' the Exchange does not propose to add references 
to CHX to the clause following ``(collectively, `Members')'' in 
category (1)(b) or to category 2.
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    \9\ See 15 U.S.C. 78c(a)(3)(a).
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     The NYSE no longer has allied members.\10\ Accordingly, 
the Exchange proposes to delete the text ``as defined in paragraph (c) 
of Rule 2 of the New York Stock Exchange LLC and'' from category 1(b) 
of ``Independence Qualifications.''
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    \10\ See Securities Exchange Act Release No. 58549 (September 
15, 2008), 73 FR 54444 (September 19, 2008) (SR-NYSE-2008-80) 
(notice of filing and immediate effectiveness of proposed rule 
change and Amendment No. 1 thereto conforming certain NYSE rules to 
changes to NYSE incorporated rules recently filed by the Financial 
Industry Regulatory Authority, Inc.).
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     NYSE MKT LLC changed its name to NYSE American LLC.\11\ 
Under ``Independence Qualifications'' and ``Member Organizations,'' 
references to NYSE MKT LLC would be updated to reflect its name change.
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    \11\ See Securities Exchange Act Release No. 80283 (March 21, 
2017), 82 FR 15244 (March 27, 2017) (SR-NYSEMKT-2017-14).
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     NYSE Arca Equities, Inc. merged with NYSE Arca, Inc., and 
therefore no longer exists.\12\ Accordingly, under ``Independence 
Qualifications,'' the text ``and Rule 1.1(c) of NYSE Arca Equities, 
Inc.'' in category 1(b) and references to NYSE Arca Equities, Inc. in 
categories 2 and 5 would be deleted.
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    \12\ See Securities Exchange Act Release No. 81419 (August 17, 
2017), 82 FR 40044 (August 23, 2017) (SR-NYSEArca-2017-40).
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    Conforming changes would also be made to delete and replace 
connectors.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act \13\ in general, and with Section 
6(b)(1) \14\ in particular, in that it enables the Exchange to be so 
organized as to have the capacity to be able to carry out the purposes 
of the Exchange Act and to comply, and to enforce compliance by its 
exchange members and persons associated with its exchange members, with 
the provisions of the Exchange Act, the rules and regulations 
thereunder, and the rules of the Exchange.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(1).
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    The Exchange believes that amending the ICE Independence Policy 
would remove impediments to, and perfect the mechanism of a free and 
open market and a national market system and, in general, protect 
investors and the public interest by incorporating CHX in the text of 
the Independence Policy and by removing or updating obsolete or 
outdated references, thereby adding clarity and transparency to the 
Exchange Rules by removing any confusion that may result if the 
Transaction was not reflected in the Independence Policy, or if it 
retained obsolete or outdated references to NYSE allied members, NYSE 
MKT LLC or NYSE Arca Equities, Inc. The proposed changes would allow 
persons subject to the Exchange's jurisdiction, regulators, and 
investors to more easily navigate and understand the Independence 
Policy, contributing to the orderly operation of the Exchange,
    For similar reasons, the Exchange also believes that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\15\ in that 
it is designed 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 
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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    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed amendments to the 
Independence Policy would remove impediments to and perfect the 
mechanism of a free and open market and a national market system by 
removing confusion that may result if the Transaction was not reflected 
in the Independence Policy, or if it retained obsolete or outdated 
references to NYSE allied members, NYSE MKT LLC or NYSE Arca Equities, 
Inc., thereby ensuring that market participants can more easily 
navigate, understand and comply with the Exchange rules. In this 
manner, the proposed change would ensure that persons subject to the 
Exchange's jurisdiction, regulators, and the investing public can more 
easily navigate and understand the Independence Policy. The Exchange 
further believes that eliminating obsolete or outdated references would 
not be inconsistent with the public interest and the protection of 
investors because investors will not be harmed and in fact would 
benefit from increased transparency, thereby reducing potential 
confusion. Removing such obsolete references will also further the goal 
of transparency and add clarity to the Exchange's rules.

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 purposes of the Exchange Act. The proposed rule 
change is not intended to address competitive issues but rather is 
concerned solely with updating the Independence Policy to

[[Page 26138]]

reflect the Transaction and to remove obsolete references.

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

    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 for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6) thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6)(iii) requires the 
Exchange to provide 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. The Exchange has 
fulfilled this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \18\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \19\ 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 to allow 
the Exchange to immediately update the Independence Policy to reflect 
the Transaction and to remove obsolete references. The Commission does 
not believe that any new or novel issues are raised by the proposal. 
For these reasons, the Commission believes that the waiver of the 
operative delay is consistent with the protection of investors and the 
public interest. Therefore, the Commission hereby waives the 30-day 
operative delay and designates the proposal operative upon filing.\20\
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 the 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 to 
determine whether the proposed rule change should be approved or 
disapproved.

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-NYSENAT-2018-06 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-NYSENAT-2018-06. 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 website (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 website 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 principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSENAT-2018-06 and should be submitted 
on or before June 26, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-11981 Filed 6-4-18; 8:45 am]
 BILLING CODE 8011-01-P