[Federal Register Volume 85, Number 196 (Thursday, October 8, 2020)]
[Notices]
[Pages 63614-63616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22251]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90079; File No. SR-CBOE-2020-071]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing of Amendment No. 1 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 1, To Amend the 
Fifth Amended and Restated Bylaws of the Exchange's Parent Corporation, 
Cboe Global Markets, Inc.

October 2, 2020.

I. Introduction

    On July 30, 2020, Cboe Exchange, Inc. (the ``Exchange'') filed with 
the Securities and Exchange Commission (the ``Commission''), pursuant 
to Section 19(b)(1) of the Securities Exchange Act of 1934 (the 
``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
amend the Fifth Amended and Restated Bylaws (the ``Parent Bylaws'') of 
its parent corporation, Cboe Global Markets, Inc. (the ``Parent''). The 
proposed rule change was published for comment in the Federal Register 
on August 19, 2020.\3\ The Commission received no comment letters 
regarding the proposed rule change. On September 24, 2020, the Exchange 
filed Amendment No. 1 to the proposal.\4\ The Commission is publishing 
this notice to solicit comments on Amendment No. 1 from interested 
persons and is approving the proposed rule change, as modified by 
Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 89543 (August 13, 
2020), 85 FR 51093 (``Notice'').
    \4\ In Amendment No. 1, the Exchange provided additional detail 
and clarity on a few points without materially changing the proposal 
or the proposed rule text. Specifically, in Amendment No. 1, the 
Exchange: (i) Provided additional support for its proposed 
restrictions on the use of audio, video, and cell phones during 
stockholder meetings, including information on past practice by the 
Exchange, underlying authority for such restrictions in the current 
Parent Bylaws, and comparison to the practices of other Delaware-
incorporated public companies; (ii) clarified that the provisions of 
proposed Section 3.15 are subject to existing Section 10.2, 
including a representation that emergency Bylaw amendments made 
pursuant to proposed Section 3.15(g) may need to be filed pursuant 
to Section 19 of the Exchange Act; (iii) clarified that proposed 
Section 3.15 is meant to provide short-term flexibility to continue 
operations during the initial stage of an emergency situation, and 
that proposed paragraph (f) makes clear that, as soon as it is 
practicable for a majority of the elected directors to reconvene, 
they would be expected to do so; and (iv) added further explanation 
of the provision in proposed Section 4.1 regarding the limitation of 
the power and authority vested in a Board committee in the 
management of the business and affairs of the Parent. To promote 
transparency of its proposed amendment, when the Exchange filed 
Amendment No. 1 with the Commission, it also submitted Amendment No. 
1 as a comment letter to the filing, which then became publicly 
available on the Commission's website.
---------------------------------------------------------------------------

II. Description

    The Exchange proposed certain amendments to the Parent Bylaws that, 
according to the Exchange, would ``improve the governance processes'' 
of the Parent and ``make certain provisions more consistent with the 
Delaware General Corporation Law (``DGCL'').'' \5\ According to the 
Exchange, many of the proposed changes reflect corporate governance 
best practices and, in some instances, provide clarity and flexibility 
to the Parent Bylaws.\6\
---------------------------------------------------------------------------

    \5\ See Notice, supra note 3, at 51093.
    \6\ See Notice, supra note 3.
---------------------------------------------------------------------------

Proposed Changes to Article 2--Stockholders 7
---------------------------------------------------------------------------

    \7\ See Notice, supra note 3, for a discussion of the detailed 
proposed changes to Article 2 and the DGCL provisions and/or rules 
of other exchanges on which they are modeled.
---------------------------------------------------------------------------

    The majority of the proposed changes amend Section 2.11 (Nomination 
of Directors) and Section 2.12 (Notice of Business at Annual Meetings). 
According to the Exchange, the changes are designed to reflect the most 
up-to-date practices under the DGCL and provide the Board with 
additional information and advance notice in connection with 
nominations and the conduct of business at annual and special meetings. 
In particular, the Exchange combines current Section 2.12 into Section 
2.11 and amends provisions that govern notice requirements for annual 
and special meetings, as well as provisions that provide general 
procedures and practices in connection with notices. The proposed 
delineation does not alter the process or definition of either type of 
meeting, but instead provides for significantly more detailed written 
notice requirements as well as updates to the manner and timeliness of 
notices.
    Additionally, as detailed further in the Notice, the proposed rule 
change relocates and expands text concerning nominees for directors and 
elections of directors, as well as amends provisions concerning the 
place of annual and special meetings and the adjournment of 
meetings.\8\
---------------------------------------------------------------------------

    \8\ See Notice, supra note 3, at 51096-97. See also Section 2.10 
(Action at Meeting), 2.11 (Notice of Business and Nomination of 
Directors at Meetings of Stockholders), 2.1 (Place of Meetings), 2.2 
(Annual Meeting), 2.3 (Special Meeting), and 2.7 (Adjournments).
---------------------------------------------------------------------------

    Further, the Exchange proposes to update provisions that govern the 
preparing of the voting list, the ability of the Board to appoint a 
director to preside over meetings in the absence of the Chairman of the 
Board, and provisions concerning the procedural authority of the 
presiding officer at any stockholder meeting.\9\
---------------------------------------------------------------------------

    \9\ See also Amendment No. 1 (concerning restrictions on the use 
of audio, video, and cell phones during stockholder meetings).
---------------------------------------------------------------------------

Proposed Changes to Article 3--Directors 10
---------------------------------------------------------------------------

    \10\ See Notice, supra note 3, for a discussion of the detailed 
proposed changes to Article 3 and the DGCL provisions and/or rules 
of other exchanges on which they are modeled.
---------------------------------------------------------------------------

    The proposed rule change amends provisions concerning director 
vacancies, notice for special meetings of the Board, and the routine 
filing of consents following an action by the Board.\11\
---------------------------------------------------------------------------

    \11\ See Section 3.5 (Vacancies), Section 3.10 (Special 
Meetings), and Section 3.13 (Action by Consent). See also Notice, 
supra note 3, at 51097.
---------------------------------------------------------------------------

    The proposed change also adds new Section 3.15 (Emergency Bylaws). 
In particular, that new section provides certain temporary emergency 
provisions that would apply at the outset of an emergency, disaster, or 
catastrophe, notwithstanding anything to the contrary in the 
Certificate of Incorporation or the Bylaws, only for so long as a 
quorum of the Board cannot

[[Page 63615]]

readily be convened for action. The Exchange notes that proposed 
Section 3.15 is meant to provide the Parent with short-term flexibility 
to continue operations during an emergency situation, and that proposed 
paragraph (f) makes clear that, as soon as it is practicable for a 
majority of the elected directors to reconvene, they would be expected 
to do so.\12\
---------------------------------------------------------------------------

    \12\ See Amendment No. 1.
---------------------------------------------------------------------------

Proposed Changes to Article 4--Committees 13
---------------------------------------------------------------------------

    \13\ See Notice, supra note 3, for a discussion of the detailed 
proposed changes to Article 4 and the DGCL provisions and/or rules 
of other exchanges on which they are modeled.
---------------------------------------------------------------------------

    The proposed rule change to Section 4.1 (Designation of Committees) 
adds language to reflect that the Board may designate one or more 
committees of the Board, and also adds text to address the absence or 
disqualification of committee members and allow committee members to 
unanimously appoint another Director to act at the meeting in place of 
any such absent or disqualified member. In addition, the Exchange 
proposes to add text to reflect the power and authority of Board 
committees.\14\
---------------------------------------------------------------------------

    \14\ See Amendment No. 1 (noting that any Board committee may 
act only insofar as the resolution of the Board of Directors 
permits, which is consistent with how Article 4 currently operates).
---------------------------------------------------------------------------

    The proposed rule change to Section 4.2 (The Executive Committee) 
replaces a list of specific actions and matters that are not to be 
handled by the Executive Committee and replaces it with a reference to 
matters under the DGCL that are to be submitted to stockholders for 
approval.
    The proposed change to Section 4.5 (The Nominating and Governance 
Committee) reduces the minimum size requirement of that committee from 
five members to three members.

Proposed Changes to Article 8--Notices 15
---------------------------------------------------------------------------

    \15\ See Notice, supra note 3, for a discussion of the detailed 
proposed changes to Article 8 and the DGCL provisions and/or rules 
of other exchanges on which they are modeled.
---------------------------------------------------------------------------

    The proposed rule changes in Section 8.1 (Notices) allow notices 
sent by messenger or overnight courier to be left at the recipient's 
address and also updates language concerning delivery by electronic 
mail and when electronic mail delivery is not allowed. The Exchange 
also proposes to amend Section 8.2 (Electronic Notice) to allow for 
electronic delivery of materials to stockholders unless the stockholder 
has opted-out of electronic transmission (currently, electronic 
transmission is permitted only when a stockholder has opted-in to 
electronic delivery).

Proposed Rule Changes to Article 11--Forum for Adjudication of Disputes 
16
---------------------------------------------------------------------------

    \16\ See Notice, supra note 3, for a discussion of the detailed 
proposed changes to Article 11 and the DGCL provisions and/or rules 
of other exchanges on which they are modeled.
---------------------------------------------------------------------------

    The proposed rule changes to Article 11 add clarifying provisions 
and additional detail regarding the exclusive forum for adjudication of 
disputes.
    Finally, the proposed rule change makes non-substantive edits to 
the Parent Bylaws, including updating paragraph lettering and numbering 
and ensuring consistent use of defined terms.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 1, is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\17\ In particular, the 
Commission finds that the proposed rule change, as amended, is 
consistent with Section 6(b)(1) of the Act,\18\ which requires, that 
the Exchange be organized and have the capacity to be able to carry out 
the purposes of the Act and to enforce compliance by the Exchange's 
Trading Permit Holders and persons associated with its Trading Permit 
Holders with the Act, the rules and regulations thereunder, and the 
rules of the Exchange.
---------------------------------------------------------------------------

    \17\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \18\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    The proposed rule change reflects the Exchange's stated goals to 
improve the governance process of the Parent and update the Parent 
Bylaws to reflect and track the DGCL and current best practices.\19\ 
The Exchange has represented that it does not believe the proposed rule 
changes are controversial and that the proposed provisions are common 
among comparable public companies.\20\
---------------------------------------------------------------------------

    \19\ See Notice, supra note 3, at 51098.
    \20\ The Exchange represents that other public companies have 
provisions similar to what it is proposing, and that some of its 
proposed rule changes have been adopted by other securities and 
commodities exchanges, including Nasdaq, Inc., Intercontinental 
Exchange, and the CME Group, Inc. Id.
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change, as modified 
by Amendment No. 1, is consistent with the Exchange Act, including 
Section 6(b)(1) thereunder, in that the Exchange, and its Parent on the 
Exchange's behalf as applicable, will remain so organized and have the 
capacity to be able to carry out the purposes of the Exchange Act and 
to comply, and enforce compliance by its members and persons associated 
with its members, with the provisions of the Exchange Act, the rules 
and regulations thereunder, and the rules of the Exchange.
    While proposed Section 3.15 will provide the Parent with special 
limited powers to ensure continued operations at the onset of an 
emergency situation that otherwise prevents the Board from obtaining 
the necessary quorum to convene and exercise its power, that section is 
intended only to provide limited short-term flexibility to ensuring 
continue operations of the Parent during the initial stage of the 
emergency situation. Pursuant to proposed paragraph (f), a majority of 
the elected directors are expected to reconvene as soon as it is 
possible to do so. In addition, the provisions in new Section 3.15 
concerning amendments to the Parent Bylaws remain subject to existing 
Section 10.2 and, as applicable, the rule filing requirements of 
Section 19 of the Act.\21\
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s. See also Amendment No. 1.
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether Amendment No. 1 
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-CBOE-2020-071 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-CBOE-2020-071. 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

[[Page 63616]]

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-
CBOE-2020-071 and should be submitted on or before October 29, 2020.

V. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 1

    The Commission finds good cause for approving the proposed rule 
change, as amended by Amendment No. 1, prior to the 30th day after the 
date of publication of notice in the Federal Register. Amendment No. 1 
provided additional detail and clarity on a few points without 
materially changing the proposal or the proposed rule text.\22\ The 
Commission notes that Amendment No. 1 does not change the substance of 
the proposed rule change as it was initially filed, but merely adds 
detail to a few select items of the proposal regarding their intended 
scope. These points of clarification add helpful detail to support the 
proposal without materially altering it. Accordingly, the Commission 
finds good cause for approving the proposed rule change, as amended, on 
an accelerated basis, pursuant to Section 19(b)(2) of the Act.\23\
---------------------------------------------------------------------------

    \22\ See supra note 4 for a description of Amendment No. 1.
    \23\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\24\ that the proposed rule change, as modified by Amendment No. 1 
(SR-CBOE-2020-071), be, and hereby is, approved on an accelerated 
basis.
---------------------------------------------------------------------------

    \24\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22251 Filed 10-7-20; 8:45 am]
BILLING CODE 8011-01-P