[Federal Register Volume 90, Number 239 (Tuesday, December 16, 2025)]
[Notices]
[Pages 58322-58330]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-22856]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104360; File No. SR-TXSE-2025-001]
Self-Regulatory Organizations; Texas Stock Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Adopt Certain Changes to the Governing Documents of the Exchange and
Its Parent Company
December 11, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 8, 2025, Texas Stock Exchange LLC (the ``Exchange'' or
``TXSE'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend and restate: (i) the Fifth
Amended and Restated Stockholders' Agreement (the ``Stockholders'
Agreement'') of TXSE Group Inc. (``TXSE Group''), which was filed with
the Commission as part of the Exchange's application for registration
as a national securities exchange,\5\ as the Sixth Amended and Restated
Stockholders' Agreement of TXSE Group; \6\ (ii) the Fourth Amended and
Restated Certificate of Incorporation of TXSE Group (the ``Certificate
of Incorporation''), which was filed with the Commission as part of the
Exchange's application for registration as a national securities
exchange,\7\ as the Fifth Amended and Restated Certificate of
Incorporation of TXSE Group; \8\ and (iii) the First Amended and
Restated Limited Liability Company Agreement of Texas Stock Exchange
LLC (the ``LLC Agreement'' or the ``Exchange's LLC Agreement''), which
was filed with the Commission as part of the Exchange's application for
registration as a national securities exchange,\9\ as the Second
Amended and Restated Limited Liability Company Agreement of Texas Stock
Exchange LLC.\10\ TXSE Group is the parent company of the Exchange and
directly owns 100% of the Exchange. The text of the proposed rule
change is provided in Exhibit 5.
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\5\ The Stockholders' Agreement was filed as Exhibit C-3.a in
the Exchange's application for registration as a national securities
exchange. See Securities Exchange Act Release No. 103604 (July 31,
2025), 90 FR 37607 (August 5, 2025) (Texas Stock Exchange LLC;
Notice of Filing of Amendment No. 2 to an Application for
Registration as a National Securities Exchange Under Section 6 of
the Securities Exchange Act of 1934).
\6\ The Exchange notes that the Fifth Amended and Restated
Stockholders' Agreement will remain in effect until and unless this
proposal becomes effective and operative.
\7\ The Certificate of Incorporation was filed as Exhibit C-1.a
in the Exchange's application for registration as a national
securities exchange. See Securities Exchange Act Release No. 103604
(July 31, 2025), 90 FR 37607 (August 5, 2025) (Texas Stock Exchange
LLC; Notice of Filing of Amendment No. 2 to an Application for
Registration as a National Securities Exchange Under Section 6 of
the Securities Exchange Act of 1934).
\8\ The Exchange notes that the Fourth Amended and Restated
Certificate of Incorporation will remain in effect until and unless
this proposal becomes effective and operative.
\9\ The LLC Agreement was filed as Exhibit A-3 in the Exchange's
application for registration as a national securities exchange. See
Securities Exchange Act Release No. 103604 (July 31, 2025), 90 FR
37607 (August 5, 2025) (Texas Stock Exchange LLC; Notice of Filing
of Amendment No. 2 to an Application for Registration as a National
Securities Exchange Under Section 6 of the Securities Exchange Act
of 1934)
\10\ The Exchange notes that the First Amended and Restated
Limited Liability Company Agreement of Texas Stock Exchange LLC will
remain in effect until and unless this proposal becomes effective
and operative.
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The text of the proposed rule change is available on the
Commission's website (https://www.sec.gov/rules/sro.shtml) at the
Exchange's website (https://txse.com/rule-filings), and at the
principal office of the Exchange.
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 Exchange 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 these 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 and restate the Stockholders'
Agreement and Certificate of Incorporation to reflect amendments made
in connection with a capital raise by TXSE Group from certain new and
existing Stockholders \11\ (the ``Transaction'') as further described
below, including: (i) amendments related to the creation of the Non-
Voting BHC Common Stock; (ii) the authorization and issuance of the
Non-Voting BHC Common Stock; (iii) voting
[[Page 58323]]
construct, convertibility, and the rights and obligations applicable to
Non-Voting BHC Common Stock; (iv) the rights and obligations of JPM (as
defined below); (v) compliance policies; (vi) amendments to definitions
and clean-up changes; (vii) amendments to delete obsolete provisions
and language; and (viii) conforming and clarifying amendments. Each of
these proposed amendments is discussed below.
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\11\ ``Stockholder'' means an owner of shares of TXSE Group who
is a party to the Stockholders' Agreement and includes without
limitation any owner who, subsequent to the Stockholders' Agreement,
acquires any shares of TXSE Group now or hereafter issued by TXSE
Group directly from TXSE Group or from a previous owner thereof.
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Background
A primary purpose of the Exchange's proposal to amend and restate
the Stockholders' Agreement and Certificate of Incorporation is to
create a new series of Common Stock of TXSE Group, the Non-Voting BHC
Common Stock, which is nearly identical (i.e., has the same privileges,
preference, duties, liabilities, obligations, and rights) to the
existing Non-Voting SLHC Common Stock.\12\ This new series of Common
Stock is not being sold as part of the Transaction. Rather, it is being
created in order to provide a new Stockholder, JPMC Strategic
Investments I Corporation (``JPM''), with a way to comply with
applicable regulations when exercising its Anti-Dilution Right under
the Stockholders' Agreement under certain circumstances as further
described below. This proposal also captures the additional changes to
both the Stockholders' Agreement and Certificate of Incorporation
enumerating JPM's rights and obligations as a Stockholder and proposes
certain other changes described below.
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\12\ The Non-Voting BHC Common Stock is identical to Non-Voting
SLHC Common Stock except that the Non-Voting BHC Common Stock is
designed to prevent exceeding regulatory thresholds associated with
the BHCA, as defined herein, and Regulation Y, while the Non-Voting
SLHC Common Stock is designed to prevent exceeding regulatory
thresholds associated with the Home Owners' Loan Act of 1933, as
amended, and Regulation LL. See Bank Holding Company Act of 1956, 12
U.S.C. 1841-1852; Bank Holding Companies and Change in Bank Control
(Regulation Y), 12 CFR pt. 225; Home Owners' Loan Act, 12 U.S.C.
1461-1470; Savings and Loan Holding Companies (Regulation LL), 12
CFR pt. 238.
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The proceeds resulting from the Transaction will be paid to TXSE
Group by the new and existing Stockholders participating in the
Transaction, and such proceeds will be used by TXSE Group for general
corporate expenses, including to support the operations and regulation
of the Exchange, which is a subsidiary of TXSE Group. Although each
Stockholder's proportionate ownership of TXSE Group may change as a
result of the Transaction, no Stockholder will exceed any ownership or
voting limitations applicable to the Stockholders set forth in the
Stockholders' Agreement or Certificate of Incorporation after giving
effect to the Transaction and the amendments to the Stockholders'
Agreement and Certificate of Incorporation proposed herein.\13\ None of
the amendments to the Stockholders' Agreement or Certificate of
Incorporation proposed herein would impact the governance of TXSE Group
or the Exchange.
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\13\ See Section 14 of the Stockholders' Agreement, which sets
forth certain limitations with respect to the ownership of TXSE
Group. The Exchange notes that the proposal contains an amendment to
Section 14, which is described below.
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The Transaction and all amendments to the Stockholders' Agreement
and Certificate of Incorporation proposed herein were previously
approved by the TXSE Group Board on October 17, 2025, in accordance
with the Stockholders' Agreement. The Exchange expects the Transaction
to be completed pursuant to one or more closings that would occur on or
shortly after the date on which the amendments to the Certificate of
Incorporation proposed herein become effective.
Amendments Related to the Creation of the Non-Voting BHC Common Stock
In connection with the Transaction, the proposal would amend the
Certificate of Incorporation to create a new series of Common Stock,
the Non-Voting BHC Common Stock, and to make certain corresponding
changes to the Stockholders' Agreement. Proposed Article FOURTH of the
Certificate of Incorporation creates the Non-Voting BHC Common Stock,
which is the same type of Stockholder interest (i.e., has the same
privileges, preference, duties, liabilities, obligations, and rights)
as the existing Non-Voting SLHC Common Stock except that the Non-Voting
BHC Common Stock is designed to prevent exceeding regulatory thresholds
associated with the U.S. Bank Holding Company Act of 1956, as amended
(the ``BHCA''), and Regulation Y, while the Non-Voting SLHC Common
Stock is designed to prevent exceeding regulatory thresholds associated
with the Home Owners' Loan Act of 1933, as amended, and Regulation LL.
The purpose of this change is to facilitate JPM's compliance with
requirements and restrictions under the BHCA, and amendments to the
BHCA regulations issued by the Board of Governors of the Federal
Reserve System regarding the framework for determining ``control''
under the BHCA, as well as interpretations of such amendments by JPM.
Authorization and Issuance of the Non-Voting BHC Common Stock
Article FOURTH(a) of the Certificate of Incorporation currently
contains provisions related to the authorization and issuance of Common
Stock in multiple series including Voting Common Stock, Non-Voting
Common Stock, Non-Voting SLHC Common Stock, and Preferred Stock (all
defined in Articles FOURTH(a)(i) and (ii)) and specifies the rights
associated with each type of Equity Security.\14\ The Exchange is
proposing to amend Articles FOURTH(a) and FOURTH(a)(i) to increase the
authorized stock from seventy million (70,000,000) shares to eighty
million (80,000,000) shares, to increase the authorized Common Stock
from sixty million (60,000,000) shares to seventy million (70,000,000)
shares, and to create a new series of Common Stock designated as Non-
Voting BHC Common Stock, alongside the existing Voting Common Stock,
Non-Voting Common Stock, and Non-Voting SLHC Common Stock. The
amendment would provide the rights, preferences, and limitations of the
Non-Voting BHC Common Stock, which are generally identical to those of
the Non-Voting SLHC Common Stock, except as set forth in Article SIXTH
of the Certificate of Incorporation.\15\ As proposed and further
described below, Article SIXTH(a)(v) provides the circumstances under
which Voting Common Stock held by a bank holding company investor will
convert into Non-Voting BHC Common Stock to maintain compliance with
applicable regulatory thresholds under the BHCA and Regulation Y, and
further provides for protective voting rights for amendments that would
significantly and adversely affect the rights of such type of Equity
Security. Proposed Article SIXTH(a)(v) is substantively identical to
current Article SIXTH(a)(iv) relating to Non-Voting SLHC Common Stock.
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\14\ As provided in the Stockholders' Agreement, the term
``Equity Securities'' means ``any and all shares of Common Stock and
any other securities of TXSE Group convertible into, or exchangeable
or exercisable for, such shares of Common Stock.''
\15\ As further described below, the Exchange is proposing to
delete Article FIFTH of the Certificate of Incorporation and
renumber all subsequent Articles accordingly (e.g., Article SIXTH
becomes Article FIFTH, Article THIRTEENTH becomes Article TWELFTH).
Therefore, all references in this document to Articles FIFTH through
EIGHTEENTH correspond to Articles SIXTH through NINETEENTH,
respectively, in the current Certificate of Incorporation.
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[[Page 58324]]
Voting Construct, Convertibility, and the Rights and Obligations
Applicable to Non-Voting BHC Common Stock
Under the proposed changes to the Stockholders' Agreement and
Certificate of Incorporation, the voting construct applicable to the
Non-Voting BHC Common Stock would mirror the voting construct
applicable to the Non-Voting SLHC Common Stock since, as noted above,
they are intended to copy the same type of Stockholder interest with
all of the same privileges, preference, duties, liabilities,
obligations, and rights under the Stockholders' Agreement and
Certificate of Incorporation. As such, this proposal includes
amendments to Article SIXTH(a)(ii) of the Certificate of Incorporation
in order to establish identical voting rights for Non-Voting BHC Common
Stock as for Non-Voting SLHC Common Stock. These provisions mirror
existing provisions relating to Non-Voting SLHC Common Stock and
provide that TXSE Group shall not, without either (i) the written
consent of a majority of the outstanding shares of Non-Voting BHC
Common Stock or (ii) the affirmative vote of holders of a majority of
the outstanding shares of Non-Voting BHC Common Stock, take actions
that would ``significantly and adversely affect'' the Non-Voting BHC
Common Stock specifically.
As it relates to convertibility, the proposal would amend Article
SIXTH(a)(iii)(D) of the Certificate of Incorporation, which currently
discusses conversion of Voting Common Stock to Non-Voting Common Stock
and Non-Voting SLHC Common Stock in order to add the ability to convert
into Non-Voting BHC Common Stock, which is described in new Article
SIXTH(a)(v). The Exchange is further proposing to add Article
SIXTH(a)(v)(A) through (F) to the Certificate of Incorporation, which
more specifically describe conversion of Voting Common Stock and Non-
Voting BHC Common Stock. Proposed Article SIXTH(a)(v) is substantively
identical to Article SIXTH(a)(iv) relating to the conversion of Voting
Common Stock into Non-Voting SLHC Common Stock, except that the
provisions of Article SIXTH(a)(iv) relate to compliance with the Home
Owners' Loan Act of 1933, as amended, while proposed Article
SIXTH(a)(v) relates to Regulation LL, the BHCA, and Regulation Y.
Proposed Article SIXTH(a)(v)(A) of the Certificate of Incorporation
provides that JPM together with its ``affiliates'' may elect to specify
the maximum voting percentage that it may have with respect to its
Voting Common Stock (default cap is 4.99%) and provides for the
conversion of Voting Common Stock into Non-Voting BHC Common Stock in
certain circumstances to maintain such Stockholder's specified maximum
permitted voting percentage with respect to such Equity Securities and
outlines the conversion process between Voting Common Stock and Non-
Voting BHC Common Stock.\16\
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\16\ The Exchange notes that Section 14 of the Stockholders'
Agreement and Article SIXTH of the Certificate of Incorporation set
forth certain limitations with respect to the ownership and voting
of Equity Securities, which are intended to prevent the
concentration of voting power and control of TXSE Group, and, in
turn, the Exchange, above certain specified thresholds. Article
SIXTH(a) and (b) of the Certificate of Incorporation provide that
for so long as TXSE Group controls the Exchange, subject to certain
limited exceptions: (i) no Person, either alone or together with its
Related Persons, shall be permitted at any time to beneficially own,
directly or indirectly, shares of stock of TXSE Group representing
in the aggregate more than forty percent (40%) of the then
outstanding shares of stock of TXSE Group; (ii) no Member, either
alone or together with its Related Persons, may own, directly or
indirectly, of record or beneficially, Equity Securities
constituting more than twenty percent (20%) of the then-outstanding
shares of stock of TXSE Group; and (iii) if any Member, either alone
or together with its Related Persons, is party to any agreement,
plan, or other arrangement relating to shares of stock of TXSE Group
entitled to vote on any matter with any other Person, either alone
or together with its Related Persons, under circumstances that would
result in shares of stock of TXSE Group that would be subject to
such agreement, plan, or other arrangement not being voted on any
matter, or the withholding of any proxy relating thereto, where the
effect of such agreement, plan, or other arrangement would be to
enable any Member, either alone or together with its Related
Persons, with the right to vote any shares of stock of TXSE Group,
but for this Article SIXTH, to vote, possess the right to vote or
cause the voting of shares of stock of TXSE Group that would exceed
twenty percent (20%) of the then-outstanding votes entitled to be
cast on such matter (assuming that all shares of stock of TXSE Group
that are subject to such agreement, plan, or arrangement are not
outstanding votes entitled to be cast on such matter) (the
``Recalculated Voting Limitation''), then the Member with such right
to vote shares of stock of the Corporation, either alone or together
with its Related Persons, shall not be entitled to vote or cause the
voting of shares of stock of TXSE Group beneficially owned by such
Member, either alone or together with its Related Persons, in person
or by proxy or through any voting agreement or other arrangement, to
the extent that such shares represent in the aggregate more than the
Recalculated Voting Limitation, and TXSE Group shall disregard any
such votes purported to be cast in excess of the Recalculated Voting
Limitation. As defined under Article FIFTH(a)(iv) of the Certificate
of Incorporation, the term ``Person'' shall mean an individual,
partnership (general or limited), joint stock company, corporation,
limited liability company, trust, or unincorporated organization, or
any governmental entity or agency or political subdivision thereof.
As defined under Article FIFTH(a)(iv) of the Certificate of
Incorporation, the term ``Related Person'' shall mean (A) in the
case of any Person, all ``affiliates'' (as such term is defined in
Rule 12b-2 under the Act) of such Person; (B) a Member, any Person
that is associated with the Member as determined using the
definition of ``person associated with a member'' in Section
3(a)(21) of the Act); (C) any two or more Persons that have any
agreement, arrangement, or understanding (whether or not in
writing), other than the Stockholders' Agreement, to act together
for the purpose of acquiring, voting, holding, or disposing of
shares of the stock of TXSE Group; (D) in the case of a Person that
is a company, corporation, or similar entity, any ``executive
officer'' (as defined under Rule 3b-7 of the Act) or director of
such Person and, in the case of a Person that is a partnership or a
limited liability company, any general partner, managing member, or
manager of such Person, as applicable; (E) in the case of a Person
that is a natural person and Member, any broker or dealer that is
also a Member with which such Person is associated; (F) in the case
of a Person that is a natural person, any relative or spouse of such
natural person, or any relative of such spouse who has the same home
as such natural person or who is a director or officer of TXSE Group
or any of the TXSE Group's parents or subsidiaries; (G) in the case
of a Person that is an ``executive officer'' (as defined under Rule
3b-7 under the Act), or a director of a company, corporation, or
similar entity, such company, corporation, or entity, as applicable;
and (H) in the case of a Person that is a general partner, managing
member, or manager of a partnership or limited liability company,
such partnership or limited liability company, as applicable. As
defined under Article FIFTH(a)(vi) of the Certificate of
Incorporation, a ``Member'' is any Person that is a registered
broker or dealer has been admitted to membership in the national
securities exchange known as Texas Stock Exchange LLC or its
successor.
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Proposed Article SIXTH(a)(v)(B) of the Certificate of Incorporation
generally provides that the Non-Voting BHC Common Stock will also
automatically convert back to Voting Common Stock where such Non-Voting
BHC Common Stock is sold or transferred to a non-affiliate third party.
Proposed Article SIXTH(a)(v)(C) provides that where TXSE Group provides
any special dividends, rights, or tender offer for Voting Common Stock,
holders of Non-Voting BHC Common Stock must receive an equivalent
benefit. Proposed Article SIXTH(a)(v)(D) provides that where new Voting
Common Stock is issued and dilutes a holder's ownership stake, some or
all of its Non-Voting BHC Common Stock automatically converts to Voting
Common Stock in order to maintain their prior percentage. Proposed
Article SIXTH(a)(v)(E) provides that either TXSE Group or the holder
can request a standard exchange agreement to formalize a conversion.
Proposed Article SIXTH(a)(v)(F) prevents Article SIXTH(a)(v) from being
changed or waived without JPM's consent for as long as JPM is a
Stockholder. Again, the entirety of proposed new Article SIXTH(a)(v)
uses the same structure and mechanics as Article SIXTH(a)(iv) related
to Non-Voting SLHC Common Stock, differing only in the regulatory
references and investor name. Finally, the Exchange is proposing to
amend the Non-Voting Common Stock ``Voting Limitation'' provisions
under Article SIXTH(a)(ii) of the Certificate of Incorporation by
[[Page 58325]]
adding references to Non-Voting BHC Common Stock.
The Exchange notes that the Non-Voting BHC Common Stock and the
Non-Voting SLHC Common Stock may be considered separate classes of
Equity Securities due to the naming convention of such Equity
Securities (i.e., being referred to as Non-Voting BHC vs. Non-Voting
SLHC) and for certain general corporate law purposes (i.e., entitled to
vote separately on any matters that affect such Equity Securities
specifically). However, as discussed above, the Non-Voting BHC Common
Stock are the same type of Stockholder interest (i.e., have the same
privileges, preference, duties, liabilities, obligations, and rights)
as the Non-Voting SLHC Common Stock. Thus, as noted above, such Equity
Securities are functionally equivalent with the only difference between
such Equity Securities being the regulatory framework that they are
designed to accommodate, which is the reason for the creation of the
new Non-Voting BHC Common Stock. Additionally, as noted above, the Non-
Voting SLHC Common Stock and the Non-Voting BHC Common Stock are both
convertible into Voting Common Stock on the same terms, and, once
converted, such shares of Voting Common Stock possess the same rights,
other than in respect of voting and conversion rights, and obligations
as the shares of Non-Voting SLHC Common Stock and/or Non-Voting BHC
Common Stock from which they were converted. As such, ownership of Non-
Voting SLHC Common Stock and Non-Voting BHC Common Stock effectively
confers the same ownership rights to the holders of any such Equity
Securities as it relates to voting and governance of TXSE Group.
Rights and Obligations of JPM
In connection with the Transaction, JPM will become a Stockholder
of TXSE Group, and the Exchange is proposing certain changes to the
Stockholders' Agreement to make clear JPM's rights and obligations as a
Stockholder. As such, the Exchange is proposing to add Section 2(k) of
the Stockholders' Agreement to provide JPM with the right to designate
one non-voting observer to the TXSE Group Board in a manner nearly
identical to those provided to other Stockholders in Sections 2(d),
2(g), and 2(i) and to reduce the number of shares required to trigger
such rights to the same number as JPM in such paragraphs. The Exchange
is also proposing to reference Section 2(l)(ii) in the ``Rights in
Control Transaction'' provision under Drag-Along Rights in Section
3(c)(i).
The Exchange is also proposing to add new Section 3(e)(v) to grant
JPM anti-dilution rights substantively identical to Section 3(e)(iv)
and to amend Section 3(e)(iv) to add reference to the JPM Anti-Dilution
Right. The Exchange is also proposing to add new Section 3(e)(vi)(5) to
grant JPM the right to exercise its JPM Anti-Dilution Right in a manner
substantively identical to Section 3(e)(vi)(4) and to reduce the number
of shares required to trigger such rights for other Stockholders in
paragraphs (e)(i) through (e)(iv) to the same number as JPM.
The Exchange is also proposing to add Section 3(f)(iii) related to
JPM's put right, which is substantively identical to Schwab's \17\ put
right in proposed Section 3(f)(iv) (previously Section 3(f)(iii)).
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\17\ As provided in the Current Stockholders' Agreement, the
term ``Schwab'' means The Charles Schwab Corporation, a Delaware
corporation.
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The Exchange is also proposing to add Section 3(h) related to JPM's
total equity limit, which is substantively identical to Schwab's total
equity limit in Section 3(g).
The Exchange is also proposing to amend Section 5(a) to allow a
Major Investor or any of its Affiliates to share Confidential
Information with its officers, directors, employees, managers and
representatives and further to provide that all Confidential
Information that constitutes a trade secret will be clearly and
conspicuously identified by the Company as such at the time of receipt
by the Major Investor; provided that the Company will not provide or
disclose any trade secret to the Major Investor without the Major
Investor's prior written consent.
The Exchange is also proposing to amend Section 5(b) to exclude the
Major Investors from the language stating that the Stockholders agree
that the Company may obtain temporary, preliminary or permanent
restraining orders, decrees, or injunctions as may be necessary to
protect the Company against violations of Section 5 of the Stockholders
Agreement.
The Exchange is also proposing to add Section 5(f) related to
regulatory disclosure to provide that nothing in the Stockholder
Agreement will prevent any Stockholder from disclosing Confidential
Information to any regulatory or self-regulatory authority with
jurisdiction over it or its Affiliates without notice of any kind.
The Exchange is also proposing to amend Section 5(g) (previously
Section 5(f)) to amend the ``Survival'' clause to apply for a period of
two (2) years following termination of each Stockholder's obligations
with respect to confidential information instead of indefinitely.
The Exchange is also proposing to add Section 7(e) to provide
equivalent prior written consent requirements to JPM that are provided
to other Major Investors (as defined below) in Sections 7(a) through
(e).
The Exchange is also proposing to add Section 18 to apply waiver of
enforcement provisions to JPM in a manner substantively identical to
Section 17.
The Exchange is also proposing to amend existing provisions of the
Stockholders' Agreement in order to further enumerate JPM's rights and
obligations as follows:
Amending the ``Most Favored Nations'' provision in Section
2(m) to add JPM to the provision by replacing Citadel, BlackRock,
Schwab, and the Warren Family with the term ``Major Investors,'' a term
which, as proposed herein, would include JPM;
Amending the ``Proxy Appointment'' provision in proposed
Section 2(o) (previously 2(m)) of the Stockholders' Agreement by adding
reference to JPM;
Amending the ``Conditions to Transfer by a Stockholder''
provision in Section 3(b) by adding reference to JPM;
Amending the ``Agreement to be Bound'' provision in
Section 3(b)(i)(2) by replacing Citadel, BlackRock, Schwab, and the
Warren Family with the term ``Major Investors;''
Amending the ``Manner of Payment'' provision under Section
3(c)(iii) by providing JPM with substantially similar rights as Schwab;
Amending the ``Failure to Transfer'' provision under
Section 3(c)(v) by adding reference to JPM;
Amending the ``Opportunity to Join'' provision under Tag-
Along Rights in Section 3(d)(i) by adding reference to JPM;
Amending the ``Exercises of Anti-Dilution Rights''
provision proposed in Section 3(e)(vi)(1) (previously Section
3(e)(v)(1)) by reorganizing and adding reference to Major Investors;
Amending Section 3(e)(vi)(6) through (8) (previously
Section 3(e)(vi)(5) through (7)) in order to provide JPM with
comparable rights to other Major Investors and to add language
providing an extension to the 30 day window for finalizing any
purchases described in Section 3 to obtain the necessary regulatory
approval (e.g., an exchange rule filing);
Amending Section 4(a) to denote JPM's consent right prior
to termination
[[Page 58326]]
of the Stockholders' Agreement pursuant to Section 2(l)(iii);
Amending Section 5, 5(a), and 5(b) to make clear how such
provisions apply to JPM with respect to the ``Other Activities,
Covenants, and Restrictions'' provisions and to make other minor
clarifying changes to those provisions;
Amending Section 6B to apply to JPM by adding reference to
Major Investors;
Amending Section 14 related to ``Stockholder Ownership
Limitation'' to add that JPM may not seek enforcement of Section 14
against any other Stockholder;
Amending Section 15 related to ``Publicity; Name and
Logo'' to add JPM and JPM Parent; and
Amending Section 16(b) and (c) related to ``Reports;
Inspection Rights'' to apply to JPM by adding references to Major
Investors.
The Exchange is also proposing new Section 19 of the Stockholders'
Agreement, which provides each Major Investor the right to designate an
individual to participate in any meetings of any informal, non-board
advisory group(s) of the Exchange.\18\ Any such individual must be an
employee of the Major Investor (or any of its Affiliates) and must be
approved by the Exchange Board. If such nominee is not approved by the
Exchange Board, such Major Investor shall nominate another individual
to participate in such meetings and shall continue to have such rights
until a nominee is approved by the Exchange Board. Any amendments to
proposed Section 19 of the Stockholders' Agreement would require
approval of the Major Investors, as provided in proposed Section 7.
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\18\ As provided in Article IV, Section 2 of the Exchange's LLC
Agreement, the Exchange Board has the power to establish such
committees.
---------------------------------------------------------------------------
The Exchange is proposing to amend Section 2(a) of the
Stockholders' Agreement to add JPM alongside Schwab in noting that
neither firm may seek enforcement of Section 2(a) against any other
Stockholder.
Compliance Policies
The Exchange is also proposing to add new Sections 20 and 21 to the
Stockholders' Agreement. Specifically, the Exchange is proposing to add
Sections 20(a) and (b), which provide that TXSE Group and its
subsidiaries and its and its subsidiaries' respective officers,
directors, employees, and agents shall conduct their respective
business and comply with all (i) AML Laws, (ii) Sanctions, (iii) Anti-
Corruption Laws, and (iv) any beneficial ownership information
reporting requirements of the U.S. Corporate Transparency Act of 2019
and that each of TXSE Group and its subsidiaries shall maintain systems
of internal controls, policies, and procedures that are collectively
reasonably designed to ensure compliance therewith.
The Exchange is also proposing to add Section 21, ``Use of
Proceeds,'' to the Stockholders' Agreement, providing that TXSE Group
shall not use the proceeds of any capital investment made by the
Stockholders to violate Anti-Corruption Laws or for the purpose of
funding, financing, or facilitating any Sanctioned Person or any
Sanctioned Country to the extent that such activity would be prohibited
by Sanctions applicable to any party hereto.
Amendments to Definitions and Clean-up Changes
The Exchange is also proposing to add definitions to and amend
certain definitions in the Stockholders' Agreement of the following
terms in Section 1 (i.e., the ``Definitions'' section of the
Stockholders' Agreement): AML Laws; \19\ Anti-Corruption Laws; \20\
BHCA; \21\ JPM; \22\ JPM Parent; \23\ JPM Regulatory Sale; \24\ Major
Investors; \25\ Permitted Transfer; \26\ Sanctions; \27\ Sanctioned
Country; \28\ Sanctioned Person; \29\ Transfer; \30\ and Warren
[[Page 58327]]
Incremental Amount.\31\ The proposal would also add references to Non-
Voting BHC Common Stock where appropriate throughout the Stockholders'
Agreement.
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\19\ As proposed, the term ``AML Laws'' means all laws, rules,
and regulations of any jurisdiction applicable to the parties
concerning or relating to money laundering and terrorist financing.
\20\ As proposed, the term ``Anti-Corruption Laws'' means the UN
Convention Against Corruption, the OECD Convention on Combating
Bribery of Foreign Public Official in International Business
Transactions, the U.S. Foreign Corrupt Practices Act, the UK Bribery
Act, or any other anti-bribery or anti-corruption laws and related
implementing legislation.
\21\ As proposed, the term ``BHCA'' means the U.S. Bank Holding
Company Act of 1956.
\22\ As proposed, the term ``JPM'' means JPMC Strategic
Investments I Corporation, a Delaware corporation and its Permitted
Transferees.
\23\ As proposed, the term ``JPM Parent'' means JPMorgan Chase &
Co., a Delaware corporation.
\24\ As proposed, the term ``JPM Regulatory Sale'' means the
right of JPM to sell all, but not less than all, of its shares of
Common Stock, in the event that there is a material change to the
regulatory environment to which the Company or JPM Parent (or any of
its Affiliates) is subject that has a material and adverse effect on
JPM Parent (or any of its Affiliates) (whether caused by a change in
regulation that applies to the Company as of the date hereof or a
change in the Company's business activities or direction that
subjects it to different or additional regulation or otherwise).
\25\ As proposed, the term ``Major Investors'' means (i) the
Warren Family, (ii) BlackRock, (iii) Citadel, (iv) Schwab, (v) JPM,
and (vi) their respective Permitted Transferees.
\26\ As proposed, the term ``Permitted Transfer'' would be
amended to include reference to JPM and JPM Parent as follows (new
text italicized): ``Permitted Transfer'' means (i) with respect to
the Warren Family, a Transfer between or among the natural persons,
entities or trusts comprising the Warren Family, (ii) with respect
to BlackRock (x) a Transfer between or among BlackRock and any of
its Affiliates or (y) a Transfer pursuant to a merger or
reorganization of BlackRock Parent, BlackRock or any BlackRock fund,
(iii) with respect to Schwab (x) a Transfer between or among Schwab
and any of its Affiliates or (y) a Transfer pursuant to a merger or
reorganization of Schwab or any Schwab fund, (iv) with respect to
Citadel, (x) a Transfer between or among Citadel and any of its
Affiliates or (y) a Transfer pursuant to a merger or reorganization
of Citadel Parent, Citadel or any Citadel fund (v) with respect to
JPM (x) a Transfer between or among JPM Parent, JPM and any of its
Affiliates or (y) a Transfer pursuant to a merger or reorganization
of JPM or any JPM fund and (vi) any Transfer by a Stockholder in
connection with a Control Transaction pursuant to Section 3(c) or a
transaction pursuant to Section 3(d).
\27\ As proposed, the term ``Sanctions'' means all economic or
financial sanctions or trade embargoes imposed, administered, or
enforced from time to time by (a) the U.S. government, including
those administered by the Office of Foreign Assets Control of the
U.S. Department of the Treasury or the U.S. Department of State, (b)
the European Union and its governmental authorities and relevant
member states, (c) the United Kingdom and its governmental
authorities, including His Majesty's Treasury, (d) the United
Nations Security Council, or (e) other relevant sanctions authority.
\28\ As proposed, the term ``Sanctions'' means all economic or
financial sanctions or trade embargoes imposed, administered, or
enforced from time to time by (a) the U.S. government, including
those administered by the Office of Foreign Assets Control of the
U.S. Department of the Treasury or the U.S. Department of State, (b)
the European Union and its governmental authorities and relevant
member states, (c) the United Kingdom and its governmental
authorities, including His Majesty's Treasury, (d) the United
Nations Security Council, or (e) other relevant sanctions authority.
\29\ As proposed, the term ``Sanctioned Country'' means any
country or territory that is the target of comprehensive Sanctions
(at the time of this Agreement, the Crimea, so-called Donetsk
People's Republic, so-called Luhansk People's Republic, and the non-
government-controlled areas of the Kherson and Zaporizhzhia regions
of Ukraine, Cuba, Iran, North Korea, and Syria).
\30\ As proposed, the term ``Transfer'' would be amended to
include reference to JPM and JPM Parent as follows (new text
italicized): ``Transfer'' means a transaction by which a Stockholder
assigns all or a portion of such Stockholder's Shares, or any
interest therein, to another Person, or by which the holder of
Shares assigns the Shares to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage,
transfer by will or intestate succession, exchange, divorce, or any
other disposition. With respect to any Stockholder that is a
corporation, limited liability company, limited liability
partnership, or other type of entity other than a natural person,
any transfer of ownership in the entity resulting in a change of the
Control Persons in such Stockholder or encumbrance of the ownership
interests resulting in a change of the Control Persons of such
Stockholder, including any such interests that become Controlled by
an estate, trustee, conservator, or other fiduciary of a Control
Person of such Stockholder, shall be deemed a Transfer, provided
that the foregoing shall not apply to a change of Control of such
Stockholder that is not otherwise required to be approved by such
Stockholder's board of managers, board of directors, managing
member, general partner, or other similar governing body, as
applicable; and provided further that (i) any transfer or issuance
of stock of BlackRock Parent or a BlackRock Regulatory Sale shall
not be deemed a Transfer by BlackRock for purposes hereof, (ii) any
transfer or issuance of equity interests of Citadel Parent or a
Citadel Regulatory Sale shall not be deemed a Transfer by Citadel
for purposes hereof, (iii) any transfer or issuance of stock of
Schwab or a Schwab Regulatory Sale shall not be deemed a Transfer by
Schwab for purposes hereof, or (iv) any transfer or issuance of
stock of JPM Parent or a JPM Regulatory Sale shall not be deemed a
Transfer by JPM for purposes hereof, or (v) any transfer or issuance
of equity interests of a parent entity of any Market Maker shall not
be deemed a Transfer by such Market Maker for purposes hereof.
\31\ As proposed, the term ``Warren Incremental Amount'' would
be amended to add reference to JPM Anti-Dilution Right as follows
(new text italicized): ``Warren Incremental Amount'' means, with
respect to an issuance of New Securities, that amount of shares of
Common Stock equal to the Warren Anti-Dilution Pro Rata Amount of
the number of shares of Common Stock then concurrently issuable upon
the exercise of the BlackRock Anti-Dilution Right, Citadel Anti-
Dilution Right, Schwab Anti-Dilution Right or JPM Anti-Dilution
Right, as applicable.
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The Exchange is also proposing to remove current Article FIFTH of
the Certificate of Incorporation which provides the name and mailing
address of the incorporator of TXSE Group.
The Exchange is also proposing to amend the term ``Stockholders'
Agreement'' under Article FIFTH(a)(vii) of the Certificate of
Incorporation to refer to the ``Sixth Amended and Restated
Stockholders' Agreement'' instead of the ``Fourth Amended and Restated
Stockholders' Agreement.''
Amendments To Delete Obsolete Provisions and Language
The proposal would make the following amendments to the
Stockholders' Agreement to delete provisions and language that are now
obsolete. The proposal would amend Section 3(a), as such paragraph
currently contains provisions relating to certain restrictions on the
transfer of Shares, which by their terms only apply until the earlier
of (i) the Exchange becoming registered as a ``national securities
exchange'' under Section 6 of the Act; or (ii) December 31, 2026.
Because the Exchange has become registered as a national securities
exchange, these provisions are now obsolete, and the proposal would
therefore delete such provisions and replace such provisions with an
``[INTENTIONALLY OMITTED]'' placeholder to maintain the paragraph
numbering. The Exchange is also proposing to delete all other
references to the ``Approval Date'' and the ``Lockup Termination Date''
because both were previously defined under Section 3(a) but, as
described above, are no longer applicable.
Conforming and Clarifying Amendments
The proposal would make various clarifying, updating, conforming,
and other minor and non-substantive amendments to the Stockholders'
Agreement, each of which is discussed below. The proposal would make
various technical and conforming amendments to the Stockholders'
Agreement and Exhibit A thereto in order to reflect that it is being
amended and restated as the ``Sixth Amended and Restated Stockholders'
Agreement'' and the Certificate of Incorporation to reflect that it is
being amended and restated as the ``Fifth Amended and Restated
Certificate of Incorporation.'' As it relates to the Stockholders'
Agreement, the proposal would amend the definition of ``Agreement'' to
reference the ``Sixth Amended and Restated Stockholders' Agreement;''
replace references to ``Fifth Amended and Restated Stockholders'
Agreement'' with references to ``Sixth Amended and Restated
Stockholders' Agreement'' throughout the Stockholders' Agreement where
appropriate (i.e., when referencing the current version of the
Stockholders' Agreement); and update the legend set forth in Section 11
to include a reference to the ``Sixth Amended and Restated
Stockholders' Agreement.''
As it relates to the Certificate of Incorporation, the proposal
would add language stating that ``The Fourth Amended and Stated
Certificate of Incorporation was filed in the office of the Secretary
of State of the State of Delaware on October 21, 2025.'' The Exchange
is also proposing to replace references to ``Fourth Amended and
Restated Certificate of Incorporation'' with references to ``Fifth
Amended and Restated Certificate of Incorporation'' throughout the
Certificate of Incorporation; and update the definition of
``Stockholders' Agreement'' to refer to the ``Sixth Amended and
Restated Stockholders' Agreement'' instead of the ``Fifth Amended and
Restated Stockholders' Agreement.''
As it relates to the Exchange's LLC Agreement, the proposal would
make certain non-substantive conforming changes to reflect the changes
to the Stockholders' Agreement to refer more broadly to Section 2 of
the Stockholders' Agreement rather than citing to specific clauses in
Section 2 in such a way that the LLC Agreement would not need to be
amended going forward if similar changes are made to the Stockholders'
Agreement in the future. The Exchange is specifically proposing to
amend language in the introduction to the LLC Agreement to state that
``This Agreement remains subject to the observer and consent right
provisions under Section 2 of the applicable Stockholders' Agreement of
TXSE Group Inc.'' instead of ``This Agreement remains subject to
Sections 2.d, 2.3, 2.5, 2.h, 2.i and 2.j of the Fourth Amended and
Restated Stockholders' Agreement, dated as of October 23, 2024.''
Similarly, the proposal would also amend Article I(d) of the LLC
Agreement which defines the term ``Board Observer'' \32\ to refer more
broadly to Section 2 of the Stockholders' Agreement instead of the
specific citations to Sections 2.d, 2.g and 2.i. The proposal would
also amend Article VIII, Section 1(a) to refer to the prior consent
requirements to amend the LLC Agreement as being set forth in Section 2
of the Stockholders' Agreement instead of in Sections 2.e, 2.h and 2.j
of the Stockholders' Agreement. The proposal would also make a clean-up
change to remove the word ``initial'' from the phrase ``initial
stockholders'' from the introduction of the LLC Agreement and to
correct a typo in Article III, Section 1(a) to refer to Article IV
instead of Article V.
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\32\ Article I(d) currently provides ``Board Observer'' means
the representative that certain investors in the LLC Member have the
right to designate to attend all meetings of the Board and any
committees thereof, in a nonvoting observer capacity, pursuant to,
and subject to the limitations set forth in, Sections 2.d, 2.g and
2.i of the Stockholders' Agreement.
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Each of these proposed amendments is a conforming change intended
to reflect the amendment and restatement of the Stockholders' Agreement
and the Certificate of Incorporation.
Lastly, the proposal would make various non-substantive ``clean-
up'' amendments throughout the Stockholders' Agreement and Certificate
of Incorporation to update cross-references (i.e., to reflect
appropriate sections/paragraphs that were renumbered as a result of the
proposed changes described herein), make minor grammatical and
punctuational edits, and make other clarification and ministerial
changes to clarify existing language or modify such language to conform
with the other proposed amendments described above.
[[Page 58328]]
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\33\ Specifically, the Exchange believes the proposed rule change
is consistent with the objectives of Section 6(b)(1) \34\ of the Act in
particular, in that such amendments enable the Exchange to be so
organized as to have the capacity to be able to carry out the purposes
of the Act and to comply with the provisions of the Act, the rules and
regulations thereunder, and the rules of the Exchange. The Exchange
also believes that the proposed amendments are consistent with Section
6(b)(5) of the Act,\35\ which requires the rules of an exchange to be
designed 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.
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\33\ 15 U.S.C. 78f(b).
\34\ 15 U.S.C. 78f(b)(1).
\35\ 15 U.S.C. 78f(b)(5).
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Amendments Related to the Creation of the Non-Voting BHC Common Stock
The Exchange believes that the creation of the Non-Voting BHC
Common Stock is consistent with the Act, as it would facilitate
additional investment and funding for TXSE Group resulting from the
Transaction, and such proceeds could be used by TXSE Group for general
corporate expenses, including to support the operations and regulation
of the Exchange. This would further enable the Exchange to be organized
as to have the capacity to carry out the purposes of the Act and to
comply with the provisions of the Act, the rules and regulations
thereunder, and the rules of the Exchange, and, in turn, would protect
investors and the public interest. Further, the Exchange believes that
the proposal for Non-Voting BHC Common Stock to be the same type of
Stockholder interest as the existing Non-Voting SLHC Common Stock is
consistent with the Act because, as described above, Non-Voting BHC
Common Stock would have the same privileges, preference, duties,
liabilities, obligations, and rights, and be subject to the same voting
construct, as Non-Voting SLHC Common Stock under the Stockholders'
Agreement and Certificate of Incorporation, which facilitates certain
Stockholders' compliance with the BHCA and provides for a governance
structure of TXSE Group that is consistent with the structure currently
in place, which was previously approved by the Commission. Since Non-
Voting BHC Common Stock is the same type of Stockholder interest as
Non-Voting SLHC Common Stock and does not otherwise impact the
governance of TXSE Group or TXSE Group subsidiaries (including the
Exchange), the Exchange believes that the creation of Non-Voting BHC
Common Stock and related amendments to the Stockholders' Agreement and
Certificate of Incorporation associated with Non-Voting BHC Common
Stock relate solely to the administration of TXSE Group and the
Transaction, and that such amendments would not impact the governance
or operations of the Exchange. Accordingly, the Exchange does not
believe the creation of Non-Voting BHC Common Stock, or the
Transaction, would in any way restrict the Exchange's ability to be
organized as to have the capacity to carry out the purposes of the Act
and to comply with the provisions of the Act, the rules and regulations
thereunder, and the rules of the Exchange.
As noted above, although each Stockholder's proportionate ownership
of TXSE Group may change as a result of the Transaction, no Stockholder
will exceed any ownership or voting limitations applicable to the
Stockholders as set forth in the Stockholders' Agreement or Certificate
of Incorporation after giving effect to the Transaction and the
proposed amendments to the Stockholders' Agreement and Certificate of
Incorporation. As described above, while Non-Voting BHC Common Stock
and Non-Voting SLHC Common Stock may be considered separate classes of
Equity Securities due to the naming convention of such Equity
Securities and for certain general corporate law purposes, Non-Voting
BHC Common Stock is the same type of Stockholder interest (i.e., has
the same privileges, preference, duties, liabilities, obligations, and
rights) as Non-Voting SLHC Common Stock and also votes together with,
and in the same manner as, Non-Voting SLHC Common Stock pursuant to
Article FOURTH(b) of the Certificate of Incorporation on all actions on
which such Equity Securities are entitled to vote (other than actions
that significantly and adversely affect Non-Voting SLHC Common Stock or
Non-Voting BHC Common Stock specifically), making such Equity
Securities functionally equivalent. Additionally, as noted above, Non-
Voting SLHC Common Stock and Non-Voting BHC Common Stock are both
convertible into Voting Common Stock on the same terms, and, once
converted, such shares of Voting Common Stock possess the same rights,
other than in respect of voting and conversion rights, and obligations
as the shares of Non-Voting SLHC Common Stock and/or Non-Voting BHC
Common Stock from which they were converted. As such, ownership of Non-
Voting SLHC Common Stock and Non-Voting BHC Common Stock effectively
confers the same ownership rights to the holders of any such Equity
Securities as related to voting and governance of TXSE Group.
Therefore, the Exchange believes the amendments to create the Non-
Voting BHC Common Stock enable the holders to have the same rights as
Non-Voting SLHC Common Stock and are appropriate and consistent with
Section 6(b)(1) of the Act, in that such amendments enable the Exchange
to be so organized as to have the capacity to carry out the purposes of
the Act and to comply with the provisions of the Act, the rules and
regulations thereunder, and the rules of the Exchange, and because such
amendments will not impair the ability of the Exchange to carry out its
functions and responsibilities as an ``exchange'' under the Act, and
the rules and regulations promulgated thereunder, nor do such
amendments impair the ability of the SEC to enforce the Act and the
rules and regulations promulgated thereunder with respect to the
Exchange.
Other Changes
The Exchange believes that certain other changes proposed,
including the addition of Section 19 of the Stockholders' Agreement and
changes to the treatment of confidential information in Section 5 of
the Stockholders' agreement are consistent with the Act. The Exchange
believes that these proposed changes are consistent with the Act in
that they do not change the governance structure of the Exchange or
TXSE Group and because such amendments will not impair the ability of
the Exchange to carry out its functions and responsibilities as an
``exchange'' under the Act, and the rules and regulations promulgated
thereunder, as they pertain to the availability or protection of
information, books and records, undue influence, conflicts of interest,
unfair control by an affiliate, or regulatory independence of the
Exchange, nor do such amendments impair the ability of the SEC to
enforce the Act and the rules and regulations promulgated thereunder
with respect to the Exchange.
[[Page 58329]]
Conforming and Clarifying Amendments
The Exchange believes the proposed amendments to make
clarifications, correct inadvertent drafting errors, delete obsolete
language, make conforming changes consistent with the other proposed
amendments to the Stockholders' Agreement and Certificate of
Incorporation described above, to make conforming changes to the
Exchange's LLC Agreement, and make other technical and conforming
changes to reflect that the Stockholders' Agreement is being amended
and restated from the Fifth Amended and Restated Stockholders'
Agreement to the Sixth Amended and Restated Stockholders' Agreement and
the Certificate of Incorporation is being amended and restated from the
Fourth Amended and Restated Certificate of Incorporation to the Fifth
Amended and Restated Certificate of Incorporation are consistent with
the Act, as such amendments would update and clarify the Stockholders'
Agreement and Certificate of Incorporation, thereby increasing
transparency and helping to avoid any potential confusion resulting
from retaining outdated, obsolete, or unclear provisions.
The Exchange believes the proposed amendments to the Stockholders'
Agreement and Certificate of Incorporation described in this proposal
are consistent with, and will not interfere with, the self-regulatory
obligations of the Exchange. The Exchange importantly notes that it is
not proposing to materially alter TXSE Group's or the Exchange's
existing governance framework; amend any of the provisions within the
Exchange's LLC Agreement related to the Exchange's obligations as a
self-regulatory organization or within the Stockholders' Agreement and
the Certificate of Incorporation that would impact the Exchange's
ability to carry out its obligations as a self-regulatory organization;
or to alter any provisions dealing with the availability or protection
of information, books and records, undue influence, conflicts of
interest, unfair control by an affiliate, or regulatory independence of
the Exchange.\36\
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\36\ See, e.g., Securities Exchange Act Release No. 104146
(September 30, 2025), 90 FR 47880 (October 2, 2025) (In the Matter
of the Application of Texas Stock Exchange LLC for Registration as a
National Securities Exchange; Findings, Opinion, and Order of the
Commission) at Section III, A (``Ownership and Governance of TXSE'')
and Section III, B (``TXSE Group and Regulation of the Exchange'').
The Exchange is proposing only non-substantive and clean-up changes
to the LLC Agreement and is not proposing to amend any provisions of
the LLC Agreement related to its self-regulatory function. For
example, the Exchange is not proposing to change any of the
following: Article III, Section 1(e) (provision related to the
factors the Exchange Board should consider when evaluating any
proposal); Article IV, Section 6(a) (provision describing the role
and function of the Regulatory Oversight Committee); Article VI,
Section 5 (provision describing the role of the Chief Regulatory
Officer); Article X, Section 3 (``Participation in Board and
Committee Meetings,'' including specific provisions related to
attendees of Board Meetings pertaining to the self-regulatory
function of the Exchange); and Article X, Section 4 (``Books and
Records; Confidentiality of Information and Records Relating to SRO
Function'').
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For these reasons, the Exchange believes such amendments would
enable the Exchange to be so organized as to have the capacity to carry
out the purposes of the Act and to comply with the provisions of the
Act, the rules and regulations thereunder, and the rules of the
Exchange, promote just and equitable principles of trade, remove
impediments to and perfect the mechanism of a free and open market, and
protect investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposal is not intended to
address competitive issues but rather is concerned with the creation of
Non-Voting BHC Common Stock in connection with the Transaction as well
as updates and other changes to the corporate documents of TXSE Group
related to the administration and governance of TXSE Group, as
described above.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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)(iii) of the Act \37\ and Rule
19b-4(f)(6) \38\ thereunder.
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\37\ 15 U.S.C. 78s(b)(3)(A)(iii).
\38\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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) normally does
not become operative prior to 30 days after the date of filing. Rule
19b-4(f)(6)(iii), however, 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 requested that the
Commission waive the 30-day operative delay contained in Rule 19b-
4(f)(6)(iii) so that the Exchange may amend the Stockholders' Agreement
and Certificate of Incorporation to create an additional series of
Common Stock in order to facilitate the closing of the Transaction as
soon as possible. The Commission finds that waiver of the operative
delay is consistent with the protection of investors and the public
interest because the proposed changes to the Stockholder's Agreement
and Certificate of Incorporation to reflect the creation of the Non-
Voting BHC Common Stock do not materially alter TXSE Group's governance
framework or raise novel issues as the Non-Voting BHC Common Stock are
functionally equivalent to the existing Non-Voting SLHC Common Stock.
As discussed above, the other proposed changes to the Exchange's LLC
Agreement, Stockholder's Agreement and Certificate of Incorporation
also do not materially alter the governance structure of the Exchange
or TXSE Group or impair the ability of the Exchange to carry out its
self-regulatory obligations. Accordingly, the Commission hereby waives
the operative delay and designates the proposal operative upon
filing.\39\
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\39\ 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 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 will 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,
[[Page 58330]]
including whether the proposal 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 No. SR-TXSE-2025-001 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 No. SR-TXSE-2025-001. 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 filing will be available for inspection and copying at
the principal office of the Exchange. Do not include personal
identifiable information in submissions; you should submit only
information that you wish to make available publicly. We may redact in
part or withhold entirely from publication submitted material that is
obscene or subject to copyright protection. All submissions should
refer to file number SR-TXSE-2025-001 and should be submitted on or
before January 6, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\40\
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\40\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-22856 Filed 12-15-25; 8:45 am]
BILLING CODE 8011-01-P