
[Federal Register: April 20, 2009 (Volume 74, Number 74)]
[Notices]               
[Page 18017]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20ap09-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59756; File No. SR-ISE-2009-08]

 
Self-Regulatory Organizations; International Securities Exchange, 
LLC; Order Granting Approval of Proposed Rule Change Relating to 
Changes to the Third Amended and Restated Limited Liability Company 
Operating Agreement of Direct Edge Holdings LLC

April 13, 2009.

I. Introduction

    On February 27, 2009, the International Securities Exchange, LLC 
(the ``Exchange'' or ``ISE''), filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ this proposed rule change. On March 3, 2009, the 
Exchange filed Amendment No. 1 to the proposed rule change. The 
proposed rule change, as modified by Amendment No. 1, was published for 
comment in the Federal Register on March 10, 2009.\3\ The Commission 
received no comments on the proposal. This order approves the proposed 
rule change, as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59492 (March 3, 
2009), 74 FR 10322 (``Notice'').
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II. Description

    Maple Merger Sub, LLC (``Merger Sub''), a wholly-owned subsidiary 
of Direct Edge Holdings, LLC (``Direct Edge''), currently owns and 
operates a marketplace for the trading of U.S. cash equity securities 
by Equity Electronic Access Members of ISE under the rules of ISE, as a 
facility, as that term is defined in Section 3(a)(2) of the Act, of ISE 
(the ``Equity Facility'').\4\ As a facility of ISE, the Equity Facility 
is subject to regulation by ISE and oversight by the Commission. In 
addition, because Direct Edge is the sole owner of the entity that 
operates the Equity Facility, ISE must review any amendments to Direct 
Edge's governing documents, including the Third Amended and Restated 
Limited Liability Company Operating Agreement of Direct Edge Holdings 
LLC (``Third Amended and Restated DE Operating Agreement''), to 
determine whether it must be filed with, or filed with and approved by, 
the Commission before it may become effective under Section 19 of the 
Act.\5\ Accordingly, ISE reviewed the proposed changes to the Third 
Amended and Restated DE Operating Agreement and determined that such 
changes were required to be filed with and approved by the Commission, 
consistent with the requirements in Section 15.2 of the Third Amended 
and Restated DE Operating Agreement.
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    \4\ See Exchange Act Release No. 59135 (December 22, 2008), 73 
FR 79954 (December 30, 2008) (SR-ISE-2008-85) (order approving a 
proposed rule change, as modified by Amendment No. 1, relating to 
the purchase by ISE Holdings of an ownership interest in Direct 
Edge).
    \5\ See Third Amended and Restated DE Operating Agreement, 
Section 15.2.
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    ISE, on behalf of Direct Edge, proposes to amend and restate the 
Third Amended and Restated DE Operating Agreement to decrease from 7.5% 
to 5% the percentage ownership interest in Direct Edge that the ISE 
Stock Exchange Consortium Members \6\ must retain in order to retain 
the right to designate a Manager to the Direct Edge Holdings Board of 
Managers. ISE also proposes that if any ISE Stock Exchange Consortium 
Member elects to sell its ownership interest in Direct Edge, it must 
first offer to sell such interest to the non-selling ISE Stock Exchange 
Consortium Members to allow such non-selling ISE Stock Exchange 
Consortium Members to collectively maintain their current percentage 
ownership interest. In addition, ISE proposes to make other non-
substantive clean-up changes necessary to reflect that the Third 
Amended and Restated DE Operating Agreement, as amended, will become 
the Fourth Amended and Restated Limited Liability Company Operating 
Agreement of Direct Edge Holdings, LLC.
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    \6\ Currently, the ISE Stock Exchange Consortium Members are DB 
US Financial Markets Holding Corporation, LabMorgan Corporation, 
Merrill Lynch L.P. Holdings, Inc., Nomura Securities International, 
Inc., and Sun Partners LLC. See Notice, supra note 3. The ISE Stock 
Exchange Consortium Members formerly were minority unitholders of 
the ISE Stock Exchange, LLC. See id. Currently, the ISE Stock 
Exchange Consortium Members have a collective ownership interest of 
8.76% in Direct Edge.
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III. Commission's Findings and Order Granting Approval of the Proposed 
Rule Change

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\7\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(1) of the Act,\8\ which requires, among 
other things, that a national securities exchange be so organized and 
have the capacity to carry out the purposes of the Act, and the rules 
and regulation thereunder, and Section 6(b)(5) of the Act \9\ in that 
it is designed to promote just and equitable principles of trade, to 
prevent fraudulent and manipulative acts, and, in general, to protect 
investors and the public interest. The Commission believes that the 
proposed changes to the Third Amended and Restated DE Operating 
Agreement should not adversely affect the ability of ISE and the 
Commission to fulfill their respective regulatory obligations under the 
Act.
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    \7\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(1).
    \9\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change, as amended (SR-ISE-2009-08) be, 
and it hereby is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-8962 Filed 4-17-09; 8:45 am]

BILLING CODE 8010-01-P
