
[Federal Register: August 26, 2009 (Volume 74, Number 164)]
[Notices]               
[Page 43193-43194]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26au09-129]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60542; File No. SR-NYSE-2009-60]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving a Proposed Rule Change in Connection With the Proposal of 
NYSE Euronext To Require That at Least Three-Fourths of Its Directors 
Satisfy Independence Requirements

August 19, 2009.

I. Introduction

    On June 23, 2009, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant

[[Page 43194]]

to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (the 
``Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule change to 
amend the Bylaws of its ultimate parent, NYSE Euronext 
(``Corporation''),\4\ and the Corporation's Director Independence 
Policy to require that at least three-fourths of the members of the 
Corporation's Board of Directors (``Board'') satisfy independence 
requirements. The proposed rule change was published for comment in the 
Federal Register on July 16, 2009.\5\ The Commission received no 
comments regarding the proposal. This order approves the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ The NYSE, a New York limited liability company, is an 
indirect wholly-owned subsidiary of NYSE Euronext.
    \5\ See Securities Exchange Act Release No. 60261 (July 8, 
2009), 74 FR 34609 (``Notice'').
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II. Description of the Proposal

    Section 10.10(C) of the Corporation's Bylaws provides, among other 
things, that for so long as the Corporation shall control, directly or 
indirectly, any U.S. Regulated Subsidiaries,\6\ before any amendment or 
repeal of any provision of the Bylaws shall be effective, such 
amendment or repeal shall be filed with or filed with and approved by 
the Commission under Section 19 of the Act and the rules promulgated 
thereunder. Consistent with this requirement, NYSE filed this proposed 
rule change. Currently, the Corporation's Bylaws and Director 
Independence Policy require that all members of the Board, other than 
the Chief Executive Officer and the Deputy Chief Executive Officer, 
must satisfy the independence requirements for directors of the 
Corporation.\7\ The proposed rule change would permit the Corporation 
to amend its Bylaws and Director Independence Policy to require that at 
least three-fourths of the members of the Board satisfy the 
independence requirements for directors of the Corporation.
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    \6\ Section 7.3(G) of the Corporation's Bylaws defines ``U.S. 
Regulated Subsidiaries'' as New York Stock Exchange LLC, NYSE 
Market, Inc., NYSE Regulation, Inc., NYSE Arca, LLC, NYSE Arca, 
Inc., NYSE Arca Equities, Inc. and NYSE Alternext US LLC or their 
successors, in each case to the extent that such entities continue 
to be controlled, directly or indirectly, by the Corporation.
    \7\ See Section 3.4 of the Amended and Restated Bylaws of NYSE 
Euronext (``Bylaws'').
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    The Exchange stated that the proposed amendment to the Bylaws and 
Director Independence Policy would not alter or amend the standards by 
which the Corporation determines whether an individual director is 
independent; would not affect the independence requirements of the 
Exchange with respect to its directors or the director independence 
requirements of any of the other self-regulatory organizations for 
which the Corporation is the ultimate parent or of NYSE Group, Inc., 
the intermediate holding company, including in each case the number of 
required independent directors; and would not affect other director 
qualification requirements set forth in the Bylaws of the 
Corporation.\8\
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    \8\ See e.g., Section 3.2 of the Bylaws (Certain Qualifications 
for the Board of Directors).
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    The Exchange further stated that the current board independence 
requirement eliminates from consideration as potential directors of the 
Corporation a substantial number of individuals who could contribute 
significantly to the deliberations of the Corporation's Board by virtue 
of their knowledge, ability, and experience. The Exchange believes that 
the proposed rule change would continue to protect the independent 
judgment of the Board, while permitting the Corporation to consider a 
broader range of experienced and knowledgeable individuals as 
directors.\9\
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    \9\ There are currently 18 directors on the Board, including the 
Chief Executive Officer and the Deputy Chief Executive Officer. The 
Bylaws currently require 16 of the directors (i.e., all but the two 
aforementioned employees) to be independent. The proposed amendment 
to the Bylaws would require a minimum of 14 of the directors to be 
independent.
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III. Discussion

    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. 
Specifically, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(1) of the Act,\10\ which requires, among 
other things, that an exchange be so organized and have the capacity to 
be able to carry out the purposes of the Act. The Commission also finds 
that the proposed rule change is consistent with Section 6(b)(5) of the 
Act,\11\ which requires, among other things, that the rules of a 
national securities exchange be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to remove impediments to, and perfect the 
mechanism of, a free and open market and a national market system, and 
in general, to protect investors and the public interest.\12\
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    \10\ 15 U.S.C. 78f(b)(1).
    \11\ 15 U.S.C. 78(f)(b)(5).
    \12\ In approving this proposed rule change, 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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    The Bylaws currently require that 16 of the 18 directors of the 
Corporation's Board (all the directors except the Chief Executive 
Officer and the Deputy Chief Executive Officer) must satisfy the 
Corporation's independence requirements. The Commission notes that the 
proposed rule change, which would require that at least three-fourths 
of the Board to be independent, would still require a minimum of 14 
directors to satisfy the Corporation's independence requirements. The 
Commission also notes that the proposal would not alter the 
Corporation's standards for determining director independence. The 
Commission believes that the proposal strikes a reasonable balance 
between the goals of retaining highly qualified and experienced 
directors for Board service and protecting the exercise of independent 
judgment by the Corporation's Board.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (SR-NYSE-2009-60) be, and hereby 
is, approved.
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    \13\ 15 U.S.C. 78s(b)(2).
    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-20544 Filed 8-25-09; 8:45 am]

BILLING CODE 8010-01-P
