
[Federal Register: May 11, 2010 (Volume 75, Number 90)]
[Notices]               
[Page 26304-26309]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11my10-138]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62032; File No. SR-NYSEArca-2010-31]

 
Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by NYSE Arca, Inc. Amending NYSE Arca Rule 3.3(a) and Section 
401(a) of the Exchange's Bylaws to Eliminate the Exchange's Audit 
Committee, Compensation Committee, and Regulatory Oversight Committee

May 4, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on April 20, 2010, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the self-regulatory organization. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Rule 3.3 to eliminate its 
audit committee (the ``NYSE Arca Audit Committee''), its compensation 
committee (the ``NYSE Arca Compensation Committee'') and its regulatory 
oversight committee (``ROC'') as committees of the board of directors 
of the Exchange. References to those board committees will also be 
deleted from Section 4.01(a) of the Exchange's Bylaws. The formal 
responsibilities of the NYSE Arca Audit Committee and the NYSE Arca 
Compensation Committee will, following elimination, be exercised by the 
committees of the board of directors of the Exchange's ultimate parent 
company, NYSE Euronext. The formal responsibilities of the ROC will be 
exercised by the board of directors of NYSE Regulation, Inc. 
(``NYSER'') in part, pursuant to the terms of a regulatory services 
agreement with the Exchange, and the board of directors of the Exchange 
in other respects.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nyse.com, at the principal office of the 
Exchange, on the Commission's Web site at http://www.sec.gov, and at 
the Commission's Public Reference Room.

[[Page 26305]]

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of 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 aspects 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 delete NYSE Arca Rule 3.3(a)(3) and the 
NYSE Arca Audit Committee provided for therein, thereby making the 
audit committee of the NYSE Euronext board (the ``NYSE Euronext Audit 
Committee'') the sole committee responsible for all Exchange-related 
audit functions. Similarly, the Exchange proposes to delete NYSE Arca 
Rule 3.3(a)(4) and the NYSE Arca Compensation Committee provided for 
therein, thereby making the human resources and compensation committee 
of the NYSE Euronext board (the ``NYSE Euronext Human Resources and 
Compensation Committee'') the sole committee responsible for all 
Exchange-related compensation functions. Finally, the Exchange proposes 
to delete NYSE Arca Rule 3.3(a)(2) and the ROC provided for therein, 
with the board of directors of NYSER and the board of directors of the 
Exchange each exercising some portion of the former responsibilities of 
the ROC related to ensuring (i) the independence of Exchange 
regulation, (ii) adequate resources for the Exchange to properly 
fulfill its SRO regulatory obligations and (iii) that Exchange 
management fully supports the execution of the regulatory process. 
NYSER performs regulatory responsibilities on behalf of the Exchange 
pursuant to the terms of a regulatory services agreement (``RSA'') 
between NYSER and the Exchange. As described in more detail below, the 
Exchange board receives reports on regulatory matters from NYSER and 
from the Exchange's Chief Regulatory Officer (``CRO''), and the 
Exchange will still retain ultimate legal responsibility for the 
performance of its regulatory obligations as well as the ability to 
take action as required to meet that responsibility. References to the 
three aforementioned NYSE Arca board committees will also be deleted 
from Section 4.01(a) of the Exchange's Bylaws.
Background
    Since the demutualization of the New York Stock Exchange LLC 
(``NYSE'') in 2006 in connection with the merger of New York Stock 
Exchange, Inc. and Archipelago Holdings, Inc. (``Archipelago''), the 
audit and compensation functions of NYSE have been carried out at the 
parent holding company level.\3\ This principle was extended in 2007 
with the merger of NYSE Group, Inc. (``NYSE Group'') and Euronext, N.V. 
to form NYSE Euronext (the ``NYSE-Euronext Merger''). As noted in the 
Commission's order approving the NYSE-Euronext Merger,\4\ upon 
consummation, the board of directors of NYSE Euronext (the ``Company') 
was expected to have an audit committee, a human resource and 
compensation committee, and a nominating and governance committee, each 
consisting solely of directors meeting the independence requirements of 
the Company.\5\ The order further stated that these committees also 
would perform relevant functions for NYSE Group, NYSE, NYSE Market, 
Inc., NYSE Regulation, Inc., Archipelago, NYSE Arca Equities, Inc., and 
the Exchange, as well as other subsidiaries of the Company, except that 
the board of directors of NYSE Regulation, Inc. would continue to have 
its own compensation committee and nominating and governance 
committee.\6\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 53382 (February 27, 
2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77) (order 
approving NYSE's business combination with Archipelago Holdings, 
Inc.) at 11257.
    \4\ Securities Exchange Act Release No. 55293 (February 14, 
2007), 72 FR 8033 (February 22, 2007) (SR-NYSE-2006-120) (``NYSE 
Euronext Approval Order'').
    \5\ See NYSE Euronext Approval Order, 72 FR at 8036.
    \6\ Id.
---------------------------------------------------------------------------

    In addition, on October 1, 2008, the American Stock Exchange LLC 
(``Amex'') was acquired by the Company. In connection with the merger, 
the Amex self-regulatory organization ultimately became known as NYSE 
Amex LLC (``NYSE Amex''). In its order approving the acquisition,\7\ 
the Commission again noted that, ``Amex expects that the committees of 
the NYSE Euronext board of directors will perform for NYSE [Amex] the 
board committee functions relating to audit, governance and 
compensation.'' \8\
---------------------------------------------------------------------------

    \7\ Securities Exchange Act Release No. 58673 (September 29, 
2008), 73 FR 57707 (October 3, 2008) (SR-Amex-2008-62, SR-NYSE-2008-
60) (``NYSE Amex Approval Order'').
    \8\ NYSE Amex Approval Order, 73 FR at 57712. Note 66 following 
this language reiterates that, ``Each of these NYSE Euronext 
committees is composed solely of directors meeting the independence 
requirements of NYSE Euronext.''
---------------------------------------------------------------------------

The NYSE Euronext Audit Committee Will Become the Sole Committee To 
Handle All Audit Responsibilities for the Exchange
    Among the various U.S. consolidated subsidiary corporations of the 
Company, only the Exchange has an audit committee that is separate and 
apart from the NYSE Euronext Audit Committee. Moreover, in practice, 
the audit responsibilities of the NYSE Arca Audit Committee overlap 
with those of the NYSE Euronext Audit Committee because the latter 
reviews the financial condition of the Exchange as part of its audit 
responsibilities.
    Under its charter, the NYSE Euronext Audit Committee has broad 
authority to assist the board of directors of the Company in its 
oversight of (a) the integrity of the Company's financial statements 
and internal controls, (b) compliance with legal and regulatory 
requirements, including the Company's ethical standards and policies, 
(c) the qualifications, independence and performance of the Company's 
independent auditor, (d) the process relating to internal risk 
management and control systems, (e) the performance of the Company's 
internal audit function and its independent auditors, and (f) the 
Company's tax policy. It also prepares the Audit Committee report to 
shareholders for inclusion in the Company's annual proxy statement. 
Because the Company's financial statements are prepared on a 
consolidated basis that includes the financial results of all of the 
Company's subsidiaries, including the Exchange and any subsidiaries of 
the Exchange, the NYSE Euronext Audit Committee's purview necessarily 
includes these subsidiaries. The committee is composed of at least 
three members, all of whom must meet the independence and experience 
requirements of the New York Stock Exchange and Rule 10A-3 under the 
Securities Exchange Act of 1934 (the ``Act''). Each member of the 
committee must be financially literate or become financially literate 
within a reasonable time after appointment to the committee, and at 
least one member must have accounting or related financial management 
expertise.
    By contrast, the NYSE Arca Audit Committee has a more limited role, 
focused solely on the exchange entity and its subsidiary NYSE Arca 
Equities,

[[Page 26306]]

Inc. which operates as a facility of the Exchange. As described in 
current Exchange Rule 3.3(a)(3)(B), the primary functions of that audit 
committee are (i) to conduct an annual review with the independent 
auditors, to determine the scope of their examination and the cost 
thereof, (ii) to periodically review with the independent auditors and 
the internal auditor the Exchange's internal controls and the adequacy 
of the internal audit program, (iii) to review the annual reports 
submitted both internally and externally, and take such action with 
respect thereto as it may deem appropriate, and (iv) to recommend to 
the board independent public accountants as auditors of the Exchange 
and its subsidiaries. However, to the extent that the committee 
performs these functions, its activities are duplicative of the 
activities of the NYSE Euronext Audit Committee which, for example, is 
specifically responsible under its charter for appointing, overseeing 
the work of, evaluating the qualifications, performance and 
independence of, and determining compensation for, the independent 
auditor. That responsibility also specifically includes reviewing and 
pre-approving the scope and general extent of the auditor's services 
and the estimated fees for those services. The independent auditor, in 
turn, is required to report directly to the NYSE Euronext Audit 
Committee.
    Similarly, the NYSE Euronext Audit Committee is responsible under 
its charter for assessing the effectiveness of the internal audit 
function and reviewing with management and the independent auditor any 
major issues as to the adequacy of the Company's internal risk 
management and internal controls. The NYSE Euronext Audit Committee is 
also charged with meeting to review and discuss with management and the 
independent auditor the Company's annual audited financial statements, 
quarterly financial statements prior to the filing of Form 10-Q, and 
significant financial reporting issues and judgments made in connection 
with the preparation of the financial statements. These specific 
responsibilities of the NYSE Euronext Audit Committee, as well as 
numerous others in its charter relating to oversight of both the 
independent and internal auditors, financial statement and disclosure 
matters, and corporate oversight, result in the responsibilities of the 
NYSE Arca Audit Committee being fully duplicated by the 
responsibilities of the NYSE Euronext Audit Committee.
    To make the practices of the Exchange consistent with the company-
wide corporate practices of the Company, the Exchange is now proposing 
to delete NYSE Arca Rule 3.3(a)(3) to eliminate the NYSE Arca Audit 
Committee and thereby formally establish the NYSE Euronext Audit 
Committee as the sole committee responsible for audit functions with 
regard to the Exchange. As has been the case since the creation of the 
NYSE Euronext Audit Committee, it will continue to be composed at all 
times of independent directors and will continue to review the 
financial condition of the Exchange as part of its oversight of the 
financial processes of the Company and of each of its consolidated 
subsidiaries.
    NYSER, a not-for-profit indirect subsidiary of the Company, has 
broad authority to oversee the regulatory activities of the Exchange 
and the other self-regulatory organizations whose ultimate parent is 
the Company, through delegated authority and regulatory services 
agreements. It is the practice of the Company's Global Risk and Audit 
Services Department (``RAS''), which performs internal audit functions, 
to report to the board of directors of NYSER (``NYSER Board'') on all 
internal audit matters relating to the Exchange's regulatory 
responsibilities. The Exchange represents that, to ensure that NYSER 
has the appropriate authority to oversee RAS's activities with respect 
to the Exchange's regulatory responsibilities pursuant to the 
provisions of the RSA between the Exchange and NYSER as described 
below, RAS's written procedures will be amended to stipulate that the 
NYSER Board may, at any time, request that RAS conduct an audit of a 
matter of concern to it and report the results of the audit both to the 
NYSER Board and the NYSE Euronext Audit Committee. The CRO of the 
Exchange, whose role is described below in more detail and who attends 
meetings of both the NYSER Board and the Exchange's board of directors, 
would be in attendance at any meeting of the NYSER Board at which the 
results of any such audit would be reported by RAS. The CRO would 
discuss these audit results with each of the NYSER Board and the 
Exchange's board of directors, as appropriate. NYSER also provides 
reports on regulatory matters at Exchange board meetings. The Exchange 
retains the authority to direct NYSER to request that RAS conduct such 
an audit of a matter of concern to it.
The NYSE Euronext Human Resources and Compensation Committee Will 
Become the Sole Committee To Handle All Human Resources and 
Compensation Responsibilities for the Exchange
    The Exchange also currently has a separate Compensation Committee 
whose assigned responsibilities with respect to compensation and 
personnel matters overlap with the broader mandate of the NYSE Euronext 
Human Resources and Compensation Committee. The latter committee is 
charged under its charter with discharging the responsibilities of the 
Company's board of directors relating to human resources policies and 
procedures, executive benefit plans, and compensation and compensation 
disclosure with respect to the Company.
    The primary functions of the NYSE Arca Compensation Committee, as 
described in current Exchange Rule 3.3(a)(4)(B), are relatively 
limited. The committee is required to (i) review and approve corporate 
goals and objectives relevant to the Exchange CEO's compensation, (ii) 
evaluate the CEO's performance in light of those goals and objectives, 
(iii) set the CEO's compensation level based on this evaluation, and 
(iv) make recommendations to the board of the Exchange with respect to 
the design of incentive compensation and equity-based plans. The first 
three of these functions relate to the determination of the Exchange 
CEO's compensation. However, the Exchange CEO, as an executive officer 
of the Company, already has his/her compensation established by the 
Company's board of directors, in conjunction with recommendations from 
the NYSE Euronext Human Resources and Compensation Committee.
    Regarding the fourth and last primary function of the NYSE Arca 
Compensation Committee as stated in Exchange Rule 3.3(a)(4)(B), 
involving recommendations to the Exchange board ``with respect to the 
design of incentive compensation and equity-based plans,'' the charter 
of the NYSE Euronext Human Resources and Compensation Committee states 
that a primary responsibility of that committee of the Company is to 
``[r]eview and make recommendations to the Board with respect to 
incentive-compensation and equity based plans that are subject to Board 
approval.'' The direct responsibility of the NYSE Euronext Human 
Resources and Compensation Committee for making such recommendations to 
the board of the Company is also a requirement for the

[[Page 26307]]

Company as a listed company, as provided in Section 303A.05 of the NYSE 
Listed Company Manual. Because there is no incentive compensation nor 
any equity-based plans for employees other than as determined at the 
parent company level, the NYSE Arca Compensation Committee is precluded 
from exercising its stated function of making such recommendations to 
the Exchange board (which could not act on any such recommendations in 
any case).
    To make the practices of the Exchange consistent with the company-
wide corporate practices of the Company, the Exchange is now proposing 
to delete NYSE Arca Rule 3.3(a)(4) to eliminate the NYSE Arca 
Compensation Committee and thereby formally establish the NYSE Euronext 
Human Resources and Compensation Committee as the sole committee 
responsible for human resources and compensation functions with regard 
to the Exchange as anticipated in those Commission orders referenced 
herein. As has been the case since the creation of the NYSE Euronext 
Human Resources and Compensation Committee, it will continue to be 
composed at all times of independent directors and will continue to 
address human resources policies and procedures, executive benefit 
plans, and compensation and compensation disclosure with respect to the 
Company and of each of its consolidated subsidiaries, including the 
Exchange (and excepting, with respect to certain items, NYSE 
Regulation, Inc.).
The NYSER Board and the Board of Directors of the Exchange Will Each 
Exercise a Portion of the Current Responsibilities of the ROC, and the 
Board of Directors of the Exchange Will Retain Ultimate Legal 
Responsibility for the Regulation of Its Permit Holders and Its Market
    The proposed elimination of the ROC will result in the exercise of 
the current formal responsibilities of that position being divided 
between the NYSER Board and the board of directors of the Exchange as 
described below. Those responsibilities are to ensure (i) the 
independence of Exchange regulation, (ii) adequate resources for the 
Exchange to properly fulfill its SRO regulatory obligations and (iii) 
that Exchange management fully supports the execution of the regulatory 
process. The Exchange believes that the performance of its regulatory 
functions following elimination of the ROC will closely parallel the 
current performance by NYSE Amex of its regulatory functions as 
previously considered and approved by the Commission.
    In the NYSE Amex Approval Order, the Commission noted that ``upon 
the consummation of the Mergers and the Related Transactions, NYSE 
[Amex] will no longer have a Regulatory Oversight Committee (``ROC''). 
Instead, NYSE [Amex] will contract with NYSE Regulation to perform all 
of its regulatory functions. The Commission believes that it is 
consistent with the Act for NYSE [Amex] to eliminate its ROC and 
instead contract with NYSE Regulation to perform its regulatory 
functions because the governance of NYSE Regulation will provide a 
comparable level of independence that a ROC would provide.'' \9\ The 
Exchange has previously entered into the RSA with NYSER to perform all 
of the Exchange's regulatory functions on the Exchange's behalf. The 
Financial Industry Regulatory Authority (``FINRA'') performs some of 
the regulatory functions contracted out to NYSER pursuant to a separate 
multi-party regulatory services agreement with FINRA. These regulatory 
contractual arrangements closely parallel the regulatory arrangements 
for NYSE Amex that the Commission reviewed and approved in the NYSE 
Amex Approval Order.\10\
---------------------------------------------------------------------------

    \9\ NYSE Amex Approval Order, 73 FR at 57717.
    \10\ See id. [``First, NYSE [Amex] will enter into a regulatory 
contract with NYSE Regulation * * * under which NYSE [Amex] will 
contract with NYSE Regulation to perform all of NYSE [Amex]'s 
regulatory functions on NYSE [Amex]'s behalf. However, FINRA may 
perform some of the regulatory functions contracted out to NYSE 
Regulation pursuant to a separate multi-party regulatory services 
agreement * * *. Notwithstanding these regulatory contracts, NYSE 
[Amex] will retain ultimate legal responsibility for the regulation 
of its members and its market.''] The Exchange represents that its 
contractual arrangements with NYSER and FINRA with respect to the 
performance of its regulatory functions are fully equivalent to the 
contractual arrangements that NYSE Amex has entered into with NYSER 
and FINRA as described in this footnote, and that the Exchange 
retains ultimate legal responsibility for the performance of its 
regulatory functions and the ability to take action to assure the 
performance of those functions.
---------------------------------------------------------------------------

    Regarding the ROC's current formal responsibility to ensure the 
independence of Exchange regulation, the Exchange notes the 
Commission's comment cited in the prior paragraph that the governance 
of NYSER will provide a comparable level of independence as that of a 
ROC. The Exchange represents that the aforementioned statement in the 
NYSE Amex Approval Order will be equally valid with respect to 
regulation of the Exchange because of the very similar regulatory 
contractual arrangements.\11\ Further, regarding the ROC's current 
formal responsibility to ensure adequate resources for the Exchange to 
properly fulfill its SRO regulatory obligations, the Exchange notes the 
Commission's statement in the NYSE Amex Approval Order that ``NYSE 
Euronext has agreed to provide adequate funding to NYSE Regulation to 
conduct its regulatory activities with respect to NYSE, NYSE Arca and * 
* * NYSE [Amex].'' \12\ That funding arrangement led the Commission to 
state that ``the Commission believes that NYSE Euronext's commitment to 
provide adequate funding to NYSE Regulation to conduct its regulatory 
activities is designed to ensure that NYSE [Amex] can perform its 
obligations under the Act.'' \13\ Because that funding commitment by 
NYSE Euronext is also applicable by its terms to the Exchange, the 
Commission's conclusion in the preceding sentence regarding adequate 
funding of NYSER for the conduct of regulatory activities is equally 
valid as applied to the Exchange's SRO regulatory obligations.
---------------------------------------------------------------------------

    \11\ Some of the specific reasons cited by the Commission in 
support of its conclusion that independence of SRO regulation would 
exist under NYSE Amex's contractual arrangements with NYSER are that 
``all directors on the Board of NYSE Regulation (other than its CEO) 
are, and will be, required to be independent of management of NYSE 
Euronext and its subsidiaries, as well as of NYSE, NYSE Arca, and 
NYSE [Amex] members and listed companies.'' The Commission further 
noted that, ``In addition, a majority of the members of the NYSE 
Regulation board must be directors that are not also directors of 
NYSE Euronext.'' See id.
    \12\ Id.
    \13\ Id.
---------------------------------------------------------------------------

    As with NYSE Amex, and notwithstanding these regulatory agreements, 
the Exchange retains ultimate legal responsibility for the regulation 
of its permit holders \14\ and its market and has full authority to 
take action to assure that its regulatory responsibilities are met. In 
addition, the Exchange board of directors will directly assume the 
ROC's current formal responsibility to ensure that Exchange management 
fully supports the execution of the regulatory process.
---------------------------------------------------------------------------

    \14\ Permit holders at the Exchange are ``members'' of the 
Exchange as that term is defined in Section 3 of the Act.
---------------------------------------------------------------------------

    In connection with the foregoing arrangements, as stated above, the 
Exchange retains the authority to direct NYSER and FINRA to take any 
action necessary to fulfill the Exchange's statutory and self-
regulatory obligations, and NYSER provides a report on regulatory 
matters at each meeting of the Exchange board. The Exchange board 
appoints its CRO who is also an officer of NYSER and reports to the 
Chief Executive Officer of NYSER. The CRO is also an officer of the 
Exchange, and in that capacity is charged with reporting on regulatory 
matters to the Exchange

[[Page 26308]]

board. These arrangements also closely track the current arrangements 
for NYSE Amex that were considered by the Commission in issuing the 
NYSE Amex Approval Order \15\ and will assure that the Exchange board 
receives reports on regulatory matters that are sufficient to enable it 
to take action as necessary in the performance of its regulatory 
responsibilities.
---------------------------------------------------------------------------

    \15\ See NYSE Amex Approval Order, 73 FR at 57717. [``NYSE 
[Amex] also will retain the authority to direct NYSE Regulation, 
FINRA, or any other SRO that provides regulatory services to take 
any action necessary to fulfill NYSE [Amex]'s statutory and self-
regulatory obligations. In addition, the NYSE [Amex] Board will 
appoint a CRO, who will be an officer of NYSE [Amex] and will report 
directly to the NYSE [Amex] Board.'']
---------------------------------------------------------------------------

    As a consequence of realigning its regulatory arrangements to 
closely match those of NYSE Amex, which arrangements were previously 
considered and approved by the Commission, the Exchange believes that 
the proposed rule change is non-controversial and presents no new or 
novel issues. In the NYSE Amex Approval Order, the Commission found 
that NYSE Amex's proposed regulatory structure ``is consistent with the 
Act, including Section 6(b)(1) of the Act * * *'' and further stated 
that, ``The Commission believes that it is consistent with the Act to 
allow NYSE [Amex] to contract with NYSE Regulation and FINRA to perform 
its regulatory functions, including its examination, enforcement, and 
disciplinary functions.'' \16\ The Commission also determined that NYSE 
Amex's ``proposal to appoint a CRO reporting to the NYSE [Amex] Board 
will further NYSE [Amex]'s ability to satisfy these self-regulatory 
obligations consistent with Section 6(b)(1) of the Act.'' \17\ Because 
all of the same elements will be present in the Exchange's regulatory 
arrangements following the elimination of the ROC, the Exchange 
believes that the proposed rule change is fully consistent with the 
Act.
---------------------------------------------------------------------------

    \16\ NYSE Amex Approval Order, 73 FR at 57717.
    \17\ Id.
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \18\ of 
the Act,\19\ in general, and furthers the objectives of Section 6(b)(1) 
\20\ of the Act, which requires a national securities exchange to be so 
organized and have the capacity to carry out the purposes of the Act 
and to comply, and to enforce compliance by its members and persons 
associated with its members, with the provisions of the Act. The 
proposed rule change is also consistent with, and furthers the 
objectives of Section 6(b)(5) \21\ of the Act, in that it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanisms of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78.
    \20\ 15 U.S.C. 78f(b)(1).
    \21\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    More specifically, the Exchange believes that the proposed rule 
change will promote efficiency and just and equitable principles of 
trade by simplifying the corporate structure of the Exchange through 
allowing the Exchange to eliminate two board committees whose 
responsibilities overlap with, and are adequately handled by, 
corresponding committees of the board of directors of the Exchange's 
ultimate parent. This will allow directors of the Exchange to focus 
their attention on matters falling directly within the purview of the 
Exchange's board. Similarly, elimination of the ROC will further 
simplify the corporate structure of the Exchange, thereby promoting 
efficiency, by aligning the structure relating to the performance of 
the regulatory functions of the Exchange more closely with the 
structure of NYSE Amex relating to its performance of those same 
functions. As discussed above, the Commission has previously determined 
that the regulatory structure of NYSE Amex is consistent with the Act, 
including Section 6(b)(1) of the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received with respect 
to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which NYSE consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml; or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2010-31 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2010-31. This 
file number should be included on the subject line if e-mail 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 Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Room, on 
official business days between the hours of 10 a.m. and 3 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; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All

[[Page 26309]]

submissions should refer to File Number SR-NYSEArca-2010-31 and should 
be submitted on or before June 1, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-11094 Filed 5-10-10; 8:45 am]
BILLING CODE 8010-01-P

