
[Federal Register Volume 77, Number 152 (Tuesday, August 7, 2012)]
[Notices]
[Pages 47161-47162]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19217]



[[Page 47161]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67564; File Nos. SR-NYSE-2012-17; SR-NYSEArca-2012-59; 
SR-NYSEMKT-2012-07]


Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE 
Arca, Inc.; NYSE MKT LLC; Order Granting Approval of Proposed Rule 
Changes Amending Independence Policy of the Board of Directors of NYSE 
Euronext and Creating a New Independence Policy for Boards of Directors 
of the New York Stock Exchange LLC, NYSE MKT LLC, NYSE Regulation, 
Inc., and NYSE Market, Inc.

August 1, 2012.

I. Introduction

    On June 6, 2012, New York Stock Exchange LLC (``Exchange''), and on 
June 8, 2012, NYSE Arca, Inc. (``NYSE Arca''), and NYSE MKT LLC (``NYSE 
MKT'' and, together with the Exchange and NYSE Arca, the ``NYSE 
Exchanges''), filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities 
Exchange Act of 1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ 
proposed rule changes amending the Independence Policy of the board of 
directors (the ``NYSE Euronext Board'') of NYSE Euronext (the ``NYSE 
Euronext Director Independence Policy'') and creating a new 
Independence Policy (the ``Regulated Subsidiary Director Independence 
Policy'') for each of the boards of directors of the Exchange, NYSE 
MKT, NYSE Regulation, Inc. (``NYSE Regulation''), and NYSE Market, Inc. 
(``NYSE Market'' and, together with NYSE Regulation, the Exchange, and 
NYSE MKT, the ``Regulated Subsidiaries''). The proposed rule changes 
were published for comment in the Federal Register on June 18, 2012.\4\ 
The Commission received no comment letters on the proposal.
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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\ See Securities Exchange Act Release Nos. 67185 (June 12, 
2011), 77 FR 36321 (SR-NYSE-2012-17); 67186 (June 12, 2012), 77 FR 
36307 (SR-NYSEArca-2012-59); 67184 (June 12, 2012), 77 FR 36324 (SR-
NYSEMKT-2012-07).
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    The Commission has reviewed carefully the proposed rule changes and 
finds that the proposed rule changes are consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\5\ In particular, the 
Commission finds that the proposed rule changes are consistent with 
Section 6(b) of the Act,\6\ which, among other things, requires a 
national securities exchange to be so organized and have the capacity 
to be able to carry out the purposes of the Act and to enforce 
compliance by its members and persons associated with its members with 
the provisions of the Act, the rules and regulations thereunder, and 
the rules of the exchange, and assure the fair representation of its 
members in the selection of its directors and administration of its 
affairs, and provide that one or more directors shall be representative 
of issuers and investors and not be associated with a member of the 
exchange, broker, or dealer. Section 6(b) of the Act \7\ also requires 
that the rules of the exchange 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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    \5\ In approving the proposed rule changes, the Commission has 
considered their impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b).
    \7\ Id.
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II. Discussion

NYSE Euronext Director Independence Policy

    Under the proposed rule changes, the NYSE Exchanges would amend the 
NYSE Euronext Director Independence Policy and create the Regulated 
Subsidiary Director Independence Policy.\8\ Under the proposed rule 
changes, the NYSE Euronext Director Independence Policy would be 
amended to reflect that (i) a majority (as opposed to 75%) of the NYSE 
Euronext Board would be required to be independent; (ii) executive 
officers of listed companies would no longer be prohibited from being 
considered independent for purposes of the NYSE Euronext Board; (iii) 
the ``additional independence requirements'' at the end of the current 
independence policy of NYSE Euronext, which provide that executive 
officers of foreign private issuers, executive officers of NYSE 
Euronext, and directors of affiliates of member organizations must 
together comprise no more than a minority of the total board, would be 
eliminated; (iv) references to certain European regulatory authorities 
would be updated, because their names have changed; (v) references to 
NYSE Alternext US LLC and NYSE Amex LLC would refer instead to NYSE MKT 
LLC, because of this entity's previous name changes; and (vi) footnote 
2 would be deleted because the NYSE Euronext Director Independence 
Policy would not be applicable to the Regulated Subsidiaries, each of 
which is proposed to have its own director independence policy.
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    \8\ In addition, the Exchange proposes to amend the Amended and 
Restated Bylaws of NYSE Euronext, the Amended and Restated Bylaws of 
NYSE Market, Inc., Third Amended and Restated Bylaws of NYSE 
Regulation, Inc., the Third Amended and Restated Operating Agreement 
of New York Stock Exchange LLC and the Second Amended and Restated 
Operating Agreement of NYSE MKT LLC to make certain conforming 
changes.
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    The Commission finds that these proposals, taken together, are 
consistent with the Act, particularly Section 6(b)(1),\9\ which 
requires an exchange to be so organized and have the capacity to carry 
out the purposes of the Act. The Commission previously considered and 
approved these changes to the NYSE Euronext Director Independence 
Policy in connection with the previously proposed combination of NYSE 
Euronext and Deutsche B[ouml]rse AG (the ``Combination'').\10\ The 
Commission notes that a majority of NYSE Euronext's Board would still 
need to be independent. In addition, the Commission notes that as a 
company listed on the Exchange, NYSE Euronext's board of directors must 
also satisfy the independence requirements applicable to a listed 
company's board of directors as contained in the Exchange's Listed 
Company Manual. Further, the Commission notes that there are 
requirements in the NYSE Euronext Director Independence Policy that 
independent directors may not be or have been within the last year, and 
may not have an immediate family member who is or within the last year 
was, a member of the Exchange, NYSE Arca, or NYSE MKT.
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    \9\ 15 U.S.C. 78f(b)(1).
    \10\ See Securities Exchange Act Release No. 34-66171 (January 
17, 2012) File Nos. SR-EDGA-2011-34; SR-EDGX-2011-33; SR-ISE-2011-
69; SR-NYSE-2011-51; SR-NYSEAmex-2011-78; SR-NYSEArca-2011-72), 77 
FR 3297 (January 23, 2012). The Combination was not completed and, 
therefore, the proposed rule changes conditionally approved by the 
Commission did not become effective. See, e.g., Securities Exchange 
Act Release No. 66662 (March 26, 2012), 77 FR 19396 (March 30, 2012) 
(SR-NYSE-2012-08).
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Regulated Subsidiary Director Independence Policy

    The Regulated Subsidiary Director Independence Policy to be adopted 
by each of the Exchange, NYSE Market, NYSE Regulation and NYSE MKT 
under the proposed rule changes would be substantially similar to the 
current Independence Policy of the NYSE Euronext Board, except that 
certain conforming changes would be made,

[[Page 47162]]

including the deletion of provisions that currently apply only to NYSE 
Euronext directors and expressly do not apply to directors of these 
Regulated Subsidiaries. In particular, (i) references to NYSE Euronext 
would refer instead to the relevant Regulated Subsidiary; (ii) the 
requirement that at least three-fourths of the directors must be 
independent would be deleted, since the organizational documents of 
these Regulated Subsidiaries contain the independence and other 
qualification requirements for directors; (iii) the requirement in the 
Independence Policy of NYSE Euronext that the board consider the 
special responsibilities of a director in light of NYSE Euronext's 
ownership of U.S. regulated subsidiaries and European regulated 
entities would be deleted, because unlike NYSE Euronext, the Regulated 
Subsidiaries are not holding companies; (iv) the requirement for 
directors to inform the Chairman of the Nominating and Governance 
Committee of certain relationships and interests would be deleted, 
since the boards of these Regulated Subsidiaries do not have a 
Nominating and Governance Committee, except that in the Regulated 
Subsidiary Director Independence Policy to be adopted by NYSE 
Regulation, this provision would reference the Nominating and 
Governance Committee of NYSE Regulation; (v) references to NYSE 
Alternext, Inc. and NYSE Amex LLC would refer instead to NYSE MKT LLC, 
because of this entity's previous name changes; (vi) because the 
current Independence Policy of NYSE Euronext provides that a director 
of an affiliate of a Member Organization'' (as defined in the Regulated 
Subsidiary Director Independence Policy) cannot qualify as an 
independent director of these Regulated Subsidiaries, the conflicting 
language stating that a director of an affiliate of a Member 
Organization shall not per se fail to be independent would be deleted; 
and (vii) because language in the current Independence Policy of NYSE 
Euronext provides that an executive officer of an issuer whose 
securities are listed on a NYSE Exchange cannot qualify as an 
independent director of these Regulated Subsidiaries, the conflicting 
language providing an exception applicable only to NYSE Euronext 
directors would be deleted. In addition, the ``additional independence 
requirements'' at the end of the current Independence Policy of NYSE 
Euronext, which provides that executive officers of foreign private 
issuers, executive officers of NYSE Euronext and directors of 
affiliates of member organizations must together comprise no more than 
a minority of the total board, would be eliminated. This provision is 
designed to ensure that although persons who are directors of an 
affiliate of a Member Organization or who are executive officers of a 
``foreign private issuer'' listed on a NYSE Exchange may in some 
circumstances qualify as independent for purposes of NYSE Euronext 
board membership, such persons may not, together with executive 
officers of NYSE Euronext, constitute more than a minority of the total 
NYSE Euronext directors. Under the proposed Regulated Subsidiary 
Director Independence Policy, such persons could not be deemed to be 
independent directors of the relevant Regulated Subsidiary and, 
accordingly, this limitation on the number of such persons who may 
serve on the board is unnecessary.
    The Commission finds that these proposals, taken together, are 
consistent with the Act, particularly Section 6(b)(1),\11\ which 
requires an exchange to be so organized and have the capacity to carry 
out the purposes of the Act. Further, the Commission notes that the 
NYSE Exchanges are not proposing to change any of the provisions 
relating to (i) the fair representation of the members of each of the 
NYSE Exchanges in the selection of its directors and administration of 
its affairs or (ii) one or more of the directors of each of the NYSE 
Exchanges being representative of issuers and investors and not being 
associated with a member of the exchange or with a broker dealer, each 
as required under Section 6(b)(3) of the Act.\12\
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    \11\ 15 U.S.C. 78f(b)(1).
    \12\ 15 U.S.C. 78f(b)(3).
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III. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with the Act and the rules and regulations 
thereunder applicable to a national securities exchange.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\13\ that the proposed rule changes (SR-NYSE-2012-17; SR-NYSEArca-2012-
59; SR-NYSEMKT-2012-07), are approved.
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    \13\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19217 Filed 8-6-12; 8:45 am]
BILLING CODE 8011-01-P


