
[Federal Register Volume 79, Number 237 (Wednesday, December 10, 2014)]
[Notices]
[Pages 73362-73364]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-28878]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73740; File Nos. SR-NYSE-2014-53; SR-NYSEMKT-2014-83; 
SR-NYSEArca-2014-112]


Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE 
MKT LLC; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as 
Modified by Amendment No. 1 Thereto, in Connection With the Proposed 
Termination of the Amended and Restated Trust Agreement, Dated as of 
November 13, 2013 and Amended on June 2, 2014 By and Among NYSE 
Holdings LLC, a Delaware Limited Liability Company, NYSE Group, Inc., a 
Delaware Corporation, Wilmington Trust Company, as Delaware Trustee, 
and Each of Jacques de Larosi[egrave]re de Champfeu, Alan Trager and 
John Shepard Reed, as Trustees

December 4, 2014.

I. Introduction

    On October 8, 2014, each of New York Stock Exchange LLC 
(``Exchange''), NYSE MKT LLC (``NYSE MKT''), and NYSE Arca, Inc. 
(``NYSE Arca'' and, with the Exchange and NYSE MKT, the ``NYSE 
Exchanges''), 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\ 
proposed rule changes in connection with the proposed termination of 
the Amended and Restated Trust Agreement, dated as of November 13, 2013 
and amended on June 2, 2014 (the ``Trust Agreement''), by and among 
NYSE Holdings LLC, a Delaware limited liability company (``NYSE 
Holdings''), NYSE Group, Inc., a Delaware corporation (``NYSE Group''), 
Wilmington Trust Company, as Delaware Trustee, and each of Jacques de 
Larosi[egrave]re de Champfeu, Alan Trager and John Shepard Reed, as 
Trustees. The proposed rule changes were published for comment in the 
Federal Register on October 22, 2014.\3\ The Commission did not receive 
any comment letters on the proposal. On October 21, 2014, the NYSE 
Exchanges filed Amendment No. 1 to the proposed rule changes.\4\ This 
order approves the proposed rule changes as modified by Amendment No. 1 
thereto.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release Nos. 73373 (October 16, 
2014), 79 FR 63191 (SR-NYSE-2014-53); 73372 (October 16, 2014), 79 
FR 63201 (SR-NYSEMKT-2014-83); 73374 (October 16, 2014), 79 FR 63188 
(SR-NYSEArca-2014-112).
    \4\ In Amendment No. 1, the NYSE Exchanges made a technical and 
non-material correction to a statement in each filing regarding the 
ownership of NYSE Amex Options LLC by ICE. The Commission notes that 
the NYSE Exchanges submitted a comment letter to each filing on 
October 24, 2014 attaching Amendment No. 1, and, consequently, 
Amendment No. 1 is available in the public comment files for SR-
NYSE-2014-53, SR-NYSEMKT-2014-83, and SR-NYSEArca-2014-112 on the 
Commission's Web site. Because Amendment No. 1 is technical in 
nature, the Commission is not required to publish it for public 
comment.
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II. Description of the Proposal

    The NYSE Exchanges seek approval for their 100% direct parent, NYSE 
Group, and its 100% indirect parent, NYSE Holdings, to terminate the 
Trust Agreement.\5\ The NYSE Exchanges believe that the regulatory 
considerations that led to the implementation of the Trust Agreement in 
2007 are now moot as a result of the sale by Intercontinental Exchange, 
Inc., a Delaware corporation (``ICE''), of Euronext N.V. (``Euronext'') 
in June 2014 and certain changes in the corporate governance of ICE, 
ICE Holdings and NYSE Holdings that occurred upon such sale.
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    \5\ ICE, a public company listed on the Exchange, owns 100% of 
Intercontinental Exchange Holdings, Inc., a Delaware corporation 
(``ICE Holdings''), which in turn owns 100% of NYSE Holdings. 
Through ICE Holdings, NYSE Holdings and NYSE Group, ICE indirectly 
owns (1) 100% of the equity interest of three registered national 
securities exchanges and self-regulatory organizations, the NYSE 
Exchanges and (2) 100% of the equity interest of NYSE Market (DE), 
Inc. (``NYSE Market''), NYSE Regulation, Inc. (``NYSE Regulation''), 
NYSE Arca L.L.C. and NYSE Arca Equities, Inc. ICE also indirectly 
owns a majority interest in NYSE Amex Options LLC. See Exchange Act 
Release No. 70210 (August 15, 2013), 78 FR 51758 (August 21, 2013) 
(SR-NYSE-2013-42; SR-NYSEMKT-2013-50; SR-NYSEArca-2013-62) 
(approving proposed rule change relating to a corporate transaction 
in which NYSE Euronext will become a wholly owned subsidiary of 
IntercontinentalExchange Group, Inc.).
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    In 2007, NYSE Group, which is the 100% owner of the NYSE Exchanges, 
combined with Euronext (the ``Combination''). The new parent company 
formed in the Combination, NYSE Euronext, operated several regulated 
entities in the United States and various jurisdictions in Europe. In 
the Commission's notice relating to the proposed Combination, the NYSE 
Exchanges emphasized the importance of continuing to regulate 
marketplaces locally:

    A core aspect of the structure of the Combination is continued 
local regulation of the marketplaces. Accordingly, the Combination 
is premised on the notion that . . . [c]ompanies listing their 
securities only on markets operated by Euronext and its subsidiaries 
will not become newly subject to U.S. laws or regulation by the SEC 
as a result of the Combination, and companies listing their 
securities only on the Exchange or NYSE Arca, will not become newly 
subject to European rules or regulation as a result of the 
Combination.\6\
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    \6\ See Exchange Act Release No. 55026 (Dec. 29, 2006) (SR-NYSE-
2006-120), 72 FR 814, 816-17 (January 8, 2007) (the ``NYSE Euronext 
Notice''). NYSE Euronext acquired NYSE MKT, the third of the NYSE 
Exchanges, in 2008.

    In connection with obtaining regulatory approval of the 
Combination, NYSE Euronext implemented certain special arrangements 
consisting of two standby structures, one involving a Dutch foundation 
(Stichting) and one involving a Delaware trust. The Dutch foundation 
was empowered to take actions to mitigate the effects of any material 
adverse change in U.S. law that had an ``extraterritorial'' impact on 
non-U.S. issuers listed on Euronext markets, non-U.S. financial 
services firms that were members of Euronext markets or holders of 
exchange licenses with respect to the Euronext markets. The Delaware 
trust was empowered to take actions to mitigate the effects of any 
material adverse change in European law that had an 
``extraterritorial'' impact on the non-European issuers listed on NYSE 
Group securities exchanges, non-European financial services firms that 
were members of any NYSE Group securities market or holders of exchange 
licenses with respect to the NYSE Group securities exchanges.\7\
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    \7\ An explanation of the terms of the Dutch foundation and the 
Delaware trust is included in the NYSE Euronext Notice. Subsequent 
modifications to the arrangements, to the extent relevant to the 
proposed rule change, are described in the Notices.
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    The Dutch foundation and the Delaware trust remained in effect 
after the merger of ICE Holdings (then known as 
IntercontinentalExchange, Inc.) and NYSE Euronext in 2013 under ICE 
(then known as IntercontinentalExchange Group, Inc.) as a new public 
holding company. However, in connection with ICE's announced plan to 
sell the Euronext securities exchanges in an initial public offering, 
the Dutch Ministry of Finance permitted modifications of the terms of 
the governing document of the Dutch foundation under which the powers 
of the Dutch foundation would cease to apply to ICE and its affiliates 
at such time as ICE ceased to hold a ``controlling interest'' in 
Euronext, with ``controlling interest'' defined by reference to the 
definition of ``control'' under Rule 10 of the International Financial 
Reporting Standards (``IFRS 10'').\8\ In June 2014, ICE announced that

[[Page 73363]]

it had sold all but approximately 6% of the ownership interest in 
Euronext in an underwritten public offering outside the United 
States.\9\ As stated in the Notices, upon ICE's application, the Dutch 
Ministry of Finance confirmed on July 16, 2014 that the conditions to 
the cessation of the application of the Dutch foundation to ICE had 
been satisfied or waived.\10\ As a result, the NYSE Exchanges represent 
that ICE and its subsidiaries are no longer subject to the provisions 
of the Dutch foundation.
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    \8\ Excerpts from the Further Amended and Restated Governance 
and Option Agreement, dated March 21, 2014, among the Dutch 
foundation, Euronext Group N.V. and ICE are attached to the Notices 
as Exhibit 5C.
    \9\ ICE's press release dated June 24, 2014 is available at the 
following link: http://ir.theice.com/investors-and-media/press/press-releases/press-release-details/2014/Intercontinental-Exchange-Announces-Closing-of-Euronext-Initial-Public-Offering/default.aspx.
    \10\ An English translation provided by the NYSE Exchanges of 
the Dutch Ministry of Finance's letter is attached to the Notices as 
Exhibit 5D.
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    In the 2013 merger, NYSE Euronext was succeeded by the entity now 
known as NYSE Holdings, which is currently a party to the Trust 
Agreement. At that time, references to the nominating and governance 
committee of the board of directors of NYSE Euronext, which selected 
the Trustees of the Delaware trust, were replaced by references to the 
nominating and governance committee of the board of directors of 
ICE.\11\ Other provisions of the Trust Agreement are substantially 
unchanged.\12\
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    \11\ See Exchange Act Release No. 70210 (August 15, 2013), 78 FR 
51758 (August 21, 2013) (SR-NYSE-2013-42; SR-NYSEMKT-2013-50; SR-
NYSEArca-2013-62).
    \12\ See Exchange Act Release No. 72158 (May 13, 2014) (SR-NYSE-
2014-23), 79 FR 28784 (May 19, 2014) (notice of filing and immediate 
effectiveness of proposed rule change relating to name changes of 
the Exchange's ultimate parent and revising Trust Agreement to 
reflect name changes of ICE and ICE Holdings).
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    In connection with the Combination of NYSE Group and Euronext in 
2007 and the establishment of the Dutch foundation and the Delaware 
trust, the Certificate of Incorporation and Bylaws of NYSE Euronext 
included several provisions relating to representation of European 
interests on the board of directors and other provisions requiring the 
board to give due consideration to European regulatory requirements and 
the interests of identified categories of European stakeholders. These 
provisions are summarized in the NYSE Euronext Notice. Each such 
provision was subject to automatic revocation in the event that NYSE 
Euronext no longer held a controlling interest in Euronext or certain 
of its subsidiaries. For this purpose, ``controlling interest'' was 
defined to mean 50% or more of the outstanding shares of each class of 
voting securities and of the combined voting power of outstanding 
voting securities entitled to vote generally in the election of 
directors. Substantially identical provisions were added to the 
Certificate of Incorporation and Bylaws of ICE and ICE Holdings, and 
were retained in the Operating Agreement of NYSE Holdings, when ICE 
acquired NYSE Euronext in 2013, except that the ``controlling 
interest'' test was modified to become a ``control'' test under IFRS 
10, as described above with respect to the Dutch foundation. As a 
result of the initial public offering of Euronext, ICE has established 
that it no longer controls Euronext within the meaning of IFRS 10, and 
the provisions of the constituent documents of ICE, ICE Holdings and 
NYSE Holdings have automatically and without further action become void 
and are of no further force and effect.
    Termination of the Delaware trust would be implemented through a 
unanimous written consent of all parties to, or otherwise bound by, the 
Trust Agreement.\13\ The proposed rule changes and exhibits thereto 
contain modifications to the corporate governance documents of NYSE 
Holdings, NYSE Group, the Exchange, NYSE MKT, NYSE Market and NYSE 
Regulation that delete references to the Delaware trust and make 
related conforming changes thereto.\14\
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    \13\ A form of unanimous written consent of all parties to, or 
otherwise bound by, the Trust Agreement resolving that the Delaware 
trust be terminated is attached to the Notices as Exhibit 5B.
    \14\ In particular, the NYSE Exchanges propose to amend: (1) The 
Fifth Amended and Restated Limited Liability Company Agreement of 
NYSE Holdings to eliminate the definition of the term ``Trust'' in 
Section 1.1 and the references to the Delaware trust in Section 7.2; 
(2) the Third Amended and Restated Certificate of Incorporation of 
NYSE Group to eliminate references to the Delaware trust in Article 
IV, Section 4(a) and (b); (3) the Sixth Amended and Restated 
Operating Agreement of the Exchange to eliminate references to the 
Delaware trust in Section 3.03; (4) the Fifth Amended and Restated 
Operating Agreement of NYSE MKT to eliminate references to the 
Delaware trust in Section 3.03; (5) the Second Amended and Restated 
Certificate of Incorporation of NYSE Market to eliminate references 
to the Delaware trust in Article IV, Section 2; and (6) the Restated 
Certificate of Incorporation of NYSE Regulation to eliminate 
references to the Delaware trust in Article V.
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III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
changes are consistent with the requirements of Section 6 of the Act 
\15\ and the rules and regulations thereunder applicable to a national 
securities exchange.\16\ The Commission finds that the proposed rule 
changes are consistent with Section 6(b)(5) of the Act,\17\ which 
requires, among other things, that the exchanges' rules 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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    \15\ 15 U.S.C. 78f.
    \16\ Additionally, in approving these proposed rule changes, the 
Commission has considered the proposed rules' impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \17\ 15 U.S.C. 78f(b)(5).
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    The NYSE Exchanges believe that the regulatory considerations that 
led to the implementation of the Trust Agreement in 2007 have been 
mooted by the sale of Euronext in June 2014, the automatic revocation 
of corporate governance provisions applicable to ICE, ICE Holdings and 
NYSE Holdings that occurred upon such sale, and the NYSE Exchanges' 
representation that the Dutch foundation which functioned as a European 
analog to the Delaware trust, ceased to have any authority over ICE and 
its subsidiaries upon the closing of the sale of Euronext. In addition, 
the NYSE Exchanges represent that continuance of the Trust Agreement 
imposes administrative burdens and costs upon the exchanges and their 
affiliates that create impediments to a free and open market, and may 
cause investor uncertainty. In particular, according to the NYSE 
Exchanges, the Trust Agreement imposes administrative burdens on ICE 
and the nominating and governance committee of its board of directors, 
such as the need to periodically consider and vote on trustees; the 
need to consider whether any proposed action requires approval under 
the Trust Agreement and, if so, the obligation to prepare materials for 
consideration and vote by the Trustees; and the need to consider 
whether any proposed action requires an amendment to the Trust 
Agreement and, if so, the additional obligation to submit such 
amendment to the Commission for approval under Rule 19b-4.\18\ 
According to the NYSE Exchanges, the Trust Agreement also results in 
out-of-pocket costs to the exchanges and their affiliates including the 
fees of the individual Trustees and the Delaware Trustee as well as 
fees of counsel incurred in connection with review of proposed 
amendments and assistance with the Commission approval process.
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    \18\ 17 CFR 240.19b-4.
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    The Commission believes that the NYSE Exchanges' proposal to 
terminate the Trust Agreement is consistent with the requirements of 
Section 6(b)(5) of the Act \19\ because the proposed rule changes would 
be consistent with and facilitate a corporate governance

[[Page 73364]]

structure for the NYSE Exchanges that is 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. 
Furthermore, the termination of the Delaware trust may remove 
impediments to the operation of the NYSE exchanges by eliminating 
certain expenses and administrative burdens as well as the potential 
for uncertainty among analysts and investors as to the practical 
implications of the Delaware trust on the exchanges.
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    \19\ 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,\20\ that the proposed rule changes (SR-NYSE-2014-53; SR-NYSEMKT-
2014-83; SR-NYSEArca-2014-112), as modified by Amendment No. 1, be, and 
hereby are, approved.
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    \20\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-28878 Filed 12-9-14; 8:45 am]
BILLING CODE 8011-01-P


