
[Federal Register Volume 80, Number 8 (Tuesday, January 13, 2015)]
[Notices]
[Page 1687]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-00294]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 74010; File No. SR-NYSE-2014-62]


Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Rule Change Amending the Bylaws of New York Stock 
Exchange LLC's Wholly-Owned Subsidiary, NYSE Regulation, Inc., To 
Provide That Non-Affiliated Directors of NYSE Regulation, Inc. Would 
Not Be Removed for Cause If They Are Acting in Good Faith in Exercising 
Their Responsibilities as Directors Related to NYSE Regulation's 
Functions and Responsibilities Delegated to It Under the Delegation 
Agreement Between New York Stock Exchange LLC, NYSE Regulation and NYSE 
Market (DE), Inc.

January 7, 2015.
    On November 7, 2014, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') 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\ a 
proposed rule change to amend the Sixth Amended and Restated Bylaws 
(``Bylaws'') of its wholly-owned subsidiary, NYSE Regulation, Inc. 
(``NYSE Regulation''), to provide that non-affiliated directors of NYSE 
Regulation (``Non-Affiliated Directors'') \3\ would not be removed for 
cause if they are acting in good faith in exercising their 
responsibilities as directors related to NYSE Regulation's functions 
and responsibilities delegated to it under the delegation agreement 
between the Exchange, NYSE Regulation, and NYSE Market (DE), Inc. 
(``Delegation Agreement'').\4\ The proposed rule change was published 
for comment in the Federal Register on November 26, 2014.\5\ The 
Commission did not receive any comment letters regarding the proposal. 
This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Bylaws define ``Non-Affiliated Directors'' as U.S. 
Persons who are not members of the Board of Directors of 
Intercontinental Exchange, Inc. (``ICE'') and qualify as independent 
under NYSE Regulation's director independence policy. See Bylaws of 
NYSE Regulation, Inc., Article III, Section 1(A); see also 
Securities Exchange Act Release No. 67564 (August 1, 2012), 77 FR 
47161 (August 7, 2012) (SR-NYSE-2012-17; SR-NYSEArca-2012-59; SR-
NYSEMKT-2012-07) (approving NYSE Regulation's director independence 
policy). The Bylaws require that a majority of NYSE Regulation's 
Board of Directors consist of Non-Affiliated Directors. The 
remaining directors are NYSE Regulation's Chief Executive Officer 
(``CEO'') and members of the ICE Board of Directors that qualify as 
independent under NYSE Regulation's director independence policy. 
The Exchange represents that the Bylaws do not require any 
affiliated directors other than the NYSE Regulation CEO.
    \4\ See Securities Exchange Act Release No. 53382 (February 27, 
2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77) (approving 
NYSE's business combination with Archipelago Holdings, Inc.). The 
Exchange has posted a copy of the Delegation Agreement on its public 
Web site at www.nyse.com.
    \5\ See Securities Exchange Act Release No. 73657 (November 20, 
2014), 79 FR 70608 (SR-NYSE-2014-62).
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    The Exchange proposes to amend Article III, Section 4 of the Bylaws 
to provide that Non-Affiliated Directors would not be removed for cause 
if they are acting in good faith in exercising their responsibilities 
as directors related to the functions and responsibilities of NYSE 
Regulation delegated to it under the Delegation Agreement. The Exchange 
also proposes to make a conforming change to the Bylaws so that the 
title of the Bylaws would read ``Seventh Amended and Restated Bylaws of 
NYSE Regulation, Inc.''
    Currently, Article III, Section 4 of the Bylaws provides that the 
Exchange may only remove Non-Affiliated Directors for ``cause.'' The 
Exchange proposes to amend Article III, Section 4 so that ``cause'' 
would not encompass ``decisions or actions taken in good faith by a 
Non-Affiliated Director in his or her capacity as a Director of [NYSE 
Regulation] and related'' to NYSE Regulation's delegated regulatory 
functions and responsibilities under the Delegation Agreement. The 
Exchange stated that this proposed amendment to the Bylaws would make 
explicit that conduct consistent with a Non-Affiliated Director's 
duties and responsibilities related to NYSE Regulation's delegated 
functions and responsibilities would not constitute grounds for 
removal.
    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.\6\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(1) of the Act,\7\ which requires an 
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 Act, the 
rules and regulations thereunder, and the rules of the exchange. The 
Commission also finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\8\ which requires that the rules of an 
exchange be designed, among other things, 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.
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    \6\ 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).
    \7\ 15 U.S.C. 78f(b)(1).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that the proposed amendment to the Bylaws 
would make explicit that conduct consistent with a Non-Affiliated 
Director's duties and responsibilities related to NYSE Regulation's 
delegated functions and responsibilities would not constitute grounds 
for such director's removal from NYSE Regulation's Board of Directors. 
The Exchange stated that the proposed amendment to the Bylaws would 
provide Non-Affiliated Directors of NYSE Regulation with reasonable 
assurances that actions or decisions, which were consistent with their 
fiduciary duty and which such Non-Affiliated Directors believed, in 
good faith, to be the proper exercise of NYSE Regulation's delegated 
functions and responsibilities, could not be used as a basis to remove 
those directors from office. The Exchange believes that the proposal 
would remove uncertainty surrounding this issue and would contribute to 
a more effective, efficient, and orderly decision-making process by 
NYSE Regulation's Board of Directors. Based on the foregoing, the 
Commission believes the proposed rule change is consistent with the 
Act.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-NYSE-2014-62) be, and it hereby is, 
approved.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-00294 Filed 1-12-15; 8:45 am]
BILLING CODE 8011-01-P


