[Federal Register Volume 83, Number 231 (Friday, November 30, 2018)]
[Notices]
[Pages 61692-61699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25998]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84648; File No. SR-NYSEArca-2018-85]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Certificate of Incorporation, Bylaws and Rule 3.3

November 26, 2018.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on November 20, 2018, 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 Exchange. The 
Commission is publishing this notice to solicit comments on the

[[Page 61693]]

proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its certificate of incorporation, 
bylaws and Rule 3.3(a)(1)(B) to (1) harmonize certain provisions 
thereunder with similar provisions in the governing documents of the 
Exchange's national securities exchange affiliates and parent 
companies; and (2) make clarifying and updating changes. The proposed 
rule change is available on the Exchange's website at www.nyse.com, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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 those 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 parts of such statements.

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

1. Purpose
    The Exchange proposes to amend the Certificate of Incorporation of 
the Exchange (``Exchange Certificate''), Amended and Restated Bylaws of 
the Exchange (``Exchange Bylaws''), and Rule 3.3(a)(1)(B) to (1) 
harmonize certain provisions thereunder with similar provisions in the 
governing documents of the Exchange's national securities exchange 
affiliates \4\ and parent companies; and (2) make clarifying and 
updating changes.
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    \4\ The Exchange has four registered national securities 
exchange affiliates: NYSE National, Inc. (``NYSE National''), New 
York Stock Exchange LLC (``NYSE''), NYSE America [sic] LLC (``NYSE 
American''), and Chicago Stock Exchange, Inc. (``CHX'' and together 
with the Exchange, NYSE National, NYSE American, and NYSE, the 
``NYSE Group Exchanges''). CHX has filed to change its name to NYSE 
Chicago, Inc. See Exchange Act Release No. 84494 (October 26, 2018), 
83 FR 54953 (November 1, 2018) (SR-CHX-2018-05) (``NYSE Chicago 
Release'') (notice of filing and immediate effectiveness of proposal 
to reflect name changes of the Exchange and its direct parent 
company and to amend certain corporate governance provisions). The 
rule changes set forth in the NYSE Chicago Release will become 
operative upon the Second Amended and Restated Certificate of 
Incorporation of Chicago Stock Exchange, Inc. (``NYSE Chicago 
Certificate'') becoming effective pursuant to its filing with the 
Secretary of State of the State of Delaware.
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    The Exchange is owned by the Holding Member, which in turn is 
indirectly wholly owned by NYSE Holdings LLC (``NYSE Holdings''). NYSE 
Holdings is a wholly owned subsidiary of Intercontinental Holdings, 
Inc. (``ICE Holdings''), which is in turn wholly owned by the 
Intercontinental Exchange, Inc. (``ICE'').\5\
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    \5\ See Exchange Act Release No. 82638 (February 6, 2018), 83 FR 
6072 (February 12, 2018) (SR-NYSE Arca-2018-09) (notice of filing 
and immediate effectiveness of proposed rule change to amend certain 
of the governing documents of the Exchange's intermediate parent 
companies).
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    The Exchange operates as a separate self-regulatory organization 
and has rules, membership rosters and listings distinct from the rules, 
membership rosters and listings of the other NYSE Group Exchanges. At 
the same time, however, the Exchange believes it is important for each 
of the NYSE Group Exchanges to have a consistent approach to corporate 
governance in certain matters, to simplify complexity and create 
greater consistency among the NYSE Group Exchanges.\6\
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    \6\ See NYSE Chicago Release, supra note 4, at 54953.
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    Because the Exchange is a Delaware non-stock corporation, most of 
the proposed changes are based on the governing documents of CHX and 
NYSE National, which are Delaware corporations, as the most comparable 
NYSE Group Exchanges.\7\ The proposed Exchange Certificate and Exchange 
Bylaws reflect the expectation that the Exchange will continue to be 
operated with a governance structure substantially similar to that of 
other NYSE Group Exchanges, primarily CHX and NYSE National.
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    \7\ The other NYSE Group Exchanges, NYSE and NYSE American, are 
limited liability companies organized under New York and Delaware 
limited liability company law, respectively.
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    The changes described herein would become operative upon the 
Exchange Certificate becoming effective pursuant to its filing with the 
Secretary of State of the State of Delaware.
    The proposed amendments described below are primarily based on the 
Second Amended and Restated Certificate of Incorporation of Chicago 
Stock Exchange, Inc. (``NYSE Chicago Certificate''); Second Amended and 
Restated By-Laws of NYSE Chicago, Inc. (``NYSE Chicago Bylaws'') \8\; 
Amended and Restated Certificate of Incorporation of NYSE National, 
Inc. (``NYSE National Certificate''); Fifth Amended and Restated Bylaws 
of NYSE National, Inc. (``NYSE National Bylaws'') \9\; and Sixth 
Amended and Restated Certificate of Incorporation of NYSE Group, Inc. 
(``NYSE Group Certificate). In addition, the amendments to the 
indemnification provisions are based on the Eighth Amended and Restated 
Bylaws of Intercontinental Exchange, Inc. (``ICE Bylaws'') and the 
Sixth Amended and Restated Bylaws of Intercontinental Exchange 
Holdings, Inc. (``ICE Holdings Bylaws'').
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    \8\ The NYSE Chicago Certificate and NYSE Chicago Bylaws will 
become operative when the NYSE Chicago Certificate becomes effective 
pursuant to its filing with the Secretary of State of the State of 
Delaware. Id.
    \9\ The Exchange notes that, concurrent with this filing, NYSE 
National is filing changes to the NYSE National Certificate and 
Bylaws. See SR-NYSENat-2018-24. References to such documents in this 
filing are to the NYSE National Certificate and Bylaws currently in 
effect. The Exchange governing documents use ``member,'' 
``Exchange'' and ``Board'' instead of ``stockholder,'' 
``Corporation,'' and ``Board of Directors,'' which are used by CHX 
and NYSE National in their governing documents. When comparing a 
proposed change to the provision it is based on, the below 
descriptions do not note when such terms differ, as they are not 
substantive differences.
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Proposed Amendments to the Exchange Certificate
    The Exchange proposes to amend the Exchange Certificate as follows.
Title and Introductory Paragraphs
    The Exchange proposes to amend the title to reflect that the 
proposed Exchange Certificate is the ``Amended and Restated Certificate 
of Incorporation of NYSE Arca, Inc.'' \10\ In addition, it proposes to 
adopt introductory paragraphs stating the Exchange's name and stating 
that the Exchange Certificate was adopted and amended in accordance 
with specific provisions of the General Corporation Law of the State of 
Delaware (``DGCL''). The introductory paragraphs are substantially 
similar to the introductory paragraphs of the NYSE Chicago Certificate.
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    \10\ See Exhibit B [sic] to Amendment No. 2, SR-PCX-2006-24 
(March 6, 2006); see also Exchange Act Release No. 53615 (April 7, 
2006), 71 FR 19226 (April 13, 2006) (SR-PCX-2006-24) (notice of 
filing and immediate effectiveness of proposed rule change and 
Amendments No. 1 and 2 thereto to change the names of the Pacific 
Exchange, Inc., PCX Equities, Inc., PCX Holdings, Inc., and the 
Archipelago Exchange, L.L.C.).
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Article 1
    In a non-substantive change, the Exchange proposes to replace 
``NYSE ARCA, INC.'' with ``NYSE Arca, Inc.'' in Article 1, to reflect 
that the legal name of the Exchange is not entirely in capital letters. 
Proposed Article 1 is substantially similar to Article 1 of the NYSE 
Chicago Certificate and Article

[[Page 61694]]

FIRST of the NYSE National Certificate, provided that the Exchange 
Certificate provision defines ``Exchange.''
Article 2 and Certificate of Change of Registered Agent and/or 
Registered Office
    In a non-substantive change, the Exchange proposes to update the 
address of the registered office and name of the registered agent, as 
previously filed. The Exchange also proposes to delete the 
``Certificate of Change of Registered Agent and/or Registered Office.'' 
\11\
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    \11\ See Exchange Act Release No. 82924 (March 22, 2018), 83 FR 
13163 (March 27, 2018) (SR-NYSEArca-2018-18).
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Article 9
    Article 9 permits the Exchange to enter into a compromise with its 
creditors in certain circumstances. The Exchange proposes to amend 
current Article 9 to be consistent with the relevant provision of the 
DGCL, including the use of ``corporation'' instead of ``Exchange.'' 
\12\ The proposed article would be substantially similar to Article 
TENTH of the NYSE Chicago Certificate and Article TENTH of the NYSE 
National Certificate.
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    \12\ See Del. Code tit. 8, Sec.  102(b)(2)(ii).
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Article 10
    In a non-substantive change, the Exchange proposes to correct a 
reference to ``this Article 11'' to reference Article 10.
Article 12
    Article 12 addresses indemnification. The Exchange proposes to 
delete Article 12 in its entirety, as the indemnification provision is 
set forth in Article VII, Section 7.01 of the Exchange Bylaws, making 
this provision redundant. Subsequent articles would be renumbered 
accordingly. NYSE Chicago made a similar change, deleting Article 
EIGHTH(a) of its Certificate.\13\
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    \13\ See NYSE Chicago Release, supra note 4, at 54956.
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Article 13
    Current Article 13 (proposed Article 12) states that the approval 
of a majority of the members of the Board and a majority of the 
existing Corporate Members shall be required to amend or repeal any 
provision of the Exchange Certificate, and that any change to the 
Exchange Certificate or Bylaws that is required to be approved by or 
filed with the Commission before it may become effective shall not 
become effective until the required Commission procedures have been 
satisfied.
    The Exchange proposes to amend the provision to state that the 
Exchange reserves the right to amend the Exchange Certificate and to 
change or repeal any provision thereof, provided that any amendment 
must be approved by a majority of the members of the Board present at 
the relevant meeting and by a majority of the existing Corporate 
Members. In addition, the Exchange proposes to add a sentence providing 
that before any amendment to, alteration or repeal of any provision of 
the Exchange Certificate shall be effective, those changes shall be 
submitted to the Board and, if required, the proposed changes shall not 
become effective until filed with or filed with and approved by the 
Commission, as the case may be. The revised provision would read as 
follows (deletions bracketed; new text italicized):
    The approval of either a majority of the Board of Directors or the 
affirmative vote of a majority of the existing Corporate Members, shall 
be required to adopt, amend or repeal any provision of the bylaws of 
the Exchange. The [approval of ]Exchange reserves the right to amend 
this certificate of incorporation, and to change or repeal any 
provision of the certificate of incorporation, and all rights conferred 
upon Corporate Members by such certificate of incorporation are granted 
subject to this reservation; provided, however, that any amendment to 
this certificate of incorporation must be approved by a majority of the 
members of the Board of Directors who are present at the meeting at 
which the amendment is proposed and by a majority of the existing 
Corporate Members [shall be required to amend or repeal any provision 
of this Certificate of Incorporation]. Any change to the Certificate of 
Incorporation or bylaws that is required to be approved by or filed 
with the United States Securities and Exchange Commission (the 
``Commission'') before it may become effective shall not become 
effective until the procedures of the Commission necessary to make it 
effective shall have been satisfied. Before any amendment to, or repeal 
of, any provision of this Certificate of Incorporation shall be 
effective, those changes shall be submitted to the Board of Directors 
of the Exchange and if such amendment or repeal must be filed with or 
filed with and approved by the Commission, then the proposed changes to 
this Certificate of Incorporation shall not become effective until 
filed with or filed with and approved by the Commission, as the case 
may be.
    The proposed new text would be substantially similar to Article 
ELEVENTH of the NYSE Chicago Certificate. In addition, the proposed 
final sentence is consistent with the final sentence of Article 
ELEVENTH of the NYSE National Certificate.
Article 14
    Article 14 sets forth the name and mailing address of each of the 
incorporators. In a non-substantive change, the Exchange proposes to 
delete current Article 14 in its entirety, as it is obsolete.\14\ 
Neither NYSE Chicago nor NYSE National have a similar provision in 
their respective certificates.\15\
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    \14\ See Del. Code tit. 8, Sec.  242(a)(7)(a).
    \15\ The Exchange notes that the certificates of incorporation 
of NYSE Group, ICE Holdings and ICE also do not have similar 
provisions.
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Proposed Article 13 and Signature Block
    In an administrative change, the Exchange proposes to add a 
statement in proposed Article 13 setting forth the date and time that 
the Exchange Certificate shall be effective, as well as to add a 
signature block with the date of execution. The proposed change would 
be consistent with Article XIV and signature block of the NYSE Group 
Certificate.
Proposed Amendments to the Exchange Bylaws
    The Exchange proposes to amend the Exchange Bylaws as follows.
Article I (Offices)
    Article I contains a provision stating that the Exchange shall have 
a registered office in Delaware as required by law, and elsewhere as 
determined by the Board. The Exchange proposes to (a) amend the title 
and number to the provision in Article I, and (b) add a sentence that 
states that the Exchange's Delaware registered agent shall be such 
person or entity determined by the Board. The proposed title and final 
sentence would be consistent with the final sentence of Article I, 
Section 1 of the NYSE Chicago Bylaws and of Article II, Section 2.1 of 
the NYSE National Bylaws.\16\
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    \16\ See NYSE Chicago Release, supra note 4, at 54957.
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Article II (Members)
    The Exchange proposes to delete Sections 2.02, 2.04, and 2.05, 
which are marked ``Reserved,'' and renumber the remaining sections of 
Article II accordingly.
    Proposed Article 2.03 (Dividends; Regulatory Fees and Penalties: 
Current Section 2.06 states that ``revenues received by the Exchange 
from regulatory fees or regulatory penalties will be applied to fund 
the legal,

[[Page 61695]]

regulatory and surveillance operations of the Exchange and will not be 
used to pay dividends.''
    The Exchange proposes to maintain the substance of current Section 
2.06, renumbering it as Article 2.03, but substantially conforming the 
provision to the governing documents of the other NYSE Group 
Exchanges.\17\ The proposed language would expand the scope of the 
provision to include regulatory assets and fines as well as fees or 
penalties collected by the Exchange's regulatory staff, and would add a 
prohibition on the payment of distributions to other entities. The 
Exchange would also revise the title and add subparagraphs. Proposed 
Section 2.03 provides as follows (deletions bracketed; new text 
italicized):
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    \17\ See NYSE Chicago Bylaws, Article IX, Section 5; NYSE 
National Bylaws, Article X, Section 10.4; NYSE Operating Agreement, 
Article IV, Section 4.05; and NYSE American Operating Agreement, 
Article IV, Section 4.05.
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    (b) Any [revenues received by the Exchange from]regulatory assets 
or any regulatory fees, fines or [regulatory] penalties collected by 
the Exchange's regulatory staff will be applied to fund the legal, 
regulatory and surveillance operations of the Exchange, and the 
Exchange shall not distribute such assets, fees, fines or penalties 
[and will not be used] to pay dividends or be distributed to any other 
entity. For purposes of this Section, regulatory penalties shall 
include restitution and disgorgement of funds intended for customers.
Article III (Board of Directors)
    Section 3.03 (Vacancies): Section 3.03 provides that any vacancy on 
the Board may be filled by the Chairman of the Board, subject to the 
approval by a majority of the directors.
    In an administrative change, the Exchange proposes to add text 
stating that (a) such approval must be made by a majority of the 
directors then in office, as opposed to total number of seats on the 
Board; and (b) the Holding Member may also fill any vacancy, and those 
vacancies resulting from removal from office by a vote of the Holding 
Member for cause may be filled by a vote of the Holding Member at the 
same meeting at which such removal occurs. The first sentence of the 
amended paragraph would be as follows (additions italicized):
    Whenever between meetings of the Exchange any vacancy exists on the 
Board of Directors by reason of death, resignation, removal or increase 
in the authorized number of directors or otherwise, it may be filled 
(i) by the Chairman of the Board, subject to approval by a majority of 
the Board of Directors then in office, or (ii) by action taken by the 
Holding Member, and those vacancies resulting from removal from office 
by a vote of the Holding Member for cause may be filled by a vote of 
the Holding Member at the same meeting at which such removal occurs.
    The change would be consistent with clause (ii) of Article II, 
Section 5 of the NYSE Chicago Bylaws, which was amended at the time of 
its acquisition by ICE.\18\
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    \18\ See Exchange Act Release No. 83635 (July 13, 2018), 83 FR 
34182 (July 19, 2018) (SR-CHX-2018-004), and Partial Amendment No. 2 
to SR-CHX-2018-004 (June 11, 2018).
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    Section 3.04 (Place of Meetings): Section 3.04 provides that any 
meeting of the Board may be held within or without the State of 
Delaware.
    In an administrative change, the Exchange proposes to amend the 
provision to state that the meeting shall be at the place designated in 
the notice of the meeting, but that if no designation is made, the 
meeting will be at the principal office of the Exchange. The change 
would be consistent with the first sentence of NYSE National Bylaws 
Article III, Section 3.8 and NYSE Chicago Bylaws, Article II, Section 
7.\19\
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    \19\ The remaining text of the NYSE National and NYSE Chicago 
provisions address conference call meetings, which are covered in 
Article III, Section 3.10 of the Exchange Bylaws.
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    Sections 3.07 (Quorum): Section 3.07 (Quorum) provides that the 
presence of a majority of the number of directors on the Board is 
necessary to constitute a quorum, and adds that, if less than a quorum 
is present at a Board meeting, the directors present may adjourn the 
meeting to another time or place until a quorum is present.
    The Exchange proposes to revise the quorum requirement to state 
that ``Except as otherwise required by law, at all meetings of the 
Board, the presence of a majority of the number of directors then in 
office shall constitute a quorum for the transaction of business.'' In 
addition, it proposes to replace the sentence regarding procedures if 
less than a quorum is present with the statement that, if a quorum is 
not present, ``a majority of the directors present at the meeting may 
adjourn the meeting, without notice other than announcement at the 
meeting, until a quorum shall be present.''
    Changing the quorum requirement to a majority of the directors then 
in office would be consistent with the quorum provisions of the other 
NYSE Group Exchanges.\20\ The proposed text is substantially similar to 
the second and fourth sentences of NYSE Chicago Bylaws Article II, 
Section 10. \21\
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    \20\ See NYSE Chicago Bylaws Article II, Section 10; NYSE 
National Bylaws Article III, Section 3.11; NYSE Operating Agreement, 
Article II, Section 2.03(d); and NYSE American Operating Agreement, 
Article II, Section 2.03(d). See also DCGL Section 141(b).
    \21\ See NYSE Chicago Release, supra note 4, at 54958-54959.
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    Section 3.08 (Vote): Pursuant to Section 3.08, the act of a 
majority of the directors present at any meeting at which there is a 
quorum shall be the act of the Board, except as may be otherwise 
specifically provided by law, the Exchange Certificate, the Exchange 
Bylaws or the Rules.
    The Exchange proposes to add a sentence stating that each director 
shall be entitled to one vote. The revised provision is substantially 
similar to the first and third sentences of NYSE Chicago Bylaws Article 
II, Section 10. \22\
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    \22\ See id. See also NYSE National Bylaws Article III, Section 
3.11.
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    Section 3.09 (Action in Lieu of a Meeting): Section 3.09 provides 
that, unless otherwise restricted by the Exchange Certificate, Exchange 
By-Laws, or Exchange Rules, action may be taken without a meeting if 
certain procedural requirements are met.
    In an administrative change, the Exchange proposes to replace 
``Unless otherwise restricted by'' with ``Unless otherwise provided by 
law.'' The proposed change would allow the provision to be consistent 
with both applicable law and the Exchange governing documents and 
rules, should applicable law set forth specific requirements that 
differ from such documents. The change would be consistent with NYSE 
Chicago Bylaws Article II, Section 13.
Article V (Officers)
    Section 5.01 (General): Section 5.01 provides that officers of the 
Exchange must include a Secretary and may include a President, Chief 
Executive Officer (``CEO'') and, upon the CEO's recommendation, any 
other officers deemed desirable for the conduct of business. In 
addition, it states that any two or more offices may be held by the 
same person.
    In an administrative change, the Exchange proposes to amend Section 
5.01 to provide that the Board shall elect officers of the Exchange as 
it deems appropriate. The statement that two or more offices may be 
held by the same person would be revised to exclude the Chief 
Regulatory Officer and the Secretary from holding the office of CEO or 
President. The revised provision would be substantially similar to 
Article VI, Section 6.1 of the NYSE National

[[Page 61696]]

Bylaws and Article V, Section 1 of the NYSE Chicago Bylaws.\23\
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    \23\ See NYSE Chicago Release, supra note 4, at 54962.
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    Section 5.02 (Privileges): In a non-substantive change, the 
Exchange proposes to revise the name of Section 5.02 to ``Powers and 
Duties,'' as it is more indicative of the content of the Section, which 
sets forth the powers and duties of officers. The Exchange does not 
propose to amend the text of Section 5.02. The revised title would be 
the same as the title of Article VI, Section 6.4 of the NYSE National 
Bylaws and Article V, Section 3 of the NYSE Chicago Bylaws.
    Section 5.03 (Term of Office; Removal and Vacancy): The first 
sentence of Section 5.03 provides that ``[e]ach officer shall hold 
office until his or her successor is elected and qualified or until his 
or her earlier resignation or removal.''
    The Exchange proposes to add death and retirement as events that 
would cause an officer to no longer hold office. The proposed change 
would be consistent with Article V, Section 2(a) of the NYSE Chicago 
Bylaws.\24\
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    \24\ See id.
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    Section 5.04 (Chief Executive Officer): The second sentence of 
Section 5.04 states that ``[s]ubject to the control of the Board of 
Directors, the Chief Executive Officer, or such other officer or 
officers as may be designated by the Board, shall have general 
executive charge, management and control of the properties, business 
and operations of the Exchange with all such powers as may be 
reasonably incident to such responsibilities; may agree upon and 
execute all leases, contracts, evidences of indebtedness and other 
obligations in the name of the Exchange; and shall have such other 
powers and duties as designated in accordance with these Bylaws and as 
from time to time may be assigned by the Board of Directors.''
    The Exchange proposes to delete the second sentence of Section 
5.04, as Section 5.02 already provides that the any officer of the 
Exchange, including the CEO, shall, unless otherwise ordered by the 
Board, have such powers and duties as generally pertain to their office 
as well as such powers and duties as from time to time may be conferred 
by the Board. The Exchange notes that Article VI of the NYSE National 
Bylaws similarly does not have a separate provision regarding the 
powers of its chief executive officer.\25\
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    \25\ See also NYSE Operating Agreement, Article II, Section 
2.04(c); and NYSE American Operating Agreement, Article II, Section 
2.04(c);
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Article VI (Miscellaneous)
    Section 6.05 (Affiliate Transaction): Section 6.05 sets forth a 
list of transactions that the Exchange may not enter into with any 
affiliate of the Exchange unless such transaction shall have been first 
approved by a majority vote of the disinterested directors of the 
Exchange who are also public directors, and sets our related 
definitions and requirements.
    The Exchange proposes to delete Section 6.05 in its entirety. 
Section 6.05 of the Exchange Bylaws dates to the demutualization of the 
Exchange (then ``Pacific Exchange, Inc.''), when its ownership 
structure was materially different.\26\ The Exchange believes that 
Section 6.05 is no longer necessary given the corporate structure of 
ICE and the Exchange, as reflected by the fact that no other NYSE Group 
Exchange has a similar provision in its governing documents.\27\
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    \26\ See Exchange Act Release No. 49718 (May 17, 2004), 69 FR 
29611 (May 24, 2004) (SR-PCX-2004-08) (order approving proposed rule 
change and notice of filing and order granting accelerated approval 
of Amendment No. 1 thereto relating to the demutualization of the 
Pacific Exchange, Inc.); see also Article VI, Section 6.05 of 
Exhibit E to SR-PCX-2004-08 (February 10, 2004).
    \27\ The Exchange notes that it has not found a similar 
provision in the bylaws of other incorporated self-regulatory 
organizations. See Tenth Amended and Restated Bylaws of CBOE 
Exchange, Inc. [sic]; Ninth Amended and Restated Bylaws of CBOE EDGA 
Exchange, Inc.; Ninth Amended and Restated Bylaws of CBOE EDGX 
Exchange, Inc.; Eighth Amended And Restated Bylaws of CBOE BYX 
Exchange, Inc.; and By-Laws Of Nasdaq BX, Inc. See also By-Laws of 
The Nasdaq Stock Market LLC; By-Laws Of Nasdaq ISE, LLC; and the 
Second Amended and Restated Operating Agreement of Investors' 
Exchange LLC.
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Article VII (Indemnification)
    Section 7.01 (Indemnification): Section 7.01 sets forth provisions 
related to indemnification by the Exchange. As a wholly-owned 
subsidiary of ICE, the Exchange believes it appropriate to harmonize 
the Exchange's indemnification provisions with those of ICE and the 
Exchange's intermediate holding company, ICE Holdings.\28\ The same 
change was made to Article VI of the NYSE Chicago Bylaws.\29\
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    \28\ See ICE Bylaws, Article X, Section 10.6, and ICE Holdings 
Bylaws, Article X, Section 10.6.
    \29\ See NYSE Chicago Release, supra note 4, at 54962-54963. The 
Exchange understands that NYSE, NYSE American, and NYSE National 
propose to file similar changes to their respective indemnification 
provisions.
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    Accordingly, the Exchange proposes to delete the text of Section 
7.01 (Indemnification) in its entirety and replace it with proposed 
text that is substantially similar to the CHX, ICE and ICE Holdings 
provisions, with the exception of changes to be consistent with the 
Exchange Bylaws' terminology.\30\ The proposed text follows:
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    \30\ For example, proposed Section 7.01 uses ``officer'' instead 
of ``Senior Officers,'' ``Exchange'' instead of ``Corporation,'' and 
``Section 7.01'' instead of ``Section 10.6.''
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    (a) The Exchange shall, to the fullest extent permitted by law, as 
those laws may be amended and supplemented from time to time, indemnify 
any director or officer made, or threatened to be made, a party to any 
action, suit or proceeding, whether criminal, civil, administrative or 
investigative, by reason of being a director or officer of the Exchange 
or a predecessor corporation or, at the Exchange's request, a director, 
officer, partner, member, employee or agent of another corporation or 
other entity; provided, however, that the Exchange shall indemnify any 
director or officer in connection with a proceeding initiated by such 
person only if such proceeding was authorized in advance by the Board 
of Directors of the Exchange. The indemnification provided for in this 
Section 7.01 shall: (i) Not be deemed exclusive of any other rights to 
which those indemnified may be entitled under any bylaw, agreement or 
vote of stockholders or disinterested directors or otherwise, both as 
to action in their official capacities and as to action in another 
capacity while holding such office; (ii) continue as to a person who 
has ceased to be a director or officer; and (iii) inure to the benefit 
of the heirs, executors and administrators of an indemnified person.
    (b) Expenses incurred by any such person in defending a civil or 
criminal action, suit or proceeding by reason of the fact that he is or 
was a director or officer of the Exchange (or was serving at the 
Exchange's request as a director, officer, partner, member, employee or 
agent of another corporation or other entity) shall be paid by the 
Exchange in advance of the final disposition of such action, suit or 
proceeding upon receipt of an undertaking by or on behalf of such 
director or officer to repay such amount if it shall ultimately be 
determined that he or she is not entitled to be indemnified by the 
Exchange as authorized by law. Notwithstanding the foregoing, the 
Exchange shall not be required to advance such expenses to a person who 
is a party to an action, suit or proceeding brought by the Exchange and 
approved by a majority of the Board of Directors of the Exchange that 
alleges willful misappropriation of corporate assets by such person, 
disclosure of confidential information in violation of such person's 
fiduciary or contractual

[[Page 61697]]

obligations to the Exchange or any other willful and deliberate breach 
in bad faith of such person's duty to the Exchange or its stockholders.
    (c) The foregoing provisions of this Section 7.01 shall be deemed 
to be a contract between the Exchange and each director or officer who 
serves in such capacity at any time while this bylaw is in effect, and 
any repeal or modification thereof shall not affect any rights or 
obligations then existing with respect to any state of facts then or 
theretofore existing or any action, suit or proceeding theretofore or 
thereafter brought based in whole or in part upon any such state of 
facts. The rights provided to any person by this bylaw shall be 
enforceable against the Exchange by such person, who shall be presumed 
to have relied upon it in serving or continuing to serve as a director 
or officer or in such other capacity as provided above.
    (d) The Board of Directors in its discretion shall have power on 
behalf of the Exchange to indemnify any person, other than a director 
or officer, made or threatened to be made a party to any action, suit 
or proceeding, whether criminal, civil, administrative or 
investigative, by reason of the fact that such person, or his or her 
testator or intestate, is or was an officer, employee or agent of the 
Exchange or, at the Exchange's request, is or was serving as a 
director, officer, partner, member, employee or agent of another 
corporation or other entity.
    (e) To assure indemnification under this Section 7.01 of all 
directors, officers, employees and agents who are determined by the 
Exchange or otherwise to be or to have been ``fiduciaries'' of any 
employee benefit plan of the Exchange that may exist from time to time, 
Section 145 of the Delaware General Corporation Law shall, for the 
purposes of this Section 7.01, be interpreted as follows: An ``other 
enterprise'' shall be deemed to include such an employee benefit plan, 
including without limitation, any plan of the Exchange that is governed 
by the Act of Congress entitled ``Employee Retirement Income Security 
Act of 1974,'' as amended from time to time; the Exchange shall be 
deemed to have requested a person to serve an employee benefit plan 
where the performance by such person of his duties to the Exchange also 
imposes duties on, or otherwise involves services by, such person to 
the plan or participants or beneficiaries of the plan; excise taxes 
assessed on a person with respect to an employee benefit plan pursuant 
to such Act of Congress shall be deemed ``fines.''
Article IX (Amendment)
    In a conforming change, the Exchange proposes to add a section 
number before the word ``Amendment.''
Proposed Amendments to Rule 3.3(a)(1)(B)
    Rule 3.3(a)(1)(B) establishes the composition of the Exchange 
Regulatory Oversight Committee (``ROC''), and is substantially the same 
as the related provisions in the governing documents of the other NYSE 
Group Exchanges.\31\ Among other things, the provision states that 
``[t]he Board may, on affirmative vote of a majority of directors, at 
any time remove a member of the ROC for cause.'' The Exchange proposes 
to add language clarifying that the majority affirmative vote 
requirement is based on the ``directors then in office,'' as opposed to 
total number of seats on the Board. The change would be consistent with 
Article IV, Section 6 of the NYSE Chicago Bylaws.\32\
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    \31\ See NYSE National Bylaws, Article V, Section 5.6; NYSE 
Operating Agreement, Article II, Section 2.03(h)(ii); NYSE American 
Operating Agreement, Article II, Section 2.03(h)(ii); and NYSE 
Chicago Bylaws, Article IV, Section 6.
    \32\ See NYSE Chicago Release, supra note 4, at 54961. The 
Exchange understands that NYSE, NYSE American, and NYSE National 
propose to file similar changes to their respective ROC provisions.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act,\33\ in general, and furthers the 
objectives of Section 6(b)(1) \34\ in particular, in that it enables 
the Exchange to be so organized as to have the capacity to be able to 
carry out the purposes of the Exchange Act and to comply, and to 
enforce compliance by its exchange members and persons associated with 
its exchange members, with the provisions of the Exchange Act, the 
rules and regulations thereunder, and the rules of the Exchange. The 
Exchange also believes that the proposed rule change is consistent with 
Section 6(b)(5) of the Exchange Act,\35\ 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 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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    \33\ 15 U.S.C. 78f(b).
    \34\ 15 U.S.C. 78f(b)(1).
    \35\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed amendments to the Exchange 
Bylaws, Certificate and Rule 3.3(a) would enable the Exchange to be so 
organized as to have the capacity to be able to carry out the purposes 
of the Exchange Act and to comply, and to enforce compliance by its 
exchange members and persons associated with its exchange members, with 
the provisions of the Exchange Act, the rules and regulations 
thereunder, and the rules of the Exchange, because such amendments 
would add or expand upon existing provisions to protect and maintain 
the independence and integrity of the Exchange and its regulatory 
function and reinforce the notion that the Exchange is not solely a 
commercial enterprise, but a national securities exchange subject to 
the obligations imposed by the Exchange Act. Such provisions include 
ensuring that regulatory assets, fees, fines, and penalties may only be 
used to fund legal, regulatory and surveillance operations; and 
providing that any amendments to the Exchange Certificate must be 
submitted to the Board and, as applicable, shall not be effective until 
filed with or filed with and approved by the Commission. The Exchange 
believes that such provisions are consistent with and will facilitate a 
governance structure that will provide the Commission with appropriate 
oversight tools to ensure that the Commission will have the ability to 
enforce the Exchange Act with respect to the Exchange. The Exchange 
also believes that such amendments would act to insulate the Exchange's 
regulatory functions from its market and other commercial interests so 
that the Exchange can carry out its regulatory obligations and that, in 
general, the Exchange is administered in a way that is equitable to all 
those who trade on its market or through its facilities. Therefore, the 
Exchange believes that the proposed rule change would prevent 
fraudulent and manipulative acts and practices, promote just and 
equitable principles of trade, foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, protect investors and the 
public interest.
    The Exchange believes that the proposed amendments to harmonize 
certain provisions of the Exchange Bylaws, Certificate and Rule 3.3(a) 
with similar provisions of the governing documents of other NYSE Group 
Exchanges, ICE and ICE Holdings would contribute to the orderly 
operation of the Exchange and would enable the

[[Page 61698]]

Exchange to be so organized as to have the capacity to carry out the 
purposes of the Exchange Act and comply with the provisions of the 
Exchange Act by its members and persons associated with members. For 
example, the proposed changes would create greater conformity between 
the Exchange's provisions relating to officers, committees, and 
indemnification and those of its affiliates, particularly NYSE National 
and CHX. The Exchange believes that such conformity would streamline 
the NYSE Group Exchanges' corporate processes, create more equivalent 
governance processes among them, and also provide clarity to the 
Exchange's members, which is beneficial to both investors and the 
public interest. At the same time, the Exchange will continue to 
operate as a separate self-regulatory organization and to have rules, 
membership rosters and listings distinct from the rules, membership 
rosters and listings of the other NYSE Group Exchanges.
    The Exchange also believes that the greater consistency among the 
governing documents of the NYSE Group Exchanges, ICE and ICE Holdings 
would promote the maintenance of a fair and orderly market, the 
protection of investors and the protection of the public interest. 
Indeed, the proposed amendments would make the corporate requirements 
and administrative processes relating to the Board, Board committees, 
officers, and other corporate matters more similar to those of the NYSE 
Group Exchanges, in particular NYSE National and CHX, which have been 
established as fair and designed to protect investors and the public 
interest.\36\
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    \36\ See NYSE Chicago Release, supra note 4; Exchange Act 
Release Nos. 83303 (May 22, 2018), 83 FR 24517 (May 29, 2018) (SR-
CHX-2018-004); and 79902 (January 30, 2017), 82 FR 9258 (February 3, 
2017) (SR-NSX-2016-16) (order approving proposed rule change in 
connection with proposed acquisition of the Exchange by NYSE Group, 
Inc.).
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    The Exchange believes that the deletion of Article VI, Section 6.05 
of the Exchange Bylaws would be consistent with the orderly operation 
of the Exchange and would enable the Exchange to be so organized as to 
have the capacity to carry out the purposes of the Exchange Act and 
comply with the provisions of the Exchange Act by its members and 
persons associated with members. Section 6.05 does not relate to the 
operations of the Exchange's markets, but rather to potential 
transactions with affiliates of the Exchange. Section 6.05 dates to the 
demutualization of the Exchange, when its ownership structure was 
materially different.\37\ The Exchange believes that Section 6.05 is no 
longer necessary given the corporate structure of ICE and the Exchange, 
as reflected by the fact that no other NYSE Group Exchange has a 
similar provision in its governing documents.\38\ For the same reasons, 
the Exchange believes that the proposed deletion would be consistent 
with the promotion of the maintenance of a fair and orderly market, the 
protection of investors and the protection of the public interest.
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    \37\ See note 26, supra.
    \38\ See note 27, supra.
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    The proposed amendments to clarify the meaning of certain 
provisions of the Exchange Bylaws, Certificate and Rule 3.3(a), to 
better comport certain provisions with the DGCL and to effect non-
substantive changes would facilitate the Exchange's continued 
compliance with the Exchange Certificate and Bylaws and applicable law, 
which would further enable the Exchange to be so organized as to have 
the capacity to be able to carry out the purposes of the Exchange Act 
and to comply, and to enforce compliance by its exchange members and 
persons associated with its exchange members, with the provisions of 
the Exchange Act, the rules and regulations thereunder, and the rules 
of the Exchange. Such amendments would also remove impediments to and 
perfects the mechanism of a free and open market by removing confusion 
that may result from corporate governance provisions that are either 
unclear or inconsistent with the governing law.
    The Exchange also believes that the proposed amendments would 
remove impediments to and perfect the mechanism of a free and open 
market by ensuring that persons subject to the Exchange's jurisdiction, 
regulators, and the investing public can more easily navigate and 
understand the governing documents. The Exchange further believes that 
the proposed amendments would not be inconsistent with the public 
interest and the protection of investors because investors will not be 
harmed and in fact would benefit from increased transparency and 
clarity, thereby reducing potential confusion.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act. The proposed rule 
change is not intended to address competitive issues but rather is 
concerned solely with the corporate governance and administration of 
the Exchange.

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

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

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \39\ and Rule 19b-4(f)(6) thereunder.\40\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \39\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \40\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \41\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \41\ 15 U.S.C. 78s(b)(2)(B).
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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 email to [email protected]. Please include 
File Number SR-NYSEArca-2018-85 on the subject line.

[[Page 61699]]

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2018-85. This 
file number should be included on the subject line if email 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 website (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All ubmissions 
should refer to File Number SR-NYSEArca-2018-85 and should be submitted 
on or before December 21, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
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    \42\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-25998 Filed 11-29-18; 8:45 am]
 BILLING CODE 8011-01-P


