[Federal Register Volume 84, Number 215 (Wednesday, November 6, 2019)]
[Notices]
[Pages 59854-59855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24180]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87436; File No. 10-237]


MEMX LLC; Notice of Filing of Application, as Amended, for 
Registration as a National Securities Exchange Under Section 6 of the 
Securities Exchange Act of 1934

October 31, 2019.
    On September 9, 2019, MEMX LLC (``MEMX'' or ``Applicant'') filed 
with the Securities and Exchange Commission (``Commission'') a Form 1 
application under the Securities Exchange Act of 1934 (``Exchange 
Act''), seeking registration as a national securities exchange under 
Section 6 of the Exchange Act. On October 23, 2019, MEMX submitted 
Amendment No. 1 to its Form 1 application.\1\ MEMX's Form 1 
application, as amended, provides detailed information on how it 
proposes to satisfy the requirements of the Exchange Act.
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    \1\ In Amendment No. 1, Applicant submitted updated portions of 
its Form 1 application, including Exhibits A-5 (Second Amended and 
Restated LLC Agreement of MEMX LLC), B (Rules of MEMX), C-2 (Third 
Amended and Restated LLC Agreement of MEMX Holdings LLC), and C-4 
(Amended and Restated LLC Agreement of MEMX SubCo LLC).
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    The Commission is publishing this notice to solicit comments on 
MEMX's Form 1 application. The Commission will take any comments it 
receives into consideration in making its determination about whether 
to grant the Applicant's request to register as a national securities 
exchange. The Commission will grant the registration if it finds that 
the requirements of the Exchange Act and the rules and regulations 
thereunder with respect to MEMX are satisfied.\2\
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    \2\ 15 U.S.C. 78s(a).
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    As discussed in the Form 1 application, MEMX would be a subsidiary 
of its parent company, MEMX Holdings, LLC (``MEMX Holdings''), which 
would directly hold 99.5% of the equity of MEMX and indirectly hold the 
other 0.5% of the equity of MEMX through its 100% ownership of MEMX 
SubCo LLC.\3\ In turn, MEMX Holdings would be owned by a group of nine 
investors that include broker-dealers, retail brokers, and banks, eight 
of which have the ability to appoint a director to the board of MEMX 
Holdings.\4\ Three of those investors also would have the ability to 
nominate a director to the board of MEMX on a rotating schedule.\5\
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    \3\ A similar ownership structure exists for MEMX Execution 
Services LLC, which would act as an optional outbound routing broker 
for MEMX.
    \4\ See Exhibit B (Directors and Observers Schedule) to the 
Third Amended and Restated LLC Agreement of MEMX Holdings.
    \5\ See ``Exchange Director Nominating Member'' as defined in 
Article 1.1 of the Third Amended and Restated LLC Agreement of MEMX 
Holdings. See also Exhibit J (Exchange Director Nomination Rotation) 
to the Third Amended and Restated LLC Agreement of MEMX Holdings.
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    The governing documents for MEMX can be found in Exhibit A to 
MEMX's Form 1 application, and a listing of the officers and directors 
of MEMX can be found in Exhibit J. The governing documents for MEMX 
Holdings and MEMX SubCo LLC can be found in Exhibit C to MEMX's Form 1 
application. One notable novel governance provision in the LLC 
Agreement of MEMX Holdings concerns quorum requirements for the board 
of directors that would require the presence of certain named investor-

[[Page 59855]]

appointed directors to have a quorum to conduct business.\6\
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    \6\ See Article VIII, Section 8.6 of the Third Amended and 
Restated LLC Agreement of MEMX Holdings.
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    With respect to its trading system, the Form 1 application further 
provides that MEMX would operate a fully automated electronic trading 
platform for the trading of National Market System stocks through 
unlisted trading privileges with a continuous automated matching 
function. MEMX would not maintain a physical trading floor. Liquidity 
would be derived from orders to buy and orders to sell submitted to 
MEMX electronically by its registered broker-dealer members from remote 
locations. MEMX would have one class of membership open to registered 
broker-dealers, and also would allow members to register under MEMX 
rules as market makers on MEMX and be subject to certain specified 
requirements and obligations set forth in MEMX's proposed rules.
    According to the Applicant, it ``intends for its System to be 
relatively simple, without many of the complex order types or 
instructions available on other national securities exchanges.'' \7\ 
While MEMX's proposed rulebook generally conforms to the rules of other 
exchanges,\8\ one novel feature of MEMX's proposed trading rules is an 
optional feature on random replenishment for reserve orders that would 
vary the time intervals of each replenishment.\9\
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    \7\ Form 1, Exhibit E at 16.
    \8\ See, e.g., Rulebook of Cboe EDGX Exchange, Inc., available 
at https://cdn.cboe.com/resources/regulation/rule_book/EDGX_Rulebook.pdf.
    \9\ See Proposed MEMX Rule 11.6(k)(1)(A).
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    A more detailed description of the manner of operation of MEMX's 
proposed system can be found in Exhibit E to the Applicant's Form 1 
application. The proposed rulebook for the proposed exchange can be 
found in Exhibit B to MEMX's Form 1 application. A complete set of 
forms concerning membership and access can be found in Exhibit F to 
MEMX's Form 1 application.
    MEMX's Form 1 application, including all of the Exhibits referenced 
above, is available online at www.sec.gov/rules/other.shtml as well as 
in the Commission's Public Reference Room. Interested persons are 
invited to submit written data, views, and arguments concerning the 
Applicant's Form 1, including whether the application is consistent 
with the Exchange 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 rule-comments@sec.gov. Please include 
File Number 10-237 on the subject line.

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 10-237. 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/other.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to MEMX's Form 1 filed with the Commission, and 
all written communications relating to the application 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. 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 publicly available. All 
submissions should refer to File Number 10-237 and should be submitted 
on or before December 23, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(71)(i).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-24180 Filed 11-5-19; 8:45 am]
BILLING CODE 8011-01-P


