[Federal Register Volume 86, Number 67 (Friday, April 9, 2021)]
[Notices]
[Pages 18570-18580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07273]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91478; File No. SR-MEMX-2021-04]


Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Order Granting Accelerated Approval of a Proposed Rule Change To Amend 
the Corporate Documents of the Exchange's Parent Company

April 5, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 22, 2021, MEMX LLC (``MEMX'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (the ``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit

[[Page 18571]]

comments on the proposed rule change from interested persons and 
approving the proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 is filing with the Commission a proposed rule change 
to amend and restate the Fourth Amended and Restated Limited Liability 
Company Agreement (the ``Fourth Amended LLC Agreement'') of MEMX 
Holdings LLC (``Holdco'') as the Fifth Amended and Restated Limited 
Liability Company Agreement of Holdco (the ``Fifth Amended LLC 
Agreement'') to reflect certain amendments, as further described 
below.\3\ Holdco is the parent company of the Exchange and directly or 
indirectly owns all of the limited liability company membership 
interests in the Exchange. The text of the proposed rule change is 
provided in Exhibit 5.
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    \3\ References herein to the ``Holdco LLC Agreement'' refer to 
the Fourth Amended LLC Agreement or the Fifth Amended LLC Agreement, 
as appropriate in the context.
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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 Exchange 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 these 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 aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to amend and restate the Holdco LLC Agreement 
to reflect certain amendments that were previously approved by the 
Holdco Board in accordance with the Holdco LLC Agreement, including: 
(i) Amendments to reflect governance changes that have already occurred 
with respect to Holdco and the Exchange, which resulted from or were 
made in connection with recent combination transactions involving 
certain Class A Members \4\ and/or their affiliates, and to make 
conforming changes to defined terms; (ii) amendments to the provisions 
relating to a quorum of the Holdco Board and to make conforming changes 
to defined terms; (iii) amendments to provisions relating to the rights 
of certain Class A Members with respect to the governance of certain 
subsidiaries of Holdco (other than the Exchange); (iv) amendments to 
streamline the email communication procedures relating to actions taken 
by written consent of the Holdco Members and the Holdco Board; and (v) 
various clarifying, conforming, and other non-substantive amendments. 
Each of these amendments is discussed below.
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    \4\ The term ``Class A Member'' refers to a Member of Holdco 
holding Class A-1 Units or Class A-2 Units of Holdco. The term 
``Member'' refers to a person admitted as a member of Holdco. See 
Section 1.1 of the Holdco LLC Agreement.
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Amendments Resulting From or in Connection With Combination 
Transactions Involving Class A Members
    In October 2020, an affiliate of Strategic Investments I, Inc. 
(``Morgan Stanley'') \5\ completed a combination transaction with 
E*TRADE Financial Corporation \6\ resulting in Morgan Stanley and/or 
one of its affiliates directly or indirectly owning all of the equity 
interests in E*Trade and all such entities becoming Affiliates \7\ of 
each other (the ``Morgan Stanley-E*Trade Combination''). In that same 
month, The Charles Schwab Corporation (``Schwab'') \8\ completed a 
combination transaction with an affiliate of Datek Online Management 
Corp. (``TD Ameritrade'') \9\ resulting in Schwab directly or 
indirectly owning all of the equity interests in TD Ameritrade and such 
entities becoming Affiliates of each other (the ``Schwab-TD Ameritrade 
Combination''). The Exchange proposes to amend certain provisions of 
the Holdco LLC Agreement to reflect governance changes that have 
already occurred with respect to Holdco and the Exchange, which 
resulted from or were made in connection with the Morgan Stanley-
E*Trade Combination and the Schwab-TD Ameritrade Combination. Each of 
these changes has already occurred by operation of the Holdco LLC 
Agreement and/or pursuant to authorization by the Holdco Board or 
action by a Class A Member, as applicable, in accordance with the 
Holdco LLC Agreement. Accordingly, the purpose of these proposed 
amendments is to update the Holdco LLC Agreement to reflect the current 
state of affairs with respect to the governance of Holdco and the 
Exchange and to make conforming changes to defined terms. Each of these 
proposed amendments is discussed below.
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    \5\ Morgan Stanley is a Class A Member of Holdco. See Section 
1.1 of the Holdco LLC Agreement for the current definition of Morgan 
Stanley.
    \6\ E*TRADE Financial Corporation was a Class A Member of Holdco 
on February 19, 2020, the effective date of the Fourth Amended LLC 
Agreement (the ``Fourth Amended LLC Agreement Effective Date''). 
E*TRADE Financial Holdings, LLC (``E*Trade''), as successor-in-
interest to E*TRADE Financial Corporation, was subsequently admitted 
as and is currently a Class A Member of Holdco.
    \7\ The term ``Affiliate'' refers to, with respect to any 
person, any other person who, directly or indirectly (including 
through one or more intermediaries), controls, is controlled by, or 
is under common control with, such person. See Section 1.1 of the 
Holdco LLC Agreement.
    \8\ Schwab is a Class A Member of Holdco. See Section 1.1 of the 
Holdco LLC Agreement for the current definition of Schwab.
    \9\ TD Ameritrade is a Class A Member of Holdco. See Section 1.1 
of the Holdco LLC Agreement for the current definition of TD 
Ameritrade.
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Amendment to the Definition of Exchange Director Nominating Member
    The Holdco LLC Agreement currently defines the term Exchange 
Director Nominating Member \10\ to mean each of E*Trade, TD Ameritrade, 
and Virtu,\11\ as each of those entities had the right to nominate an 
Exchange Director as of the Fourth Amended LLC Agreement Effective 
Date. In connection with the Morgan Stanley-E*Trade Combination and the 
Schwab-TD Ameritrade Combination, (i) E*Trade transferred its right to 
nominate an Exchange Director to Morgan Stanley after such entities 
became Affiliates, and (ii) TD Ameritrade transferred its right to 
nominate an Exchange Director to Schwab after such entities became 
Affiliates. Accordingly, the Exchange proposes to amend the definition 
of Exchange Director Nominating Member to replace the references to 
E*Trade and TD Ameritrade with references to Morgan Stanley and Schwab, 
respectively, to reflect that each of Morgan Stanley and Schwab now has 
the right to nominate an Exchange Director (in addition to Virtu, which 
remains as the third Exchange Director Nominating Member). The purpose 
of this proposed amendment is to add

[[Page 18572]]

clarity to the Holdco LLC Agreement as it reflects governance changes 
with respect to the Exchange that have already occurred.
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    \10\ The term ``Exchange Director Nominating Member'' refers to 
a Member of Holdco that has the right to nominate an Exchange 
Director pursuant to the Exchange Director Nomination Rotation. The 
term ``Exchange Director'' refers to a member of the Exchange Board 
nominated by an Exchange Director Nominating Member. The term 
``Exchange Director Nomination Rotation'' refers to the order in 
which Exchange Director Nominating Members may nominate Exchange 
Directors as set forth in Exhibit J of the Holdco LLC Agreement. See 
Section 1.1 and Exhibit J of the Holdco LLC Agreement.
    \11\ The term ``Virtu'' refers to Virtu Getco Investments, LLC, 
which is a Class A Member of Holdco. See Section 1.1. of the Holdco 
LLC Agreement for the current definition of Virtu. The Exchange is 
also proposing to amend the definition of Virtu to reflect a name 
change of that entity, as further described below.
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Amendment to Exhibit J Regarding the Exchange Director Nomination 
Rotation
    Exhibit J of the Holdco LLC Agreement sets forth the order in which 
Exchange Director Nominating Members may nominate Exchange Directors 
(i.e., the Exchange Director Nomination Rotation). The Exchange 
proposes to amend Exhibit J to replace the references to E*Trade and TD 
Ameritrade with references to Morgan Stanley and Schwab, respectively, 
to reflect that Morgan Stanley and Schwab are now Exchange Director 
Nominating Members, which replaced E*Trade and TD Ameritrade, 
respectively, in the Exchange Director Nomination Rotation, as 
described above. The purpose of this proposed amendment is to add 
clarity to the Holdco LLC Agreement as it reflects a governance change 
with respect to the Exchange that has already occurred.
Amendment to the Definition of Morgan Stanley
    The Exchange proposes to amend the definition of Morgan Stanley in 
the Holdco LLC Agreement to reflect that such entity is now an Exchange 
Director Nominating Member, as E*Trade's right to nominate an Exchange 
Director was transferred to Morgan Stanley, as described above. The 
Holdco LLC Agreement currently defines E*Trade to include a reference 
that such entity is an Exchange Director Nominating Member (i.e., has 
the right to nominate an Exchange Director), so the purpose of this 
proposed amendment is to reflect that Morgan Stanley now holds this 
right instead.\12\ This proposed amendment is intended to add clarity 
to the Holdco LLC Agreement as it reflects a governance change with 
respect to the Exchange that has already occurred.
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    \12\ See Section 1.1 of the Holdco LLC Agreement for the current 
definition of E*Trade. The Exchange is also proposing to delete the 
definition of E*Trade, as further described below.
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Amendments to the Definition of Schwab
    The Exchange proposes to amend the definition of Schwab in the 
Holdco LLC Agreement to reflect that such entity is now an Exchange 
Director Nominating Member, as TD Ameritrade's right to nominate an 
Exchange Director was transferred to Schwab, as described above. The 
Holdco LLC Agreement currently defines TD Ameritrade to include a 
reference that such entity is an Exchange Director Nominating Member 
(i.e., has the right to nominate a Director), so the purpose of this 
proposed amendment is to reflect that Schwab now holds this right 
instead.\13\ This proposed amendment is intended to add clarity to the 
Holdco LLC Agreement as it reflects a governance change with respect to 
the Exchange that has already occurred.
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    \13\ See Section 1.1 of the Holdco LLC Agreement for the current 
definition of TD Ameritrade. The Exchange is also proposing to 
delete the definition of E*Trade, as further described below.
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    The Exchange also proposes to further amend the definition of 
Schwab to reflect that it is no longer a Nominating Class A Member.\14\ 
In connection with the Schwab-TD Ameritrade Combination, Schwab 
irrevocably waived its right to nominate a director of Holdco 
(``Director'').\15\ Accordingly, the purpose of this proposed amendment 
is to reflect that Schwab is no longer a Nominating Class A Member as a 
result of Schwab's waiver of its right to nominate a Director. This 
proposed amendment is intended to add clarity to the Holdco LLC 
Agreement as it reflects a governance change with respect to Holdco 
that has already occurred pursuant to action taken by Schwab.
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    \14\ The term ``Nominating Class A Member'' refers to a Class A 
Member of Holdco which has the right to nominate a Director to the 
Holdco Board. See Section 8.3(b) of the Holdco LLC Agreement.
    \15\ Section 8.11 of the Holdco LLC Agreement permits a Class A 
Member that is a Nominating Class A Member to waive (revocably or 
irrevocably) its right to nominate a Director.
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Deletion of the Definition of E*Trade
    The Holdco LLC Agreement currently defines E*Trade to include 
references that such entity is a Nominating Class A Member and an 
Exchange Director Nominating Member. As described above, E*Trade's 
right to nominate an Exchange Director was transferred to Morgan 
Stanley in connection with the Morgan Stanley-E*Trade Combination, 
resulting in E*Trade no longer being an Exchange Director Nominating 
Member. Additionally, E*Trade's right to nominate a Director was 
eliminated by operation of Section 8.17 of the Holdco LLC Agreement in 
connection with the Morgan Stanley-E*Trade Combination, resulting in 
E*Trade no longer being a Nominating Class A Member.\16\ Further, the 
Exchange is also proposing herein to delete all references to the term 
``E*Trade'' contained in the definition of Exchange Director Nominating 
Member (as described above), in Exhibit J (as described above), and in 
the definition of Retail Broker Class A Member \17\ (as described 
below), and there are no other references to the term ``E*Trade'' in 
the Holdco LLC Agreement. Accordingly, the Exchange proposes to delete 
the definition of the term ``E*Trade'' in its entirety. This proposed 
amendment is intended to add clarity to the Holdco LLC Agreement as it 
deletes a defined term that would otherwise not be used in the Holdco 
LLC Agreement, and would thus be obsolete, after giving effect to the 
proposed amendments described herein. The Exchange notes that the 
absence of a definition for a Class A Member that is neither a 
Nominating Class A Member nor an Exchange Director Nominating Member is 
consistent with the current Holdco LLC Agreement, which omits 
definitions for certain of such Class A Members.
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    \16\ See Section 8.17 of the Holdco LLC Agreement, which 
provides that if a Nominating Class A Member merges, consolidates or 
otherwise combines with, obtains control over, or becomes Affiliated 
with, another Nominating Class A Member (a ``Combination''), the 
surviving Affiliated group shall (i) if both such Nominating Class A 
Members had nominated a Director that is serving on the Holdco Board 
at the time of the Combination, remove or cause the removal of one 
of such Directors effective upon the consummation of such 
Combination, and (ii) thereafter have the right to nominate only one 
Director and the number of Directors shall be reduced accordingly. 
In connection with the Morgan Stanley-E*Trade Combination, the 
surviving Affiliated group (consisting of Morgan Stanley and 
E*Trade) caused the removal of the Director nominated by E*Trade, 
resulting in Morgan Stanley retaining such Affiliated group's right 
to nominate a Director.
    \17\ The term ``Retail Broker Class A Member'' currently refers 
to each of E*Trade, Fidelity, Schwab, TD Ameritrade, and any other 
Member that is specifically designated as a Retail Broker Class A 
Member and which, or an Affiliate of which, is a broker-dealer 
registered with the Financial Industry Regulatory Authority, Inc. 
which provides services to retail customers, in each case, together 
with each of their respective Affiliates. See Section 1.1 of the 
Holdco LLC Agreement.
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Deletion of the Definition of TD Ameritrade
    The Holdco LLC Agreement currently defines TD Ameritrade to include 
references that such entity is a Nominating Class A Member and an 
Exchange Director Nominating Member. As described above, TD 
Ameritrade's right to nominate an Exchange Director was transferred to 
Schwab in connection with the Schwab-TD Ameritrade Combination, 
resulting in TD Ameritrade no longer being an Exchange Director 
Nominating Member. Additionally, TD Ameritrade's right to nominate a 
Director was eliminated by operation of Section 8.17 of the Holdco LLC 
Agreement in connection with the Schwab- TD Ameritrade Combination, 
resulting in TD Ameritrade no longer being a Nominating Class A 
Member.\18\

[[Page 18573]]

Further, the Exchange is also proposing herein to delete all references 
to the term ``TD Ameritrade'' contained in the definition of Exchange 
Director Nominating Member (as described above), in Exhibit J (as 
described above), and in the definition of Retail Broker Class A Member 
(as described below), and there are no other references to the term 
``TD Ameritrade'' in the Holdco LLC Agreement. Accordingly, the 
Exchange proposes to delete the definition of the term ``TD 
Ameritrade'' in its entirety. This proposed amendment is intended to 
add clarity to the Holdco LLC Agreement as it deletes a defined term 
that would otherwise not be used in the Holdco LLC Agreement, and would 
thus be obsolete, after giving effect to the proposed amendments 
described herein. As noted above, the absence of a definition for a 
Class A Member that is neither a Nominating Class A Member nor an 
Exchange Director Nominating Member is consistent with the current 
Holdco LLC Agreement, which omits definitions for certain of such Class 
A Members.
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    \18\ See Section 8.17 of the Holdco LLC Agreement. In connection 
with the Schwab-TD Ameritrade Combination, the surviving Affiliated 
group (consisting of Schwab and TD Ameritrade) caused the removal of 
the Director nominated by TD Ameritrade, resulting in Schwab 
retaining such Affiliated group's right to nominate a Director.
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Amendment to the Definition of Retail Broker Class A Member
    The Holdco LLC Agreement currently defines Retail Broker Class A 
Member to include references to E*Trade and TD Ameritrade. As the 
Exchange is proposing to delete ``E*Trade'' and ``TD Ameritrade'' as 
defined terms in the Holdco LLC Agreement, as described above, the 
Exchange proposes to amend the definition of Retail Broker Class A 
Member to delete the references to E*Trade and TD Ameritrade. This 
proposed amendment is intended to add clarity to the Holdco LLC 
Agreement as it deletes references to terms that would be obsolete 
after giving effect to the proposed amendments described herein. The 
Exchange notes that there is no other consequence of deleting 
references to E*Trade and TD Ameritrade in the definition of Retail 
Broker Class A Member because, after giving effect to the proposed 
amendments described herein, the only references to Retail Broker Class 
A Member are in reference to a Retail Broker Class A Member's Director 
or right to nominate a Director, neither of which E*Trade and TD 
Ameritrade currently have.
Amendments to Provisions Relating to a Quorum of the Holdco Board
    The Exchange proposes to amend the Holdco LLC Agreement's 
provisions relating to a quorum of the Holdco Board and make conforming 
amendments to defined terms in connection therewith. Specifically, the 
Exchange proposes to group a new ``Buy Side Class A Member'' category 
\19\ together with the Retail Broker Class A Member category for 
purposes of the provisions relating to establishing a quorum at a 
meeting of the Holdco Board and to add and amend certain defined terms 
in connection with this proposed amendment. Each of these proposed 
amendments is discussed below.
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    \19\ The other categories of Class A Members include Bank Class 
A Member, Market Maker Class A Member and Retail Broker Class A 
Member. See Section 1.1 of the Holdco LLC Agreement for the 
definitions of these terms.
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Add ``Buy Side Class A Member'' as a New Defined Term
    The Exchange proposes to add ``Buy Side Class A Member'' as a 
defined term in the Holdco LLC Agreement that includes BlackRock \20\ 
and is otherwise consistent with the definitions of the other 
categories of Class A Members (i.e., Bank Class A Member, Market Maker 
Class A Member, and Retail Broker Class A Member).\21\ The purpose of 
this proposed amendment is to add a defined term that will be 
referenced in the proposed amendments to the Holdco LLC Agreement's 
provisions relating to a quorum of the Holdco Board, as further 
described below.
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    \20\ The term ``BlackRock'' refers to BLK SMI, LLC, which is a 
Class A Member of Holdco. See Section 1.1 of the Holdco LLC 
Agreement.
    \21\ See Section 1.1 of the Holdco LLC Agreement for the current 
definitions of these terms.
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Add ``Buy Side Director'' as a New Defined Term
    The Exchange proposes to add ``Buy Side Director'' as a defined 
term in the Holdco LLC Agreement that means a Director nominated by a 
Buy Side Class A Member. This definition is consistent with the 
definitions of the other categories of Directors (i.e., Bank Director, 
Market Maker Director, and Retail Broker Director).\22\ The purpose of 
this proposed change is to add a defined term that will be referenced 
in the proposed amendments to the Holdco LLC Agreement's provisions 
relating to a quorum of the Holdco Board, as further described below.
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    \22\ Id.
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Amendments to the Provisions Relating to a Quorum of the Holdco Board
    Section 8.6(a)(i) of the Holdco LLC Agreement currently provides 
that a quorum for the transaction of business of the Holdco Board at a 
meeting of the Holdco Board shall constitute a number of Directors 
which both (A) represents the majority of the votes of the Directors 
serving on the Holdco Board, and (B) includes (x) at least one (1) 
Market Maker Director (or his or her Alternate Director), (y) at least 
one (1) Retail Broker Director (or his or her Alternate Director), and 
(z) at least one (1) Bank Director (or his or her Alternate Director). 
As a result of the governance changes that resulted from the Morgan 
Stanley-E*Trade Combination and the Schwab-TD Ameritrade Combination 
(specifically, each of E*Trade's and TD Ameritrade's right to nominate 
a Director being eliminated by operation of Section 8.17 of the Holdco 
LLC Agreement, and Schwab's waiver of its right to nominate a Director, 
each as described above), Fidelity \23\ remains as the sole Retail 
Broker Class A Member with the right to nominate a Retail Broker 
Director. Accordingly, under the Holdco LLC Agreement's existing 
provision relating to a quorum of the Holdco Board, the Director 
nominated by Fidelity, as the sole remaining Retail Broker Director, is 
required to be present to establish a quorum of the Holdco Board. To 
avoid the result of requiring the Director nominated by a single Class 
A Member (i.e., Fidelity) to be present to establish a quorum of the 
Holdco Board, which the Exchange and the Holdco Board believe may be 
impractical for logistical reasons, the Exchange proposes to amend 
Section 8.6(a)(i) to provide that a quorum for the transaction of 
business of the Holdco Board at a meeting of the Holdco Board shall 
constitute a number of Directors which both (A) represents the majority 
of the votes of the Directors serving on the Holdco Board, and (B) 
includes (x) at least one (1) Market Maker Director (or his or her 
Alternate Director), (y) at least one (1) Retail Broker Director (or 
his or her Alternate Director) or at least one (1) Buy Side Director 
(or his or her Alternate Director), and (z) at least one (1) Bank 
Director (or his or her Alternate Director). The effect of this 
proposed amendment is to group Buy Side Directors (which would 
currently include only the Director nominated by BlackRock) together 
with Retail Broker Directors (which currently includes only the 
Director nominated by Fidelity) for purposes of establishing a quorum 
of the Holdco Board such that a Director of either of those categories 
would be required to be present to establish a quorum of the Holdco 
Board. The Exchange and the Holdco Board believe this proposed 
amendment would

[[Page 18574]]

improve the governance of Holdco by no longer requiring the Director 
nominated by a single Class A Member to be present to establish a 
quorum of the Holdco Board at a meeting of the Holdco Board.
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    \23\ The term ``Fidelity'' currently refers to Devonshire 
Investors (Delaware) LLC, which is a Class A Member of Holdco. See 
Section 1.1 of the Holdco LLC Agreement. The Exchange is also 
proposing to amend this definition to reference an updated entity 
name, as further described below.
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    The Exchange also proposes to amend Section 8.6(a)(ii)(A) of the 
Holdco LLC Agreement, which provides alternative quorum requirements if 
a Director and his or her Alternate Director (where applicable) fail to 
attend two consecutively scheduled meetings of the Holdco Board, to 
include references to Buy Side Director and Buy Side Class A Member 
(grouped together with Retail Broker Director and Retail Broker Class A 
Member) to conform this provision to the proposed amended quorum 
requirements in Section 8.6(a)(i) described above.
Amendments to the Definition of Bank Class A Member
    The definition of Bank Class A Member currently provides that no 
Bank Class A Member shall be deemed a Market Maker Class A Member or a 
Retail Broker Class A Member, and no Market Maker Class A Member and no 
Retail Broker Class A Member shall be deemed a Bank Class A Member for 
the purposes of the Holdco LLC Agreement. The Exchange proposes to 
amend this part of the definition of Bank Class A Member to also 
reflect that no Bank Class A Member shall be deemed a Buy Side Class A 
Member, and no Buy Side Class A Member shall be deemed a Bank Class A 
Member, for the purposes of the Holdco LLC Agreement. The purpose of 
this proposed amendment is to reflect the proposed addition of ``Buy 
Side Class A Member'' as a defined term and category of Class A Member, 
as described above.
    The Exchange also proposes to further amend the definition of Bank 
Class A Member to delete an inadvertent duplicative reference to Class 
A Member. The purpose of this proposed amendment is to add clarity to 
the Holdco LLC Agreement by correcting an inadvertent drafting error.
Amendment to the Definition of Market Maker Class A Member
    The definition of Market Maker Class A Member currently provides 
that no Market Maker Class A Member shall be deemed a Bank Class A 
Member or a Retail Broker Class A Member, and no Bank Class A Member 
and no Retail Broker Class A Member shall be deemed a Market Maker 
Class A Member for the purposes of the Holdco LLC Agreement. The 
Exchange proposes to amend this part of the definition of Market Maker 
Class A Member to also reflect that no Market Maker Class A Member 
shall be deemed a Buy Side Class A Member, and no Buy Side Class A 
Member shall be deemed a Market Maker Class A Member, for the purposes 
of the Holdco LLC Agreement. The purpose of this proposed amendment is 
to reflect the proposed addition of ``Buy Side Class A Member'' as a 
defined term and category of Class A Member, as described above.
Amendment to the Definition of Retail Broker Class A Member
    The definition of Retail Broker Class A Member currently provides 
that no Retail Broker Class A Member shall be deemed a Bank Class A 
Member or a Market Maker Class A Member, and no Bank Class A Member and 
no Market Maker Class A Member shall be deemed a Retail Broker Class A 
Member for the purposes of the Holdco LLC Agreement. The Exchange 
proposes to amend this part of the definition of Retail Broker Class A 
Member to also reflect that no Retail Broker Class A Member shall be 
deemed a Buy Side Class A Member, and no Buy Side Class A Member shall 
be deemed a Retail Broker Class A Member, for the purposes of the 
Holdco LLC Agreement. The purpose of this proposed amendment is to 
reflect the proposed addition of ``Buy Side Class A Member'' as a 
defined term and category of Class A Member, as described above.
Amendments Related to the Rights of Certain Class A Members With 
Respect to the Governance of Certain Holdco Subsidiaries
    Section 8.18(i) of the Holdco LLC Agreement sets forth certain 
rights and requirements relating to the governance of certain 
subsidiaries of Holdco (``Holdco Subsidiaries''), including that, 
generally, each Market Maker Class A Member which is a Nominating Class 
A Member, each Retail Broker Class A Member which is a Nominating Class 
A Member, and each Bank Class A Member which is a Nominating Class A 
Member shall have the right to nominate one member to the board of 
directors or an equivalent governing body, if any, of each Holdco 
Subsidiary.\24\ As of the Fourth Amended LLC Agreement Effective Date, 
all of the Market Maker Class A Members, Retail Broker Class A Members, 
and Bank Class A Members were Nominating Class A Members. Additionally, 
all such Class A Members as a group comprised all of the Nominating 
Class A Members of Holdco. Therefore, the references in Section 8.18(i) 
to each of the three categories of Class A Members (i.e., Market Maker 
Class A Members, Retail Broker Class A Members, and Bank Class A 
Members) were unnecessary, as the same effect would have been achieved 
by simply referencing ``each Nominating Class A Member'' without 
references to the three categories of Class A Members. It was in fact 
the intended effect for each Class A Member that was a Nominating Class 
A Member to have this right, which, as of the Fourth Amended LLC 
Agreement Effective Date, included each of the Class A Members in the 
three categories of Class A Members, although the references to the 
specific categories was not problematic.
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    \24\ Section 8.18(i) contains an exception to this general 
requirement for the governance of the Exchange, which provides that 
the Exchange shall be governed by the Exchange Board (which shall be 
constituted as set forth in the limited liability company agreement 
of the Exchange). Accordingly, the proposed amendment to Section 
8.18(i) does not in any way affect the governance of the Exchange.
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    Following the Fourth Amended LLC Agreement Effective Date, 
BlackRock was admitted as a Nominating Class A Member of Holdco. The 
Exchange now proposes to amend Section 8.18(i) to delete the references 
to the three specific categories of Class A Members (i.e., Market Maker 
Class A Members, Retail Broker Class A Members, and Bank Class A 
Members) so that Section 8.18(i) would provide that each Nominating 
Class A Member shall have the right to nominate one member to the board 
of directors or an equivalent governing body, if any, of each Holdco 
Subsidiary. The effect of this proposed amendment is for each of the 
Class A Members that currently has this right (i.e., each of the 
Nominating Class A Members as of the Fourth Amended LLC Agreement 
Effective Date) to retain this right (and the unnecessary references to 
the three categories of Class A Members be deleted), and for BlackRock, 
as a Nominating Class A Member that was admitted as such after the 
Fourth Amended LLC Agreement Effective Date, to also have this right. 
The purpose of this proposed amendment is to delete unnecessary 
references to the three categories of Class A Members (since all such 
Class A Members are Nominating Class A Members) and to also include 
BlackRock in the group that has this right, which is consistent with 
the original intent for Section 8.18(i) that each Nominating Class A 
Member has this right. As noted above, this aspect of Section 8.18(i) 
does not apply to the governance of the Exchange and, therefore, this 
proposed amendment does not in any way affect the governance of the 
Exchange.
    The Exchange also proposes to further amend Section 8.18(i) to 
clarify that the requirement for each Nominating Class A Member to have 
the right to nominate

[[Page 18575]]

one member to the board of directors or an equivalent governing body of 
each Holdco Subsidiary is not applicable if the governance structure of 
such Holdco Subsidiary is otherwise approved by the Holdco Board by 
Supermajority Board Vote.\25\ This is already true under the existing 
Supermajority Board Vote provisions in the Holdco LLC Agreement,\26\ so 
the purpose of this proposed amendment is to simply add clarity in 
Section 8.18(i) regarding the Holdco Board's ability to approve a 
different governance structure of a Holdco Subsidiary pursuant to a 
Supermajority Board Vote of the Holdco Board.
---------------------------------------------------------------------------

    \25\ The term ``Supermajority Board Vote'' means the affirmative 
vote of at least seventy-seven percent (77%) of the votes of all 
Directors of Holdco then entitled to vote on the matter under 
consideration and who have not recused themselves, whether or not 
present at the applicable meeting of the Holdco Board; provided that 
if such affirmative vote threshold results in the necessity of the 
affirmative vote of all such Directors of Holdco with respect to 
such matter, an affirmative vote of all but one of such Directors of 
Holdco shall be required instead with respect to such matter. See 
Section 1.1 of the Holdco LLC Agreement.
    \26\ Exhibit C of the Holdco LLC Agreement sets forth certain 
matters that may be accomplished by a Supermajority Board Vote, 
which include materially amending the governing documents of a 
committee of the Holdco Board, or of the board of directors or a 
similar governing body of any Holdco Subsidiary. See Exhibit C (#25) 
of the Holdco LLC Agreement.
---------------------------------------------------------------------------

Amendments To Streamline Email Communications Procedures for Actions 
Taken by Written Consent of the Holdco Members
    Section 4.7(e) of the Holdco LLC Agreement provides that any action 
to be taken at a meeting of the Members of Holdco may be taken without 
a meeting if the action is taken in writing (which may be via email 
communication) by consent of such number of Members as would otherwise 
be required to approve such action. Section 4.7(e) also provides 
specific procedures for an action to be deemed to have been taken in 
writing via email communication for this purpose. The Exchange proposes 
to amend Section 4.7(e) to streamline these procedures, as described 
below.
     Current language in Section 4.7(e) relating to email 
communication procedures: For purposes of the foregoing, an action 
shall be deemed to have been taken in writing via email communication 
if (i) an email communication is sent by the CEO \27\ to all Members 
entitled to vote on the matter at issue clearly specifying the action 
to be taken and clearly stating that an email response to such email 
shall be deemed to be an email communication for purposes of this 
Section 4.7(e), (ii) the number of Members required to approve the 
matter at issue respond to the CEO's email with an unambiguous approval 
of such matter, and (iii) the CEO's email and all such responses are 
filed with the minutes of the meetings of Members.
---------------------------------------------------------------------------

    \27\ The term ``CEO'' refers to the individual serving as the 
chief executive officer of Holdco. See Section 8.3(c) of the Holdco 
LLC Agreement.
---------------------------------------------------------------------------

     Proposed amended language in Section 4.7(e) relating to 
email communication procedures: For purposes of the foregoing, an 
action shall be deemed to have been taken in writing via email 
communication if (i) an email communication is sent by an Officer \28\ 
to all Members entitled to vote on the matter at issue clearly 
specifying the action to be taken, (ii) the number of Members required 
to approve the matter at issue respond to the Officer's email with an 
unambiguous approval of such matter, and (iii) the Officer's email and 
all such responses are filed with the minutes of the meetings of 
Members.
---------------------------------------------------------------------------

    \28\ The term ``Officer'' refers to an individual appointed by 
the Board as an officer of Holdco. See Section 8.14(a) of the Holdco 
LLC Agreement.
---------------------------------------------------------------------------

    The effect of the proposed amendments to Section 4.7(e) is to 
modify the procedures for an action to be deemed to have been taken in 
writing via email communication for this purpose to: (i) Permit an 
email communication to be sent by any Officer (rather than just the 
CEO) and (ii) no longer require that such email communication clearly 
state that an email response to such email shall be deemed to be an 
email communication for purposes of Section 4.7(e). The Exchange and 
the Holdco Board believe it is already clear from the context of email 
communications requesting the Holdco Members' written consent of a 
particular matter that such email communications should be deemed as 
email communications for purposes of Section 4.7(e) and that expressly 
stating this in such email communications is unnecessary. Accordingly, 
these proposed amendments are intended to simplify and streamline the 
procedures for actions taken by the Members of Holdco without a meeting 
by broadening the group of Officers that may send an email 
communication for this purpose and eliminating an unnecessary technical 
requirement. The Exchange and the Holdco Board believe that 
simplification of the procedures for an action to be deemed to have 
been taken in writing via email communication for purposes of Section 
4.7(e) is particularly helpful to Holdco and the Members of Holdco in 
light of the COVID-19 pandemic, which has resulted in less in-person 
meetings and more actions to be taken by the Members of Holdco in 
writing via email communication.
Amendments To Streamline Email Communications Procedures for Actions 
Taken by Written Consent of the Holdco Board
    Section 8.7 of the Holdco LLC Agreement provides that any action of 
the Holdco Board may be taken without a meeting if a written consent 
(including via email communication) of all of the Directors then 
constituting the Holdco Board approves such action. Section 8.7 also 
provides specific procedures for an action to be deemed to have been 
taken in writing via email communication for this purpose. The Exchange 
proposes to amend Section 8.7 to streamline these procedures, as 
described below.
     Current language in Section 8.7 relating to email 
communication procedures: For purposes of the foregoing, an action 
shall be deemed to have been taken in writing via email communication 
if (i) an email communication is sent by the CEO or Chairman of the 
Board to all Directors entitled to vote on the matter at issue clearly 
specifying the action to be taken and clearly stating that an email 
response to such email shall be deemed to be an email communication for 
purposes of this Section 8.7, (ii) the number of Directors required to 
approve the matter at issue respond to the CEO's or the Chairman of the 
Board's email with an unambiguous approval of such matter, and (iii) 
the CEO's or Chairman of the Board's email and all such responses are 
filed with the minutes of the meetings of Directors.
     Proposed amended language in Section 8.7 relating to email 
communication procedures: For purposes of the foregoing, an action 
shall be deemed to have been taken in writing via email communication 
if (i) an email communication is sent by an Officer or the Chairman of 
the Board to all Directors entitled to vote on the matter at issue 
clearly specifying the action to be taken, (ii) the number of Directors 
required to approve the matter at issue respond to the Officer's or the 
Chairman of the Board's email with an unambiguous approval of such 
matter, and (iii) the Officer's or Chairman of the Board's email and 
all such responses are filed with the minutes of the meetings of 
Directors.
    The effect of the proposed amendments to Section 8.7 is to modify 
the procedures for an action to be deemed to have been taken in writing 
via email communication for this purpose to: (i) Permit an email 
communication to be sent by any Officer

[[Page 18576]]

(rather than just the CEO) and (ii) no longer require that such email 
communication clearly state that an email response to such email shall 
be deemed to be an email communication for purposes of Section 8.7. The 
Exchange and the Holdco Board believe it is already clear from the 
context of email communications requesting the Holdco Board's written 
consent of a particular matter that such email communications should be 
deemed as email communications for purposes of Section 8.7 and that 
expressly stating this in such email communications is unnecessary. 
Accordingly, these proposed amendments are intended to simplify and 
streamline the procedures for actions taken by the Holdco Board without 
a meeting by broadening the group of Officers that may send an email 
communication for this purpose and eliminating an unnecessary technical 
requirement. The Exchange and the Holdco Board believe that 
simplification of the procedures for an action to be deemed to have 
been taken in writing via email communication for purposes of Section 
8.7 is particularly helpful to Holdco and the Holdco Board in light of 
the COVID-19 pandemic, which has resulted in less in-person meetings 
and more actions to be taken by the Holdco Board in writing via email 
communication.
Clarifying, Conforming, and Other Non-Substantive Amendments
    Finally, the Exchange proposes to make various clarifying, 
conforming, and other non-substantive amendments to the Holdco LLC 
Agreement, each of which is discussed below.
Clarifying Amendments to Section 8.3(b) Regarding the Elimination or 
Waiver of a Nominating Class A Member's Right To Nominate a Director
    Section 8.3(b) of the Holdco LLC Agreement currently provides, in 
part, that the right of a Nominating Class A Member to nominate a 
Director may be eliminated or waived, as applicable, as set forth in 
Section 8.10 (which relates to the loss of the right to nominate a 
Director if a Nominating Class A Member ceases to own a specified 
amount of Class A Units) and Section 8.11 (which relates to a 
Nominating Class A Member's ability to waive its right to nominate a 
Director). The Exchange proposes to amend Section 8.3(b) to also 
include a reference that the right of a Nominating Class A Member to 
nominate a Director may be eliminated as set forth in Section 8.17 of 
the Holdco LLC Agreement. Section 8.17 sets forth the procedures with 
respect to Combinations of Nominating Class A Members, including that, 
if both such Nominating Class A Members that involved in a Combination 
had nominated a Director that is serving on the Holdco Board at the 
time of the Combination, the surviving Affiliated group shall remove or 
cause the removal of one of such Directors effective upon the 
consummation of such Combination and thereafter have the right to 
nominate only one Director and the number of Directors shall be reduced 
accordingly. Thus, Section 8.17 already provides that the right to 
nominate a Director held by one Nominating Class A Member involved in 
such a Combination will be eliminated as a result of such Combination 
(since the surviving Affiliated group may retain only one of the 
Nominating Class A Members' rights to nominate a Director), however, 
Section 8.17 is not currently referenced in Section 8.3(b) as a section 
pursuant to which such right may be eliminated or waived. Accordingly, 
the proposed amendment to include a reference to Section 8.17 in 
Section 8.3(b) is intended to clarify that the right of a Nominating 
Class A Member to nominate a Director may be eliminated pursuant to 
Section 8.17 in connection with a Combination involving Nominating 
Class A Members.
    The Exchange also proposes to further amend Section 8.3(b) to 
provide that, for the avoidance of doubt, a Class A Member shall not be 
a Nominating Class A Member for so long as such Class A Member's right 
to nominate a Director is eliminated or waived pursuant to Section 
8.10, Section 8.11, and Section 8.17. This is already true under the 
Holdco LLC Agreement pursuant to the operation of these sections, so 
the purpose of this proposed amendment is to simply add clarity to the 
Holdco LLC Agreement in this regard.
Amendment to Section 8.19(a) To Correct an Inadvertent Drafting Error
    Section 8.19 of the Holdco LLC Agreement contains provisions 
relating to the creation and functioning of an advisory board with 
industry representation (the ``Holdco Industry Advisory Board''). 
Section 8.19(a) sets forth the compositional requirements of the Holdco 
Industry Advisory Board. The Exchange proposes to amend Section 8.19(a) 
of the Holdco LLC Agreement to replace a reference in that provision to 
``Members'' (which refers to a person admitted as a limited liability 
company member of Holdco) with a reference to ``members'' (which, in 
the context, refers to members of the national securities exchange 
operated by the Exchange), as this was the original intent of the 
parties to the Holdco LLC Agreement. Thus, the purpose of this proposed 
amendment is to add clarity to the Holdco LLC Agreement by correcting 
an inadvertent drafting error.
Amendment to Section 8.3(e) Regarding the Maintenance of the Director 
and Observers Schedule
    Section 8.3(e) of the Holdco LLC Agreement currently provides that 
a copy of the Directors and Observers Schedule \29\ as of the execution 
of this Agreement (referring to the Holdco LLC Agreement) is attached 
thereto as Exhibit B. The Exchange proposes to amend Section 8.3(e) to 
delete the phrase ``as of the execution of this Agreement'' so that the 
Directors and Observers Schedule may be maintained on an ongoing basis 
rather than remaining static as of a specific date. The Exchange and 
the Holdco Board believe that the proposed change would benefit the 
Members of Holdco and the public by providing up-to-date information 
with respect to Director, Alternate Director and Board Observer changes 
as they occur, as the Exchange maintains a copy of the Holdco LLC 
Agreement on its public website and would update the Director and 
Observers Schedule as such changes occur. The Exchange believes this is 
a non-substantive amendment to the Holdco LLC Agreement as it relates 
solely to the administration and maintenance of the corporate documents 
of Holdco.
---------------------------------------------------------------------------

    \29\ The term ``Directors and Observers Schedule'' refers to a 
schedule of all Directors, Alternate Directors and Board Observers 
maintained by the Holdco Board. See Sections 8.3(e) of the Holdco 
LLC Agreement. The term ``Alternate Director'' refers to an 
alternate for a Director nominated by a Class A Member. See Section 
8.12(a) of the Holdco LLC Agreement. The term ``Board Observer'' 
refers to an observer to the Board appointed by a Member. See 
Section 8.13(c) of the Holdco LLC Agreement.
---------------------------------------------------------------------------

Deletion of Section 13.1(d) To Remove an Obsolete Provision Relating to 
Events of Dissolution of Holdco
    The Exchange proposes to delete Section 13.1(d) of the Holdco LLC 
Agreement in its entirety, as that provision is now outdated and 
obsolete, and it would therefore not be appropriate to leave in the 
Fifth Amended LLC Agreement. Specifically, Section 13.1(d) provides 
that Holdco shall be dissolved and its affairs wound up upon the 
occurrence of either of two events, each of which could only have 
occurred prior to the Commission's approval of the Exchange 
Application.\30\ On May 4, 2020, the Commission

[[Page 18577]]

approved \31\ the Exchange Application and, therefore, the occurrence 
of either of these events of dissolution is no longer possible. 
Accordingly, the purpose of this proposed amendment is to add clarity 
to the Holdco LLC Agreement by deleting a provision that is now 
obsolete.
---------------------------------------------------------------------------

    \30\ As currently defined in Section 13.1(d) of the Holdco LLC 
Agreement, the term ``Exchange Application'' refers to the 
application of the Exchange as a national securities exchange.
    \31\ See Securities Exchange Act Release No. 88806 (May 4, 
2020), 85 FR 27451 (May 8, 2020).
---------------------------------------------------------------------------

Amendment to Section 8.3(c) To Delete Obsolete Language Regarding the 
Current CEO's Election to the Holdco Board
    The Exchange proposes to amend Section 8.3(c) of the Holdco LLC 
Agreement to delete an outdated statement that Holdco's CEO as of the 
Fourth Amended LLC Agreement Effective Date shall be deemed to be 
elected as a Director to the Holdco Board as of such date. The CEO as 
of the Fourth Amended LLC Agreement Effective Date (i.e., the current 
CEO) has already been elected as a Director to the Holdco as of such 
date and, therefore, this language is obsolete and it would therefore 
not be appropriate to leave in the Fifth Amended LLC Agreement. As 
amended, Section 8.3(c) would continue to provide that the individual 
serving as the CEO shall be deemed elected to the Holdco Board as a 
Director at the time of his or her appointment as the CEO by the Holdco 
Board. The purpose of this proposed amendment is to add clarity to the 
Holdco LLC Agreement by deleting language that is now obsolete.
Amendment to Section 3.2 To Delete Obsolete Language Regarding the 
Prior Reclassification of Class A Units
    The Exchange proposes to amend Section 3.2 of the Holdco LLC 
Agreement to delete an outdated reference that all Units classified as 
Class A Units immediately prior to the Fourth Amended LLC Agreement 
Effective Date are reclassified as Class A-1 Units as of such date. 
This reclassification of Class A Units already happened pursuant to the 
Fourth Amended LLC Agreement as of the Fourth Amended LLC Agreement 
Effective Date and, therefore, it would not be appropriate to leave 
this language in the Fifth Amended LLC Agreement. The purpose of this 
proposed amendment is to add clarity to the Holdco LLC Agreement by 
deleting language that is now obsolete.
Amendment to Section 3.3(b) To Reflect Updated Amount of Class B Units 
Available for Issuance
    The Exchange proposes to amend Section 3.3(b) of the Holdco LLC 
Agreement to reflect that the maximum number of Class B Units available 
for issuance pursuant to the Amended and Restated MEMX Holdings LLC 
2018 Profits Interests Plan (the ``Incentive Plan'') has increased 
(from 12,352,941 to 16,754,087) as a result of action taken by the 
Holdco Board in accordance with the Holdco LLC Agreement and the 
Incentive Plan following the Fourth Amended LLC Agreement Effective 
Date. Thus, the purpose of this proposed amendment is to add clarity to 
the Holdco LLC Agreement by updating the amount of Class B Units 
referenced in Section 3.3(b) to reflect this increased amount.
Amendments To Reflect Updated Class A Member Entity Names
    The Exchange proposes to amend the Holdco LLC Agreement to reflect 
the updated entity names of certain Class A Members and add signature 
pages for entities that became Class A Members after the Fourth Amended 
LLC Agreement Effective Date. The purpose of these amendments is to add 
clarity to the Holdco LLC Agreement by updating references to outdated 
entity names and including signature pages for entities that are now 
Class A Members and will be signatories to the Fifth Amended LLC 
Agreement. Each amendment is discussed below.
     Definition and signature page of Fidelity: The Exchange 
proposes to amend the definition of ``Fidelity'' to replace all 
references to Devonshire Investors (Delaware) LLC with references to 
FMR LLC, as the Class A Units held by Devonshire Investors (Delaware) 
LLC were transferred to its Affiliate, FMR LLC, and FMR LLC was 
admitted as a Class A Member of Holdco following the Fourth Amended LLC 
Agreement Effective Date. The Exchange also proposes to amend 
Fidelity's signature page to reflect this change.
     Definition and signature page of Virtu: The Exchange 
proposes to amend the definition of ``Virtu'' to replace all references 
to Virtu Getco Investments, LLC with references to Virtu Investments, 
LLC to reflect that such entity underwent a name change following the 
Fourth Amended LLC Agreement Effective Date. The Exchange also proposes 
to amend Virtu's signature page to reflect this change.
     Definition and signature page of E*Trade: The Exchange 
proposes to amend E*Trade's signature page to reference E*TRADE 
Financial Holdings, LLC, as this entity is the successor-in-interest to 
E*TRADE Financial Corporation and was admitted as a Class A Member of 
Holdco following the Fourth Amended LLC Agreement Effective Date, as 
described above.\32\
---------------------------------------------------------------------------

    \32\ See supra note 6.
---------------------------------------------------------------------------

     Signature Pages of New Class A Members: The Exchange 
proposes to add signature pages for the following entities, as such 
entities became admitted as Class A Members of Holdco following the 
Fourth Amended LLC Agreement Effective Date and will be signatories to 
the Fifth Amended LLC Agreement: Wells Fargo Central Pacific Holdings, 
Inc.; Flow Traders U.S. Holding LLC; BLK SMI, LLC; Manikay Global 
Opportunities 2, LP; and Citicorp North America, Inc.
Add ``Fourth Amended LLC Agreement'' and ``Fourth Amended LLC Agreement 
Effective Date'' as New Defined Terms and Make Conforming Changes
    As the Exchange is proposing to amend and restate the Holdco LLC 
Agreement, the Exchange proposes to add ``Fourth Amended LLC 
Agreement'' as a defined term to reference the Fourth Amended LLC 
Agreement. The Exchange also proposes to add ``Fourth Amended LLC 
Agreement Effective Date'' to reference the Fourth Amended LLC 
Agreement Effective Date. The Exchange also proposes to make conforming 
amendments to Sections 10.6(a) and 12.4(c) of the Holdco LLC Agreement 
to replace references to ``Effective Date'' with references to ``Fourth 
Amended LLC Agreement Effective Date'' as appropriate in the context.
Technical and Conforming Amendments To Amend and Restate the Holdco LLC 
Agreement
    The Exchange proposes to make technical and conforming amendments 
to Section 2.1(b), the cover page, the table of contents, the lead-in, 
the recitals, and the signature pages of the Holdco LLC Agreement to 
reflect that the Holdco LLC Agreement is being amended and restated 
from the Fourth Amended LLC Agreement to the Fifth Amended LLC 
Agreement.
2. Statutory Basis
    The Exchange believes that the proposed amendments to the Holdco 
LLC Agreement are consistent with Section 6(b) of the Act,\33\ in 
general, and further the objectives of Section 6(b)(1) of the Act,\34\ 
in particular, in that such amendments enable the Exchange to be so 
organized as to have the capacity to be able to carry out the purposes 
of the Act and to comply with the provisions

[[Page 18578]]

of the Act, the rules and regulations thereunder, and the rules of the 
Exchange. The Exchange also believes that the proposed amendments are 
consistent with Section 6(b)(5) of the Act,\35\ which requires the 
rules of an exchange to 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.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78f(b).
    \34\ 15 U.S.C. 78f(b)(1).
    \35\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes the proposed amendments to reflect governance 
changes that resulted from or were made in connection with the Morgan 
Stanley-E*Trade Combination and the Schwab-TD Ameritrade Combination, 
and to make conforming changes to defined terms, are appropriate and 
consistent with the Act, as such amendments would update and clarify 
the relevant provisions of the Holdco LLC Agreement to reflect 
governance changes with respect to Holdco and the Exchange that have 
already occurred by operation of the Holdco LLC Agreement and/or 
pursuant to authorization by the Holdco Board or action by a Class A 
Member, as applicable, as described above. The Exchange believes that 
updating the Holdco LLC Agreement to reflect the current state of 
affairs with respect to the governance of Holdco and the Exchange would 
further the goal of transparency and add clarity with respect to the 
corporate documents of the Exchange's parent company, thereby enabling 
the Exchange to be so organized as to have the capacity to carry out 
the purposes of the Act and to comply with the provisions of the Act, 
the rules and regulations thereunder, and the rules of the Exchange, 
promoting just and equitable principles of trade, removing impediments 
to and perfect the mechanism of a free and open market, and protecting 
investors and the public interest.
    The Exchange believes the proposed amendments to add ``Buy Side 
Class A Member'' and ``Buy Side Director'' as new defined terms, group 
Buy Side Class A Members together with Retail Broker Class A Members 
for purposes of the Holdco Board's quorum provisions, and make 
conforming changes to defined terms, are appropriate and consistent 
with the Act, as the Exchange believes such amendments would improve 
the governance of Holdco by reducing potential logistical concerns with 
respect to establishing a quorum of the Holdco Board at meetings of the 
Holdco Board. As noted above, the effect of these amendments is to 
group Buy Side Directors (which would currently include only the 
Director nominated by BlackRock) together with Retail Broker Directors 
(which currently includes only the Director nominated by Fidelity) for 
purposes of establishing a quorum of the Holdco Board such that a 
Director of either of those categories would be required to be present 
to establish a quorum of the Holdco Board. The Exchange believes this 
change would improve the governance of Holdco by no longer requiring 
the Director nominated by a single Class A Member to be present to 
establish a quorum of the Holdco Board at a meeting of the Holdco 
Board, which the Exchange believes may be impractical as requiring one 
specific Director to establish a quorum at meetings of the Holdco Board 
could result in difficulty establishing a quorum, and thus conducting 
the business, of the Holdco Board if such Director is unavailable for a 
meeting.
    Similarly, the Exchange believes the proposed amendments to Section 
4.7(e) and Section 8.7 to permit email communications for purposes of 
those sections to be sent by any Officer (rather than just the CEO) and 
to no longer require that such email communications clearly state that 
an email response shall be deemed to be an email communication for 
purposes of those sections would improve the governance of Holdco, as 
such amendments would simplify and streamline the procedures for 
actions taken by written consent of the Holdco Members and the Holdco 
Board via email communications by broadening the group of Officers that 
may send an email communication for these purposes and eliminating an 
unnecessary technical requirement. As noted above, simplification of 
these procedures is particularly helpful at this time as actions of the 
Holdco Members and the Holdco Board are more likely to be taken by 
written consent via email communications than at in-person meetings due 
to the COVID-19 pandemic.
    While the proposed amendments aimed at improving the governance of 
Holdco do not directly impact the governance or operations of the 
Exchange or the Exchange Board, the Exchange believes that having a 
more efficient and effective governance structure in place for its 
parent company would indirectly benefit the Exchange's governance and 
operations, thereby enabling the Exchange to be so organized as to have 
the capacity to carry out the purposes of the Act, remove impediments 
to and perfect the mechanism of a free and open market, and protect 
investors and the public interest.
    The Exchange believes the proposed amendments to Section 8.18(i) to 
provide that each Nominating Class A Member shall have the right to 
nominate one member to the board of directors or an equivalent 
governing body, if any, of each Holdco Subsidiary (other than the 
Exchange \36\), are consistent with the Act, as such amendments update 
this section to reflect the admission of BlackRock as a Nominating 
Class A Member. As described above, the effect of these proposed 
amendments is to add BlackRock, which became a Nominating Class A 
Member following the Fourth Amended LLC Agreement Effective Date, to 
the group of Class A Members that holds this right in a manner 
consistent with the Holdco Members' original intent of granting this 
right to each Nominating Class A Member. The Exchange also believes 
that amending Section 8.18(i) to clarify that the requirement for each 
Nominating Class A Member to have this right with respect to a Holdco 
Subsidiary is not applicable if the governance structure of such Holdco 
Subsidiary is otherwise approved by the Holdco Board by Supermajority 
Board Vote, which is already the case under the Holdco LLC Agreement's 
Supermajority Board Vote provisions, as described above, is consistent 
with the Act, as it would clarify this result in Section 8.18(i). For 
the reasons described above, the Exchange believes that the proposed 
amendments to Section 8.18(i) would remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and protect investors and the public interest.
---------------------------------------------------------------------------

    \36\ See supra note 24.
---------------------------------------------------------------------------

    The Exchange believes the proposed amendments to clarify provisions 
relating to the elimination or waiver of a Nominating Class A Member's 
right to nominate a Director, correct inadvertent drafting errors, 
delete obsolete language and make other conforming changes consistent 
with the other proposed amendments to the Holdco LLC Agreement 
described above, reflect updated Class A Member entity names, and make 
technical and conforming changes to reflect that the Holdco LLC 
Agreement is being amended and restated from the Fourth Amended LLC 
Agreement to the Fifth Amended LLC Agreement are consistent with the 
Act, as such amendments would add update and clarify the Holdco LLC 
Agreement, thereby increasing transparency and helping to avoid any 
potential confusion resulting from retaining outdated, obsolete, or 
unclear provisions. For

[[Page 18579]]

these reasons, the Exchange believes such amendments would enable the 
Exchange to be so organized as to have the capacity to carry out the 
purposes of the Act and to comply with the provisions of the Act, the 
rules and regulations thereunder, and the rules of the Exchange, 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market, and protect 
investors and the public interest.
    Finally, the Exchange believes the proposed amendment to maintain 
the Directors and Observers Schedule attached as Exhibit B to the 
Holdco LLC Agreement on an ongoing basis, rather than as of a specific 
date, is consistent with the Act, as it would enable the Exchange to 
maintain a copy of the Holdco LLC Agreement with an up-to-date 
Directors and Observers Schedule on its public website, thereby 
increasing transparency with respect to the governance of the 
Exchange's parent company, which the Exchange believes would protect 
investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposal will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposal is not intended to 
address competitive issues but rather is concerned solely with the 
update and maintenance of Holdco's corporate documents and the 
governance, administration, and functioning of Holdco and certain 
Holdco Subsidiaries (other than the Exchange), as described above.

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Discussion

    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.\37\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(1) of the Act,\38\ which 
requires that an exchange be so organized as to have the capacity to be 
able to carry out the purposes of the Act and to comply with the 
provisions of the Act, the rules and regulations thereunder, and the 
rules of the exchange.
---------------------------------------------------------------------------

    \37\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \38\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    As summarized above, the Exchange proposes to amend and restate the 
Holdco LLC Agreement to make changes that are necessitated by recent 
consolidation among several of its shareholders. Relatedly, the 
Exchange proposes changes to the classification of its shareholders, 
which is relevant to the quorum provisions. Finally, the Exchange 
proposes other governance changes that impact, among other things, 
written consents, director nominations, updates to reflect the addition 
of Blackrock as a shareholder, and obsolete language.
    The Commission finds that the proposed rule changes are consistent 
with the Exchange Act, including Section 6(b)(1) thereunder, in that 
they update the Holdco LLC Agreement to reflect corporate changes among 
its shareholders, preserve a balanced approach to the quorum provision, 
accommodate a new shareholder into the governance framework of Holdco, 
and make updates that do not materially alter Holdco governance or 
adversely impact governance of the Exchange.
    In particular, the Commission believes that the Exchange's proposed 
amendments to the provisions governing quorum of the Holdco Board are 
consistent with Section 6(b)(1) of the Act in that the amendments are 
meant to guard against any particular Holdco shareholder exerting undue 
influence over the affairs of Holdco. Specifically, the Exchange has 
proposed to add ``Buy Side Class A Member'' and ``Buy Side Director'' 
as new defined terms, and group Buy Side Director(s) together with 
Retail Broker Director(s) for purposes of the Holdco Board's quorum 
provision. Under current rules, quorum requires the presence of (1) a 
Market Maker Director, (2) a Bank Director, and (3) a Retail Broker 
Director.\39\ However, as a result of recent consolidation that reduced 
the number of shareholders that are Retail Broker Class A Members,\40\ 
there currently remains only one Retail Broker Director nominated to 
Holdco by a single Retail Broker Class A Member, meaning that quorum of 
the Holdco Board could depend on the presence of a single 
individual.\41\ The Exchange's proposal to group the Holdco director 
appointed by the new Buy Side Class A Member (i.e., Blackrock) together 
with the Holdco director that can be appointed by the remaining Retail 
Broker Class A Member (i.e., Fidelity) for the quorum provision will 
enable the Holdco Board to preserve a balanced approach to its quorum 
provision without providing any one shareholder with the power to 
withhold quorum and thus exercise undue influence over Holdco or its 
exchange subsidiary.
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    \39\ See Section 8.6(a)(i) of the Holdco LLC Agreement.
    \40\ See supra notes 5-9 and accompanying text.
    \41\ See supra note 15 and accompanying text (noting that Schwab 
irrevocably waived its right to nominate a director of Holdco).
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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 rule-comments@sec.gov. Please include 
File Number SR-MEMX-2021-04 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 SR-MEMX-2021-04. 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

[[Page 18580]]

comment submissions. You should submit only information that you wish 
to make available publicly. All submissions should refer to File Number 
SR-MEMX-2021-04 and should be submitted on or before April 30, 2021.

V. Accelerated Approval of Proposed Rule Change

    The Commission finds good cause for approving the proposed rule 
change prior to the 30th day after the date of publication of notice in 
the Federal Register. The Commission believes that the proposed rule 
changes update the Holdco LLC Agreement to reflect recent corporate 
changes among its shareholders and make other updates that do not 
materially alter Holdco governance or adversely impact governance of 
the Exchange. Accordingly, the proposed changes do not appear to 
present any novel regulatory issues. Furthermore, the Commission 
believes that the proposed amendments to the provisions relating to a 
quorum of the Holdco Board are necessary to preserve an appropriate 
balance and to avoid a situation in future Holdco Board meetings of one 
shareholder having an inappropriate and disproportionate impact on 
quorum. Accelerated approval of the proposal allows the updated quorum 
provision to take effect prior to the next Holdco Board meeting. For 
these reasons, the Commission finds good cause for approving the 
proposed rule change, as amended, on an accelerated basis, pursuant to 
Section 19(b)(2) of the Act.\42\
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    \42\ 15 U.S.C. 78s(b)(2)
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\43\ that the proposed rule change (SR-MEMX-2021-04) be, and hereby is, 
approved on an accelerated basis.
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    \43\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\44\
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    \44\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-07273 Filed 4-8-21; 8:45 am]
BILLING CODE 8011-01-P


