[Federal Register Volume 86, Number 85 (Wednesday, May 5, 2021)]
[Notices]
[Pages 24083-24090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09446]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91727; File No. SR-CboeBZX-2021-028]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Amend the Sixth Amended and 
Restated Bylaws of Cboe BZX Exchange, Inc.'s Parent Corporation, Cboe 
Global Markets, Inc. To Implement Proxy Access

April 29, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 16, 2021, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``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 comments on the proposed rule 
change from interested persons.
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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

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') is filing 
with the Securities and Exchange Commission (the ``Commission'') a 
proposed rule change with respect to amendments to the Sixth Amended 
and Restated Bylaws (the ``CGM Bylaws'') of its parent corporation, 
Cboe Global Markets, Inc. (``Cboe'' or ``Corporation''). The text of 
the proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, 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 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
    Cboe has received a stockholder proposal submitted pursuant to Rule 
14a-8 under the Act \3\ which requested that the CGM Board take steps 
to implement a ``proxy access'' bylaw provision. In general, proxy 
access bylaws allow a stockholder, or group of stockholders, who comply 
with certain requirements, to nominate candidates for service on a 
board and have those candidates included in a company's proxy 
materials. Such provisions have become common among S&P 500 
companies.\4\ Cboe has determined to take the stockholder's requested 
steps to implement proxy access. Accordingly, the Exchange now proposes 
to make these changes by adopting new Section 2.16 of the CGM Bylaws 
and making certain conforming changes to current Sections 2.10 and 2.11 
of the CGM Bylaws, all of which are described further below.
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    \3\ See 17 CFR 240.14a-8, which requires companies that are 
subject to the federal proxy rules to include shareholder proposals 
in companies' proxy statements to shareholders, subject to certain 
procedural and substantive requirements.
    \4\ More than 75% of S&P 500 companies have adopted proxy access 
bylaw provisions.
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    In developing its proposal, Cboe generally tried to balance the 
relative weight of arguments for and against proxy access provisions. 
On the one hand, Cboe recognizes the significance of this issue to some 
investors, who see proxy access as an important accountability 
mechanism that allows them to participate in board elections through 
the nomination of stockholder candidates that are presented in a 
company's proxy statement. On the other hand, Cboe's proposed proxy 
access provision includes certain procedural requirements that are 
designed to help ensure, among other things, that Cboe and its 
stockholders will have full and accurate information about nominating 
stockholders and their nominees and that such stockholders and nominees 
will comply with applicable laws, regulations and other requirements. 
Additionally, the Exchange notes the proposed terms are common among 
companies that have adopted proxy access. The Exchange also notes that 
the parent companies of other exchanges have adopted substantively 
similar proxy access provisions and the Exchange does not

[[Page 24084]]

believe such provisions are materially different than the Exchange's 
proposal.\5\
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    \5\ See Securities Exchange Release No. 79357 (November 18, 
2016) 81 FR 85283 (November 25, 2016) (SR-NASDAQ-2016-127; SR-BX-
2016-051; SR-ISE-2016-22; SR-ISEGemini-2016-10; SR-ISEMercury-2016-
16; SR-PHLX-2016-93; SR-BSECC-2016-001; SR-SCCP-2016-01). See also 
Securities Exchange Release No. 77782 (May 6, 2016) 81 FR 29600 (May 
12, 2016) (SR-NYSE-2016-14; SR-NYSEArca-2016-25; SR-NYSEMKT-2016-
20).
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    The proposed rule change would add new Section 2.16 to the CGM 
Bylaws. Section 2.16 would permit a stockholder, or group of up to 20 
stockholders, to nominate director nominees for the Cboe Board, so long 
as the stockholder(s) have owned at least three percent of Cboe's 
outstanding shares of capital stock continuously for at least three 
years. The director nominees would be included in Cboe's annual meeting 
proxy materials. The proposed provision would limit the number of 
proposed director nominees to the greater of (i) two or (ii) 20% of the 
number of Cboe directors in office (rounded down to the nearest whole 
number, but no less than two) provided that the stockholder(s) and 
nominee(s) satisfy the other conditions specified in the CGM Bylaws as 
described further below.
Proposed Section 2.16(a)
    The Exchange first proposes to amend the CGM Bylaws to, as set 
forth in the first sentence of proposed Section 2.16(a), require the 
Corporation to include in its proxy statement, its form proxy and any 
ballot distributed at the stockholder meeting, the name of, and certain 
Required Information \6\ about, any person nominated for election (the 
``Stockholder Nominee'') to the Board by a stockholder or group of 
stockholders (the ``Eligible Stockholder'') \7\ that satisfies the 
requirements set forth in the proxy access provision of CGM Bylaws.\8\ 
Proposed Section 2.16(a) will also make clear that Cboe is able to 
solicit against any Stockholder Nominee or include in its proxy 
materials the Corporation's own statements or other information 
relating to any Eligible Stockholder or Stockholder Nominee, including 
any information provided to the Corporation pursuant to Section 2.16. 
This provision clarifies that just because Cboe must include a 
Stockholder Nominee in its proxy materials if the proxy access 
provisions are satisfied, Cboe does not necessarily have to support 
that nominee.
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    \6\ The Required Information is the information provided to 
Cboe's Corporate Secretary about the Stockholder Nominee and the 
Eligible Stockholder that is required to be disclosed in the 
Corporation's proxy statement by the regulations promulgated under 
the Act, and if the Eligible Stockholder so elects, a written 
statement, not to exceed 500 words, in support of the Stockholder 
Nominee(s)' candidacy (the ``Supporting Statement'', as defined 
further below).
    \7\ As used throughout the CGM Bylaws, the term ``Eligible 
Stockholder'' includes each member of a stockholder group that 
submits a proxy access nomination to the extent the context 
requires.
    \8\ When the Corporation includes proxy access nominees in the 
proxy materials, such individuals will be included in addition to 
any persons nominated for election by at or the direction of the 
Board to the Board or any committee thereof.
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Proposed Section 2.16(b)
    Proposed Section 2.16(b) will provide that in order to utilize this 
provision, the Eligible Stockholder must expressly request at the time 
of providing a required notice to the Corporation of the proxy access 
nomination (the ``Notice of Proxy Access Nomination'') to have its 
nominee included in the Corporation's proxy materials. Proposed Section 
2.16(b) also establishes the deadline for a timely Notice of Proxy 
Access Nomination. Specifically, such a notice must be delivered to the 
Cboe's Secretary at the principal executive offices of the Corporation 
not earlier than the open of business on the one hundred fiftieth 
(150th) day and not later than the close of business on the one hundred 
twentieth (120th) day prior to the first anniversary of the date that 
Cboe first distributed its proxy statement to stockholders for the 
previous year's annual meeting of stockholders provided, however, that 
in the event the annual meeting is more than thirty (30) days before or 
after the anniversary date of the prior year's annual meeting, or if no 
annual meeting was held in the preceding year, to be timely, the Notice 
of Proxy Access Nomination must be received at the principal executive 
offices of the Corporation no earlier than one hundred fifty (150) days 
before such annual meeting and no later than the later of one hundred 
twenty (120) days before such annual meeting or the tenth (10th) day 
following the day on which public announcement (as defined in Section 
2.11) of the date of such meeting is first made by the Corporation. 
Further Section 2.16 will provide that in no event shall any 
adjournment or postponement of an annual meeting or the announcement 
thereof commence a new time period (or extend any time period) for the 
giving of a Notice of Proxy Access Nomination as described above. Cboe 
believes this notice period will provide stockholders an adequate 
window to submit nominees via proxy access, while also providing the 
Corporation adequate time to diligence a proxy access nominee before 
including them in the proxy statement for the next annual meeting of 
stockholders.
Proposed Section 2.16(c)
    Proposed Section 2.16(c) specifies that the maximum number (``the 
Permitted Number'') of Stockholder Nominees nominated by all Eligible 
Stockholders that will be included in Cboe's proxy materials with 
respect to an annual meeting of stockholders shall not exceed the 
greater of two or 20% of the total number of directors in office 
(rounded down to the nearest whole number) as of the last day on which 
a Notice of Proxy Access Nomination may be delivered pursuant to and in 
accordance with the proxy access provision of the Bylaws (the ``Final 
Proxy Access Nomination Date''). In the event that one or more 
vacancies for any reason occurs after the Final Proxy Access Nomination 
Date but before the date of the annual meeting and the Board resolves 
to reduce the size of the Board in connection therewith, the Permitted 
Number of Stockholder Nominees included in Cboe's proxy materials shall 
be calculated based on the number of directors in office as so reduced. 
In addition, the Permitted Number shall be reduced by (i) the number of 
individuals who will be included in the Corporation's proxy materials 
as director nominees recommended by the Board pursuant to an agreement, 
arrangement or other understanding with a stockholder or group of 
stockholders (other than any such agreement, arrangement or 
understanding entered into in connection with an acquisition of stock 
from the Corporation by such stockholder or group of stockholders) and/
or (ii) the number of directors in office as of the Final Proxy Access 
Nomination Date who were included in the Corporation's proxy materials 
as Stockholder Nominees for any of the two preceding annual meetings of 
stockholders (including any persons counted as Stockholder Nominees 
pursuant to the immediately succeeding sentence) and whose reelection 
at the upcoming annual meeting is being recommended by the Board. Any 
individual nominated by an Eligible Stockholder for inclusion in the 
proxy materials pursuant to the proxy access provision of the CGM 
Bylaws whom the Board decides to nominate as a nominee of the Board, 
and any individual nominated by an Eligible Stockholder for inclusion 
in the proxy materials pursuant to the proxy access provision but whose 
nomination is subsequently withdrawn, shall be counted as one of the 
Stockholder Nominees for purposes of determining when the Permitted

[[Page 24085]]

Number of Stockholder Nominees has been reached. Any Eligible 
Stockholder submitting more than one Stockholder Nominee for inclusion 
in the proxy materials shall rank such Stockholder Nominees based on 
the order that the Eligible Stockholder desires such Stockholder 
Nominees to be selected for inclusion in the proxy statement in the 
event that the total number of Stockholder Nominees submitted by 
Eligible Stockholders pursuant to the proxy access provision exceeds 
the Permitted Number of nominees allowed. In the event that the number 
of Stockholder Nominees submitted by Eligible Stockholders pursuant to 
Section 2.16 exceeds the Permitted Number of nominees allowed, the 
highest ranking Stockholder Nominee who meets the requirements of the 
proxy access provision of the Bylaws from each Eligible Stockholder 
will be selected for inclusion in the proxy materials until the 
Permitted Number is reached, going in order of the amount (largest to 
smallest) of shares of Cboe's outstanding capital stock each Eligible 
Stockholder disclosed as owned in its respective Notice of Proxy Access 
Nomination submitted to Cboe. If the Permitted Number is not reached 
after the highest ranking Stockholder Nominee who meets the 
requirements of the proxy access provision of the Bylaws from each 
Eligible Stockholder has been selected, then the next highest ranking 
Stockholder Nominee who meets the requirements of Section 2.16 from 
each Eligible Stockholder will be selected for inclusion in the 
Corporation's proxy materials, and this process will continue as many 
times as necessary, following the same order each time, until the 
Permitted Number is reached. Additionally, notwithstanding anything to 
the contrary contained in proposed Section 2.16, Cboe will not be 
required to include any Stockholder Nominees in its proxy materials 
pursuant to Section 2.16 for any meeting of stockholders for which the 
Secretary receives a notice (whether or not subsequently withdrawn) 
that the Eligible Stockholder or any other stockholder intends to 
nominate one or more persons for election to the Board pursuant to 
Section 2.11 of the CGM Bylaws. Cboe believes it is reasonable to limit 
the Board seats available to proxy access nominees and to establish 
procedures for selecting candidates if the nominee limit is exceeded. 
The limitation on Board seats available to proxy access nominees 
ensures that proxy access cannot be used to take over the entire Board, 
which is not the stated purpose of proxy access campaigns. The 
procedures for selecting candidates if the nominee limit is exceeded 
establish clear and rational guidelines for an orderly nomination 
process to avoid the Corporation having to make arbitrary judgments 
among candidates.
Proposed Section 2.16(d)
    Proposed Section 2.16(d) defines who may qualify as an ``Eligible 
Stockholder''. Particularly, an Eligible Stockholder is a stockholder 
or group of no more than 20 stockholders \9\ that (i) has owned 
continuously for at least three years (the ``Minimum Holding Period'') 
a number of shares of capital stock of the Corporation that represents 
at least three percent of the outstanding shares of capital stock of 
the Corporation as of the date the Notice of Proxy Access Nomination is 
received (the ``Required Shares''), (ii) continues to own the Required 
Shares through the date of the annual meeting and (iii) meets all other 
requirements of proposed Section 2.16. Cboe believes it is reasonable 
to require each member of a nominating group to provide such 
information so that both the Corporation and its stockholders are fully 
informed about the entire group making the proxy access nomination. As 
such, Section 2.16(d) further makes clear that whenever the Eligible 
Stockholder consists of a group of stockholders (including a group of 
funds that are part of the same Qualifying Fund Group), (i) each 
provision in Section 2.16 that requires the Eligible Stockholder to 
provide any written statements, representations, undertakings, 
agreements or other instruments or to meet any other conditions shall 
be deemed to require each stockholder (including each individual fund) 
that is a member of such group to provide such statements, 
representations, undertakings, agreements or other instruments and to 
meet such other conditions (except that the members of such group may 
aggregate the shares that each member has owned continuously for the 
Minimum Holding Period in order to meet the three percent ownership 
requirement of the ``Required Shares'' definition) and (ii) a breach of 
any obligation, agreement or representation under Section 2.16 by any 
member of such group shall be deemed a breach by the Eligible 
Stockholder. No stockholder may be a member of more than one group of 
stockholders constituting an Eligible Stockholder with respect to any 
annual meeting.
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    \9\ For this purpose, any two or more funds that are part of the 
same Qualifying Fund Group may be counted as one stockholder. A 
``Qualifying Fund Group'' means two or more funds that are (i) under 
common management and investment control, (ii) under common 
management and funded primarily by the same employer or (iii) a 
``group of investment companies'' as such term is defined in Section 
12(d)(1)(G)(ii) of the Investment Corporation Act of 1940, as 
amended.
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Proposed Section 2.16(e)
    Proposed Section 2.16(e) clarifies, for the avoidance of doubt, how 
``ownership'' will be defined for purposes of meeting the ownership 
requirements of the Required Shares. Specifically, an Eligible 
Stockholder shall be deemed to ``own'' only those outstanding shares of 
Cboe's capital stock as to which the stockholder possesses both: (i) 
The full voting and investment rights pertaining to the shares; and 
(ii) the full economic interest in (including the opportunity for 
profit from and risk of loss on) such shares; provided that the number 
of shares calculated in accordance with clauses (i) and (ii) shall not 
include any shares: That are (1) sold by such stockholder or any of its 
affiliates in any transaction that has not been settled or closed; (2) 
borrowed by such stockholder or any of its affiliates for any purposes 
or purchased by such stockholder or any of its affiliates pursuant to 
an agreement to resell; or (3) subject to any option, warrant, forward 
contract, swap, contract of sale, other derivative or similar 
instrument or agreement entered into by such stockholder or any of its 
affiliates, whether any such instrument or agreement is to be settled 
with shares or with cash based on the notional amount or value of 
shares of Cboe's outstanding capital stock, in any such case which 
instrument or agreement has, or is intended to have, the purpose or 
effect of: (A) Reducing in any manner, to any extent or at any time in 
the future, such stockholder's or its affiliates' full right to vote or 
direct the voting of any such shares; and/or (B) hedging, offsetting or 
altering to any degree any gain or loss realized or realizable from 
maintaining the full economic ownership of such shares by such 
stockholder or its affiliates.
    Further, a stockholder shall ``own'' shares held in the name of a 
nominee or other intermediary so long as the stockholder retains the 
right to instruct how the shares are voted with respect to the election 
of directors and possesses the full economic interest in the shares. A 
stockholder's ownership of shares shall be deemed to continue during 
any period in which (i) the stockholder has loaned such shares provided 
that the stockholder has the power to recall such loaned shares on five 
(5) business days' notice and includes in the Notice of

[[Page 24086]]

Proxy Access Nomination an agreement that it will (1) recall such 
loaned shares upon being notified that any of its Stockholder Nominees 
will be included in the Corporation's proxy materials and (2) will hold 
such shares through the date of the annual meeting or (ii) the 
stockholder has delegated any voting power by means of a proxy, power 
of attorney or other instrument or arrangement which is revocable at 
any time by the stockholder. Section 2.16(e) also clarifies that the 
terms ``owned,'' ``owning'' and other variations of the word ``own'' 
shall have correlative meanings. Whether outstanding shares of Cboe's 
capital stock are ``owned'' for these purposes shall be determined by 
the Board. For purposes of Section 2.16, the term ``affiliate'' or 
``affiliates'' shall have the meaning ascribed thereto under the rules 
and regulations of the Act.\10\ An Eligible Stockholder shall include 
in its Notice of Proxy Access Nomination the number of shares it is 
deemed to own for the purposes of proposed Section 2.16. In proposing 
the Required Shares and the Minimum Holding Period, Cboe seeks to 
ensure that the Eligible Stockholder has had a sufficient stake in the 
Corporation for a sufficient amount of time and is not pursuing a 
short-term agenda.
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    \10\ Pursuant to Rule 12b-2 under the Act, ``[a]n `affiliate' 
of, or a person `affiliated' with, a specified person, is a person 
that directly, or indirectly through one or more intermediaries, 
controls, or is controlled by, or is under common control with, the 
person specified.'' 17 CFR 240.12b-2. Further, ``[t]he term 
`control' (including the terms `controlling,' `controlled by' and 
`under common control with') means the possession, direct or 
indirect, of the power to direct or cause the direction of the 
management and policies of a person, whether through the ownership 
of voting securities, by contract, or otherwise.'' 17 CFR 240.12b-2.
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Proposed Section 2.16(f)
    Proposed Section 2.16(f) sets forth the information that an 
Eligible Stockholder must provide to Cboe's Corporate Secretary in 
writing within the deadline discussed above in order to make a proxy 
access nomination. This information includes:
     A statement by the Eligible Stockholder (1) setting forth 
and certifying as to the number of shares it owns and has owned 
continuously for the Minimum Holding Period and (2) agreeing to 
continue to own the Required Shares through the date of the annual 
meeting;
     one or more written statements from the record holder of 
the Required Shares (and from each intermediary through which the 
Required Shares are or have been held during the Minimum Holding 
Period) verifying that, as of a date within seven calendar days prior 
to the date the Notice of Proxy Access Nomination is delivered to 
Cboe's Secretary at the principal executive offices of the Corporation, 
the Eligible Stockholder owns, and has owned continuously for the 
Minimum Holding Period, the Required Shares, and the Eligible 
Stockholder's agreement to provide, within five (5) business days after 
the record date for the annual meeting, written statements from the 
record holder and intermediaries verifying the Eligible Stockholder's 
continuous ownership of the Required Shares through the record date;
     a copy of the Schedule 14N that has been filed with the 
SEC as required by Rule 14a-18 under the Act; \11\
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    \11\ See 17 CFR 240.14n-101 and 17 CFR 240.14a-18, which 
generally require a Nominating Stockholder to provide notice to the 
Corporation of its intent to submit a proxy access nomination on a 
Schedule 14N and file that notice, including the required 
disclosure, with the Commission on the date first transmitted to the 
Corporation.
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     the information, representations and agreements and other 
documents that are required to be set forth in or included with a 
stockholder's notice of nomination given pursuant to Section 2.11 of 
the CGM Bylaws;
     the written consent of each Stockholder Nominee to being 
named in the proxy statement as a nominee and to serving as a director 
if elected;
     a representation that the Eligible Stockholder:
    [cir] Acquired the Required Shares in the ordinary course of 
business and not with the intent to change or influence control of 
Cboe, and does not presently have such intent;
    [cir] has not nominated and will not nominate for election any 
individual as a director at the annual meeting, other than its 
Stockholder Nominee(s);
    [cir] has not engaged and will not engage in, and has not and will 
not be a participant in another person's, ``solicitation'' within the 
meaning of Rule 14a-1(l) under the Act in support of the election of 
any individual as a director at the annual meeting, other than its 
Stockholder Nominee(s) or a nominee of the Board;
    [cir] has not distributed and will not distribute to any 
stockholder of the Corporation any form of proxy for the annual meeting 
other than the form distributed by the Corporation;
    [cir] has complied and will comply with all laws, rules and 
regulations applicable to solicitations and the use, if any, of 
soliciting material in connection with the annual meeting, and
    [cir] has provided and will provide facts, statements and other 
information in all communications with Cboe and its stockholders that 
are or will be true and correct in all material respects and do not and 
will not omit to state a material fact necessary in order to make the 
statements made, in light of the circumstances under which they were 
made, not misleading;
     an undertaking that the Eligible Stockholder agrees to
    [cir] assume all liability stemming from any legal or regulatory 
violation arising out of the Eligible Stockholder's communications with 
the stockholders of the Corporation or out of the information that the 
Eligible Stockholder provided to the Corporation;
    [cir] indemnify and hold harmless the Corporation and each of its 
Directors, officers and employees individually against any liability, 
loss or damages in connection with any threatened or pending action, 
suit or proceeding, whether legal, administrative or investigative, 
against the Corporation or any of its Directors, officers or employees 
arising out of any nomination submitted by the Eligible Stockholder 
pursuant to this Section 2.16 or any solicitation or other activity in 
connection therewith; and
    [cir] file with the Securities and Exchange Commission any 
solicitation or other communication with the stockholders of the 
Corporation relating to the meeting at which its Stockholder Nominee(s) 
will be nominated, regardless of whether any such filing is required 
under Regulation 14A of the Act or whether any exemption from filing is 
available for such solicitation or other communication under Regulation 
14A of the Act;
     in the case of a nomination by a group of stockholders 
that together is an Eligible Stockholder, the designation by all group 
members of one group member that is authorized to receive 
communications, notices and inquiries from the Corporation and to act 
on behalf of all members of the group with respect to all matters 
relating to the nomination under this Section 2.16 (including 
withdrawal of the nomination);
     in the case of a nomination by an Eligible Stockholder 
consisting of a group of stockholders in which two or more funds are 
intended to be treated as one stockholder for purposes of qualifying as 
an Eligible Stockholder, documentation reasonably satisfactory to the 
Corporation that demonstrates that the funds are part of the same 
Qualifying Fund Group; and
     a written representation and agreement by the Stockholder 
Nominee that such person:

[[Page 24087]]

    [cir] Will act as a representative of all of the stockholders of 
the Corporation while serving as a director;
    [cir] will provide facts, statements and other information in all 
communications with the Corporation and its stockholders that are or 
will be true and correct in all material respects (and shall not omit 
to state a material fact necessary in order to make the statements 
made, in light of the circumstances under which they were made, not 
misleading);
    [cir] is not and will not become a party to (i) any compensatory, 
payment or other financial agreement, arrangement or understanding with 
any person or entity other than the Corporation in connection with 
service or action as a director of the Corporation that has not been 
disclosed to the Corporation, (ii) any Voting Commitment that has not 
been disclosed to the Corporation or (iii) any Voting Commitment \12\ 
that could reasonably be expected to limit or interfere with the 
Stockholder Nominee's ability to comply, if elected as a director of 
the Corporation, with its fiduciary duties under applicable law; and
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    \12\ A ``Voting Commitment'' is defined as any agreement, 
arrangement or understanding with any person or entity as to how the 
Stockholder Nominee would vote or act on any issue or question as a 
director.
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    [cir] will abide by and comply with the CGM Bylaws, the Certificate 
of Incorporation and applicable policies of the Corporation including 
all applicable publicly disclosed corporate governance, conflict of 
interest, confidentiality and stock ownership and trading policies and 
guidelines of the Corporation, as well as the applicable provisions of 
the rules and regulations of the Securities and Exchange Commission and 
any stock exchange applicable to the Corporation.
    In proposing the informational requirements for the Eligible 
Stockholder, Cboe's goal is to gather sufficient information about the 
Eligible Stockholder for both itself and its stockholders. Among other 
things, this information is designed to help ensure that Cboe is able 
to comply with its disclosure and other requirements under applicable 
law and that Cboe, its Board and its stockholders are able to assess 
the proxy access nomination adequately.
Proposed Section 2.16(g)
    Proposed Section 2.16(g) establishes additional information the 
Stockholder Nominee must provide. Particularly:
     The Stockholder Nominee(s) must submit all completed and 
signed questionnaires required of directors and officers of the 
Corporation;
     the Corporation may require any proposed Stockholder 
Nominee to furnish any information:
    [cir] That may reasonably be requested by the Corporation to 
determine whether the Stockholder Nominee would be independent under 
Section 3.3 and otherwise qualifies as independent under the rules of 
the principal national securities exchange on which the outstanding 
capital stock of the Corporation is traded;
    [cir] that could be material to a reasonable stockholder's 
understanding of the independence, or lack thereof, of such Stockholder 
Nominee;
    [cir] that would be required to satisfy the requirements for 
qualification of directors under applicable foreign regulations; or
    [cir] (that may reasonably be requested by the Corporation to 
determine the eligibility of such Stockholder Nominee to be included in 
the Corporation's proxy materials pursuant to this Section 2.16 or to 
serve as a director of the Corporation; and
     the Corporation may require the Eligible Stockholder to 
furnish any other information that may reasonably be requested by the 
Corporation to verify the Eligible Stockholder's continuous Ownership 
of the Required Shares for the Minimum Holding Period and through the 
date of the annual meeting.
    Like the informational requirements for an Eligible Stockholder, 
which are set forth above, the informational requirements for the 
Stockholder Nominee ensure that both Cboe and its stockholders will 
have sufficient information about the Stockholder Nominee. Among other 
things, this information will ensure that Cboe is able to comply with 
its disclosure and other requirements under applicable law and that 
Cboe, its Board and its stockholders are able to assess the proxy 
access nomination adequately.
Proposed Section 2.16(h)
    Proposed Section 2.16(h) provides that an Eligible Stockholder may 
provide, at its option, to the Secretary, at the time the Notice of 
Proxy Access Nomination is provided, a written statement, not to exceed 
500 words, in support of its Stockholder Nominee(s)' candidacy (a 
``Supporting Statement''). Only one Supporting Statement may be 
submitted by an Eligible Stockholder (including any group of 
stockholders together constituting an Eligible Stockholder) in support 
of its Stockholder Nominee(s). Notwithstanding anything to the contrary 
contained in Section 2.16, the Corporation may omit from its proxy 
materials any information or Supporting Statement (or portion thereof) 
that it, in good faith, believes is untrue in any material respect (or 
omits to state a material fact necessary in order to make the 
statements made, in light of the circumstances under which they are 
made, not misleading) or would violate any applicable law, rule or 
regulation. The Exchange notes proposed Section 2.16(h) allows Cboe to 
comply with Rule 14a-9 under the Act \13\ and to protect its 
stockholders from information that is materially untrue or that 
violates any law, rule or regulation.
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    \13\ See 17 CFR 240.14a-9, which generally prohibits proxy 
solicitations that contain any statement which, at the time and in 
the light of the circumstances under which it is made, is false or 
misleading with respect to any material fact, or which omits to 
state any material fact necessary in order to make the statements 
therein not false or misleading.
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Proposed Section 2.16(i)
    Pursuant to proposed Section 2.16(i), each Eligible Stockholder or 
Stockholder Nominee must promptly notify Cboe's Corporate Secretary of 
any information or communications provided by the Eligible Stockholder 
or Stockholder Nominee, as the case may be, to Cboe or its stockholders 
that when provided was not, or thereafter ceases to be, true and 
correct in all material respects or omits a material fact necessary to 
make the statements made, in light of the circumstances under which 
they were made, not misleading and of the information that is required 
to correct any such defect. An Eligible Stockholder shall also provide 
immediate notice to the Corporation if the Eligible Stockholder ceases 
to own any of the Required Shares prior to the date of the annual 
meeting. In addition, any person providing any information to the 
Corporation pursuant to Section 2.16(i) shall be required to update or 
supplement such information, if necessary, so that all such information 
shall be true and correct as of the (i) as of the record date for 
determining the stockholders entitled to receive notice of the meeting 
and (ii) as of the date that is ten (10) business days prior to the 
meeting (or any postponement, adjournment or recess thereof), and such 
update shall be received by the Secretary at the principal executive 
offices of the Corporation (A) not later than five (5) business days 
after the record date for determining the stockholders entitled to 
receive notice of such meeting (in the case of an update required to be 
made under clause (i)) and (B) not later than seven (7) business

[[Page 24088]]

days prior to the date for the meeting, if practicable, or, if not 
practicable, on the first practicable date prior to the meeting or any 
adjournment, recess or postponement thereof (in the case of an update 
required to be made pursuant to clause (ii)).
    This provision further makes clear that providing any such 
notification, update or supplement, shall not be deemed to cure any 
defect in any previously provided information or communications or 
limit the remedies available to the Corporation relating to such defect 
(including the right to omit a Stockholder Nominee from its proxy 
materials). This provision is intended to protect Cboe's stockholders 
by requiring an Eligible Stockholder or Stockholder Nominee to give 
Cboe notice of information previously provided that is materially 
untrue. Cboe may then decide what action to take with respect to such 
defect, which may include, as noted above, omitting the relevant 
Stockholder Nominee from its proxy materials.
Proposed Section 2.16(j)
    Proposed Section 2.16(j) provides that Cboe shall not be required 
to include a Stockholder Nominee in its proxy materials for any meeting 
of stockholders under certain circumstances. In these situations, the 
proxy access nomination shall be disregarded and no vote on such 
Stockholder Nominee will occur, even if Cboe has received proxies in 
respect of the vote. These circumstances occur when the Stockholder 
Nominee:
     Would not be an independent director under Section 3.3, 
under the rules of the principal national securities exchange on which 
the outstanding capital stock of the Corporation is traded, any 
applicable rules of the Securities and Exchange Commission and any 
publicly disclosed standards used by the Board in determining and 
disclosing independence of the Corporation's directors, in each case as 
determined by the Board in its sole discretion;
     would not meet the audit committee independence 
requirements under the rules of the principal national securities 
exchange on which the outstanding capital stock of the Corporation is 
traded;
     if elected, intended to resign as a director of the 
Corporation prior to the end of the full term for which he or she is 
standing for election;
     is or has been subject to any statutory disqualification 
under Section 3(a)(39) of the Act;
     is or has been subject to disqualification under 17 CFR 
1.63;
     if elected, would cause the Corporation to be in violation 
of these Bylaws, the Certificate of Incorporation, the rules of the 
principal national securities exchange on which the outstanding capital 
stock of the Corporation is traded, or any applicable law, rule or 
regulation;
     is or has been, within the past three years, an officer or 
director of a competitor, as defined for purposes of Section 8 of the 
Clayton Antitrust Act of 1914;
     is a named subject of a pending criminal proceeding 
(excluding traffic violations and other minor offenses) or has been 
convicted in such a criminal proceeding within the past 10 years;
     is subject to any order of the type specified in Rule 
506(d) of Regulation D promulgated under the Securities Act of 1933, as 
amended;
     has provided any information to the Corporation or its 
stockholders that was untrue in any material respect or that omitted to 
state a material fact necessary to make the statements made, in light 
of the circumstances in which they were made, not misleading; or
     breaches or fails, or the Eligible Stockholder breaches or 
fails, to comply with its obligations pursuant to the CGM Bylaws, 
including, but not limited to, Section 2.16 and any agreement, 
representation or undertaking required by Section 2.16.
    Cboe believes these provisions will protect the Corporation and its 
stockholders by allowing it to exclude certain categories of 
objectionable Stockholder Nominees from the proxy statement.
Proposed Section 2.16(k)
    Proposed Section 2.16(k) provides that notwithstanding anything to 
the contrary contained in the CGM Bylaws, if (i) a Stockholder Nominee 
and/or the applicable Eligible Stockholder breaches any of its 
agreements or representations or fails to comply with any of its 
obligations under this Section 2.16 or (ii) a Stockholder Nominee 
otherwise becomes ineligible for inclusion in the Corporation's proxy 
materials pursuant to this Section 2.16, or dies, becomes disabled or 
otherwise becomes ineligible or unavailable for election at the annual 
meeting, in each case as determined by the Board or the chairman of the 
meeting, (1) the Corporation may omit or, to the extent feasible, 
remove the information concerning such Stockholder Nominee and the 
related Supporting Statement from its proxy materials and/or otherwise 
communicate to its stockholders that such Stockholder Nominee will not 
be eligible for election at the annual meeting, (2) the Corporation 
shall not be required to include in its proxy materials any successor 
or replacement nominee proposed by the applicable Eligible Stockholder 
or any other Eligible Stockholder and (3) the chairman of the meeting 
shall declare such nomination to be invalid and such nomination shall 
be disregarded, notwithstanding that proxies in respect of such vote 
may have been received by the Corporation. Cboe believes this provision 
protects the Corporation and its stockholders by providing the Board or 
the chairman of the stockholder meeting limited authority to disqualify 
a proxy access nominee when that nominee or the sponsoring 
stockholder(s) have breached an obligation under the proxy access 
provision.
Proposed Section 2.16(l)
    Proposed Section 2.16(l) states that the following Stockholder 
Nominees who are included in the Corporation's proxy materials for a 
particular annual meeting of stockholders will be ineligible to be a 
Stockholder Nominee for the next two annual meetings: (i) Stockholder 
Nominee who withdraws from or becomes ineligible or unavailable for 
election at the annual meeting; or (ii) Stockholder Nominee who does 
not receive at least 25% of the votes cast in favor of such Stockholder 
Nominee's election. For the avoidance of doubt, Section 2.16(l) also 
clarifies that this provision shall not prevent any stockholder from 
nominating any person to the Board pursuant to Section 2.11 of the CGM 
Bylaws. Section 2.16(l) will save the Corporation and its stockholders 
the time and expense of analyzing and addressing subsequent proxy 
access nominations regarding individuals who were included in the proxy 
materials for a particular annual meeting but ultimately did not stand 
for election or receive a substantial amount of votes. After the next 
two annual meetings, these Stockholder Nominees would again be eligible 
for nomination through the proxy access provisions of the Bylaws.
Proposed Section 2.16(m)
    Proposed Section 2.16(m) provides that notwithstanding the 
provisions of proposed Section 2.16, if the Eligible Stockholder 
providing notice (or a qualified representative of the Eligible 
Stockholder) does not appear in person (including virtually, in the 
case of a meeting held solely by means of remote communication) at the 
stockholder meeting to present the nomination of such Stockholder 
Nominee, such proposed nomination shall not be

[[Page 24089]]

presented by the Corporation and shall not be transacted, 
notwithstanding that proxies in respect of such vote may have been 
received by the Corporation. For purposes of this Section 2.16, to be 
considered a qualified representative of the Eligible Stockholder 
providing notice, a person must be a duly authorized officer, manager 
or partner of such stockholder or must be authorized by a writing 
executed by such stockholder or an electronic transmission delivered by 
such stockholder to act for such stockholder as proxy at the meeting 
and such writing or electronic transmission, or a reliable reproduction 
of the writing or electronic transmission, must be provided to the 
Corporation at least twenty-four (24) hours prior to the meeting.
Proposed Section 2.16(n)
    In case there are matters involving a proxy access nomination that 
are open to interpretation, proposed Section 2.16(n) states that the 
Board (or any other person or body authorized by the Board) shall have 
exclusive power and authority to interpret the proxy access provisions 
of the Bylaws and make all determinations deemed necessary or advisable 
in connection with proposed Section 2.16 as to any person, facts or 
circumstances. In addition, all actions, interpretations and 
determinations of the Board (or any person or body authorized by the 
Board) with respect to the proxy access provisions shall be final, 
conclusive and binding on the Corporation, the stockholders and all 
other parties. While Cboe has attempted to implement a clear, detailed 
and thorough proxy access provision, there may be matters about future 
proxy access nominations that are open to interpretation. In these 
cases, Cboe believes it is reasonable and necessary to designate an 
arbiter to make final decisions on these points and that the Board is 
best-suited to act as that arbiter.
Proposed Section 2.16(o)
    For the avoidance of doubt, proposed Section 2.16(o) states that 
the proxy access provisions outlined in proposed Section 2.16 shall be 
the exclusive means for stockholders to include nominees in the 
Corporation's proxy materials. Stockholders may, of course, continue to 
propose nominees through other means, but the Board will have final 
authority to determine whether to include those nominees in the 
Corporation's proxy materials.
Revisions to Other Sections of the Bylaws
    Cboe also proposes to make conforming changes to Sections 2.10 and 
2.11 to provide clarifications and prevent confusion. First, the 
Exchange proposes to add a reference to Section 2.11 and proposed 
Section 2.16 to clarify the exact bylaw provisions relating to 
stockholder nominees. Next, the Exchange proposes to amend Section 
2.11. Section 2.11 currently describes the business that may be 
properly brought before an annual meeting of stockholders and the 
methods by which nominations of persons for election to the Board may 
be made at an annual meeting of stockholders. Cboe proposes to add 
proxy access nominations (i.e., reference to Section 2.16) to the list 
of methods. Current Section 2.11(a)(i) also states, among other things, 
that compliance with Section 2.11 shall be the exclusive means for a 
stockholder to propose business or director nominations before an 
annual meeting stockholders. The Exchange proposes to clarify that 
Sections 2.11 and 2.16 are the exclusive means for a stockholder to 
make a director nomination.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\14\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \15\ requirements that the rules 
of an exchange be 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 regulating, 
clearing, settling, processing information with respect to, and 
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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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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    In light of a shareholder proposal received from a stockholder, 
Cboe is proposing changes to its Bylaws to implement proxy access. The 
Exchange believes that this filing furthers the objectives of Section 
6(b)(5) of the Act because the proposed rule change would be consistent 
with and facilitate a governance and regulatory structure that 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 regulating, clearing, 
settling, processing information with respect to, and 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. Particularly, 
the Exchange believes that, by permitting an Eligible Stockholder of 
Cboe that meets the stated requirements to nominate directors and have 
its nominees included in Cboe's annual meeting proxy statement, the 
proposed rule change strengthens the corporate governance of the 
Exchange's ultimate parent company, which is beneficial to both 
investors and the public interest.
    Additionally, the procedural requirements are designed to help 
protect investors by stating clearly and explicitly the procedures 
stockholders must follow in order to submit a proper proxy access 
nomination. The informational requirements are designed to enhance 
investor protection by helping to ensure among other things, that the 
Corporation and its stockholders have full and accurate information 
about nominating stockholders and their nominees and that such 
stockholders and nominees comply with applicable laws, regulations and 
other requirements. Moreover, as noted above, proxy access has become 
commonplace among companies and the Exchange believes its core 
provisions are common among companies that have adopted proxy access, 
including the parent companies of other exchanges that have adopted 
similar proxy access provisions.\16\
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    \16\ See Securities Exchange Release No. 79357 (November 18, 
2016) 81 FR 85283 (November 25, 2016) (SR-NASDAQ-2016-127; SR-BX-
2016-051; SR-ISE-2016-22; SR-ISEGemini-2016-10; SR-ISEMercury-2016-
16; SR-PHLX-2016-93; SR-BSECC-2016-001; SR-SCCP-2016-01). See also 
Securities Exchange Release No. 77782 (May 6, 2016) 81 FR 29600 (May 
12, 2016) (SR-NYSE-2016-14; SR-NYSEArca-2016-25; SR-NYSEMKT-2016-
20).
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    Finally, the remaining changes to existing provisions of the CGM 
Bylaws are clarifying in nature, and they enhance investor protection 
and the public interest by preventing confusion with respect to the 
operation of the Bylaw provisions.

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

    Because the proposed rule change relates to the governance of the 
Corporation and not to the operations of the Exchange, the Exchange 
does not believe that the proposed rule change

[[Page 24090]]

will impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is not 
designed to address any competitive issue or have any impact on 
competition; rather, adoption of a proxy access bylaw by the 
Corporation is intended to enhance corporate governance and 
accountability to stockholders.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

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-CboeBZX-2021-028 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 SR-CboeBZX-2021-028. 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 submissions 
should refer to File Number SR-CboeBZX-2021-028 and should be submitted 
on or before May 26, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09446 Filed 5-4-21; 8:45 am]
BILLING CODE 8011-01-P


