[Federal Register Volume 88, Number 48 (Monday, March 13, 2023)]
[Notices]
[Pages 15484-15487]
[FR Doc No: 2023-05037]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97057; File No. SR-NYSEAMER-2023-15]

Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Amend Article
II, Section 2.03(b) of Its Operating Agreement

March 7, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on February 23, 2023, NYSE American LLC (``NYSE American''
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 comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to (a) amend Article II, Section 2.03(b) of
its operating agreement to provide that the board of directors of its
ultimate parent or that board's compensation committee may fix the
compensation of the board of directors of the Exchange, and (b) make
certain clarifying, technical and conforming changes to the operating
agreement. The proposed rule change is available on the Exchange's
website at www.nyse.com, at the principal office of the Exchange, and
at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

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

1. Purpose
    The Exchange proposes to (a) amend Article II, Section 2.03(b)
(Board) of the Twelfth Amended and Restated Operating Agreement of the
Exchange (``Operating Agreement'') to provide that the board of
directors of its ultimate parent, Intercontinental Exchange, Inc.
(``ICE,'' and its board of directors, the ``ICE Board'') or the
compensation committee of the ICE Board (the ``ICE Compensation
Committee'') may fix the compensation of the board of directors of the
Exchange (the ``Exchange Board''), and (b) make certain clarifying,
technical and conforming changes to the Operating Agreement.
Proposed Amendment to Section 2.03(b)
    Currently, Exchange directors are not entitled to compensation
unless, and to the extent, approved by the sole member of the Exchange,
NYSE Group, Inc. (``NYSE Group'').\4\ NYSE Group is wholly owned by
NYSE Holdings LLC, which is a wholly owned subsidiary of
Intercontinental Exchange Holdings, Inc. Intercontinental Exchange
Holdings, Inc. is in turn wholly owned by ICE, a public company listed
on the New York Stock Exchange LLC (``NYSE'').\5\
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    \4\ See the first paragraph & Section 2.03(b) of the Operating
Agreement.
    \5\ See Exchange Act Release No. 72156 (May 13, 2014), 79 FR
28782 (May 19, 2014) (SR-NYSEMKT-2014-41) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Relating to Name
Changes of Its Ultimate Parent, IntercontinentalExchange Group,
Inc., and Its Indirect Parents, IntercontinentalExchange, Inc. and
NYSE Euronext Holdings LLC).
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    The proposed change would move the responsibility to fix Exchange
director compensation from NYSE Group to the ICE Board or the ICE
Compensation Committee. To do so, the Exchange proposes amending
Article II, Section 2.03(b) of the Operating Agreement as follows
(proposed deletions bracketed, proposed additions italicized):

    Compensation. [Directors of the Company, in their capacity as
such, shall not be entitled to compensation, unless, and to the
extent, approved by the Member.]Notwithstanding any provision of
this Agreement to the contrary, the Board of Directors of
Intercontinental Exchange, Inc. or the compensation committee
thereof shall have the authority to fix the compensation of
Directors of the Company. The Directors of the Company may be paid
their expenses, if any, of attendance at each meeting of the Board
and may be paid a fixed sum for attendance at each meeting of the
Board or a stated salary as Director (which amounts may be paid in
cash or such other form as the Board of Directors of
Intercontinental Exchange, Inc. or the compensation committee
thereof may from time to time authorize). No such payment shall
preclude any Director from serving the Company in any other capacity
and receiving compensation therefor.

    As a result of the proposed change, compensation for the Exchange
Board members would be fixed by a body that is required to have at
least a majority of its members be independent.
    Currently, the board of directors of NYSE Group is not required to
be independent. This was not always true: when the New York Stock
Exchange, Inc. combined with Archipelago Holdings, Inc. under NYSE
Group in 2006, NYSE Group was publicly traded, required to have an
independent board of directors, and subject to an independence
policy.\6\ That changed when NYSE Group combined with Euronext N.V.
After that combination, NYSE Euronext, the publicly traded parent
company, had an independent board of directors subject to an
independence policy, and the board of directors of NYSE Group, which
became a subsidiary of NYSE Euronext, did not.\7\
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    \6\ See Securities Exchange Act Release No. 53382 (February 27,
2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77) (Order Granting
Approval of Proposed Rule Change and Amendment Nos. 1, 3, and 5
Thereto and Notice of Filing and Order Granting Accelerated Approval
to Amendment Nos. 6 and 8 Relating to the NYSE's Business
Combination With Archipelago Holdings, Inc.). The NYSE Group was
expected to fix the compensation of the Exchange Board through a
compensation committee. Id. at 11256.
    \7\ See Securities Exchange Act Release No. 55293 (February 14,
2007), 72 FR 8033 (February 22, 2007) (SR-NYSE-2006-120) (Order
Granting Approval of Proposed Rule Change and Notice of Filing and
Order Granting Accelerated Approval to Amendment No. 1 Regarding the
Proposed Combination Between NYSE Group, Inc. and Euronext N.V.).
See also Exhibit 5E to SR-NYSE-2006-120, Section 3.2 (deleting the
independence requirements for the NYSE Group board of directors).
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    When ICE acquired NYSE Euronext, the requirement to have a majority
of independent directors moved to ICE.\8\ The requirement is in
accordance with NYSE listing requirements, which require that listed
companies have a majority of independent directors.\9\ Accordingly, if
the ICE Board fixed the compensation of the Exchange Board, the
decision would be made by a body that required to have at least a
majority of its members be independent.
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    \8\ See Securities Exchange Act Release No. 70210 (August 15,
2013), 78 FR 51758 (August 21, 2013) (SR-NYSE- 2013-42; SR-NYSEMKT-
2013-50; SR- NYSEArca-2013-62) (Order Granting Approval of Proposed
Rule Change Relating to a Corporate Transaction in which NYSE
Euronext Will Become a Wholly-Owned Subsidiary of Intercontinental
Exchange Group, Inc.). Intercontinental Exchange Group, Inc.,
subsequently changed its name to Intercontinental Exchange, Inc. See
79 FR 28782, supra note 5. The ICE Board is subject to the
requirements of the Independence Policy of the Board of Directors of
Intercontinental Exchange, Inc., available at https://s2.q4cdn.com/154085107/files/doc_downloads/governance_docs/ICE-Independence-Policy.pdf. The bylaws of ICE require that the members of the ICE
Board take into consideration the effect that ICE's actions would
have on the ability of the Exchange to carry out its responsibility
under Exchange Act. See the Ninth Amended and Restated Bylaws of
Intercontinental Exchange, Inc. (``ICE Bylaws''), Article III,
Section 3.14. The ICE Bylaws are available at https://s2.q4cdn.com/154085107/files/doc_downloads/governance_docs/2022/ICE-Ninth-Amended-and-Restated-Bylaws.pdf.
    \9\ See NYSE Listed Company Manual Sections 303A.01 (Independent
Directors) and 303A.02(a)(ii) (Independence Tests), and ICE Bylaws,
Article III, Section 3.4.
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    If the ICE Compensation Committee fixed the Exchange Board
compensation,\10\ compensation decisions would be made by a body that
is made up of independent members. As a company listed on the NYSE, ICE
is required to have a compensation committee that is composed entirely
of independent directors that satisfy the additional independence
requirements specific to compensation committee members.\11\
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    \10\ Pursuant to its Charter, the Compensation Committee of the
ICE Board is charged with, among other things, reviewing and
approving compensation for the members of the board of directors of
any ICE subsidiary, which includes the Exchange. See Charter of the
Compensation Committee of the Board of Directors of ICE, at https://s2.q4cdn.com/154085107/files/doc_downloads/governance_docs/2022/Intercontinental-Exchange-Inc.-Compensation-Committee-Charter-March-3-2022.pdf. See also NYSE Listed Company Manual Section 303A.05(b).
    \11\ See NYSE Listed Company Manual Section 303A.05(a)
(Compensation Committee). See also NYSE Listed Company Manual
Section 303A.02(a)(ii) and ICE annual report on Form 10-K for the
fiscal year ended December 31, 2021, at 19, available at https://www.sec.gov/ix?doc=/Archives/edgar/data/1571949/000157194922000006/ice-20211231.htm.
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    The proposed rule text is more comprehensive than the provision it
would replace since, unlike the Operating Agreement, it would provide
that directors may be paid their expenses for attending board meetings
and that they may receive compensation on a per-meeting basis or as a
salary, clarify the form of compensation that may be granted, and note
that the payment does not preclude a director from serving the Exchange
in another capacity.
    The Exchange operates as a separate self-regulatory organization
and has rules, membership rosters and listings distinct from the rules,
membership rosters and, where applicable, listings of its affiliates
the NYSE, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National, Inc.
(collectively with the

Exchange, the ``NYSE Group Exchanges''). At the same time, however, the
Exchange believes it is important for each of the NYSE Group Exchanges
to have a consistent approach to corporate governance in certain
matters, to simplify complexity and create greater consistency among
the NYSE Group Exchanges.\12\ To that end, each of the NYSE Group
Exchanges is proposing a substantially similar change to its governing
documents.\13\
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    \12\ See Exchange Act Release No. 84636 (November 20, 2018), 83
FR 60536 (November 26, 2018) (SR-NYSEAMER-2018-49).
    \13\ See SR-NYSE-2023-13; SR-NYSEArca-2023-18, SR-NYSECHX-2023-
10, and SR-NYSENat-2023-08. Presently, three different entities fix
the compensation of the boards of directors of the NYSE Group
Exchanges: NYSE Group fixes the compensation of the directors of the
NYSE American, NYSE, and NYSE National, Inc.; NYSE Chicago Holdings,
Inc. fixes the compensation of the directors of NYSE Chicago, Inc.;
and the board of directors of NYSE Arca, Inc. fixes its own
compensation.
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    The proposed amendment is based on Article III, Section 3.13
(Compensation of Directors) of the ICE Bylaws.\14\
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    \14\ See ICE Bylaws, Article III, Section 3.13.
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Additional Proposed Amendments
    The Exchange proposes to make the following non-substantive
technical and conforming changes to the title, recitals and signature
page of the Operating Agreement: \15\
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    \15\ See 83 FR 60536, supra note 12, at 60538 (proposing to make
technical and conforming changes to the title, recitals, and
signature page of the Eleventh Amended and Restated Operating
Agreement of the Exchange).
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     Update references to the ``Twelfth Amended and Restated
Operating Agreement'' to the ``Thirteenth Amended and Restated
Operating Agreement.''
     Update the dates in the introduction and signature line.
     Update the recitals.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Exchange Act,\16\ in general, and furthers the
objectives of Section 6(b)(1) \17\ in particular, in that it enables
the Exchange to be so organized as to have the capacity to be able to
carry out the purposes of the Exchange Act and to comply, and to
enforce compliance by its exchange members and persons associated with
its exchange members, with the provisions of the Exchange Act, the
rules and regulations thereunder, and the rules of the Exchange. The
Exchange also believes that the proposed rule change is consistent with
Section 6(b)(5) of the Exchange Act,\18\ in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(1).
    \18\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed change would allow the
Exchange to be so organized as to have the capacity to carry out the
purposes of the Exchange Act and comply with the provisions of the
Exchange Act by its members and persons associated with members,
because the Exchange Board would no longer have its compensation fixed
by a body whose members are not subject to independence requirements.
The Exchange believes that it is more advisable to have compensation
determinations made by a body that is required to have at least a
majority of its members be independent, like the ICE Board or ICE
Compensation Committee. Otherwise, the compensation could be fixed by a
body that is made up of employees or persons related to the Exchange.
Indeed, the change would be consistent with prior practice, as
immediately after the combination between New York Stock Exchange, Inc.
and Archipelago Holdings, Inc., the members of the board of directors
of NYSE Group were both subject to independence requirements and
expected to fix the compensation of the Exchange Board through a
compensation committee.\19\ For the same reason, the Exchange believes
that the change would contribute to the orderly operation of the
Exchange and would promote the maintenance of a fair and orderly
market, the protection of investors and the protection of the public
interest.
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    \19\ 71 FR 11251, supra note 6, at 11256 (``It is expected that,
upon completion of the Merger, the NYSE Group board of directors
will have [a] . . . compensation committee'') and 11257 (``[T]he
board of directors of New York Stock Exchange LLC is not expected to
have its own committees and that any necessary functions with
respect to . . . compensation . . . will be performed by the
relevant committee[ ] of the NYSE Group board of directors'').
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    The Exchange believes that because at least a majority of the
members of the ICE Board and all of the ICE Compensation Committee must
be independent, there is no substantial likelihood of a potential
conflict of interest. Indeed, the Exchange believes that the proposal
lessens the potential for conflicts of interest by eliminating the
fixing of compensation by an entity that is not subject to any
independence requirements. Further, the governing documents of ICE
require that the members of the ICE Board take into consideration the
effect that ICE's actions--including actions by the ICE Board or ICE
Compensation Committee--would have on the ability of the Exchange ``to
carry out [its] responsibilities under the Exchange Act'' and ``to
engage in conduct that fosters and does not interfere with the ability
of the Exchange[ ] . . . to remove impediments to and perfect the
mechanisms of a free and open market in securities and a U.S. national
securities market system; and . . . to protect investors and the public
interest.'' \20\ For the foregoing reasons, the Exchange believes that
the proposed change would allow the Exchange to be so organized as to
have the capacity to carry out the purposes of the Exchange Act and
comply with the provisions of the Exchange Act by its members and
persons associated with members, and would contribute to the orderly
operation of the Exchange and would promote the maintenance of a fair
and orderly market, the protection of investors and the protection of
the public interest.
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    \20\ See ICE Bylaws, Article III, Section 3.14(a). The NYSE
American Rules set forth additional review and reporting
requirements for listed ICE affiliate securities. See Rule 497-
Equities (Additional Requirements for Listed Securities Issued by
ICE or its Affiliates).
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    Moreover, the Exchange believes that the proposal would promote
greater consistency in the compensation philosophy and director
compensation structure across affiliated exchanges, thereby promoting
the maintenance of a fair and orderly markets, the protection of
investors and the public interest. As noted above, the other NYSE Group
Exchanges are filing similar proposed changes to their governing
documents. By locating the authority to fix compensation in the hands
of the ICE Board or the ICE Compensation Committee, the proposed change
would permit compensation for each board of directors of an NYSE Group
Exchange to be set centrally and with greater uniformity and
consistency across affiliated exchanges. The Exchange believes that
such conformity would streamline the NYSE Group Exchanges' corporate
processes and create more equivalent compensation processes among them,
to the benefit of both investors and the public interest. The proposal
also reflects the fact that, no matter the size or role of the relevant
NYSE Group Exchange, every NYSE Group Exchange board of directors must

manage its business while considering the government of the exchange as
an ``exchange'' within the meaning of the Exchange Act.\21\
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    \21\ See Operating Agreement, Article II, Section 2.03(k);
Thirteenth Amended and Restated Operating Agreement of the NYSE,
Article II, Section 2.03(k) (Board); Bylaws of NYSE Arca, Inc.,
Article III, Section 3.01 (Powers); Second Amended and Restated
Bylaws of NYSE Chicago, Inc., Article II, Section 1 (Powers) and
Article IX, Sec. 1 (Management of the Corporation); and Seventh
Amended and Restated By-laws of NYSE National, Inc., Article III,
Section 3.1 (Powers) and Article X, Section 10.1 (Management of the
Exchange).
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    The Exchange believes that the more comprehensive provision would
remove impediments to and perfect the mechanism of a free and open
market, as it would make the provision relating to director
compensation more comprehensive and transparent for market
participants, making it so that they can more easily navigate and
understand the governing documents. As noted, the proposed text is more
comprehensive than the provision it would replace and would set forth
additional detail regarding the compensation that directors may receive
such as whether expenses for attending board meetings may be paid,
whether directors may receive compensation on a per-meeting basis or as
a salary, and what form of compensation may be granted, and would
clarify that payment does not preclude a director from serving the
Exchange in another capacity. The Exchange believes that the greater
additional detail would add transparency and clarity to the Exchange's
governing documents, and would not be inconsistent with the public
interest and the protection of investors because investors will not be
harmed and in fact would benefit from increased transparency and
clarity, thereby reducing potential confusion.
    Finally, the proposed non-substantive technical and conforming
changes would remove impediments to and perfect the mechanism of a free
and open market by ensuring that persons subject to the Exchange's
jurisdiction, regulators, and the investing public can more easily
navigate and understand the governing documents. The proposed non-
substantive amendments also would not be inconsistent with the public
interest and the protection of investors because investors will not be
harmed and in fact would benefit from increased transparency and
clarity, thereby reducing potential confusion.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act. The proposed rule
change is not intended to address competitive issues but rather is
concerned solely with the corporate governance of the Exchange.

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

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

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

    Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \22\ and Rule 19b-
4(f)(6) thereunder.\23\
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    \22\ 15 U.S.C. 78s(b)(3)(A).
    \23\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \24\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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    \24\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-NYSEAMER-2023-15 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-NYSEAMER-2023-15. 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-NYSEAMER-2023-15, and should be
submitted on or before April 3, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-05037 Filed 3-10-23; 8:45 am]
BILLING CODE 8011-01-P