[Federal Register Volume 79, Number 24 (Wednesday, February 5, 2014)]
[Notices]
[Pages 6961-6970]
[FR Doc No: 2014-02382]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71449; File Nos. SR-EDGA-2013-34; SR-EDGX-2013-43]

Self-Regulatory Organizations; EDGA Exchange, Inc.; EDGX
Exchange, Inc.; Order Granting Approval of Proposed Rule Change, as
Modified by Amendment Nos. 1 and 2, in Connection With the Proposed
Business Combination Involving BATS Global Markets, Inc. and Direct
Edge Holdings LLC

January 30, 2014.

I. Introduction

    On November 29, 2013, EDGA Exchange, Inc. (``EDGA'') and EDGX
Exchange, Inc. (``EDGX'' and, together with EDGA, the ``DE Exchanges'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934
(``Act''),\2\ and Rule 19b-4 thereunder,\3\ proposed rule changes in
connection with the proposed business combination (``Combination'') of
their indirect parent company, Direct Edge Holdings LLC (``DE
Holdings''), and BATS Global Markets, Inc., the parent company of BATS
Exchange, Inc. (``BATS'') and BATS-Y Exchange, Inc. (``BYX'' and,
together with BATS, the ``BATS Exchanges'') (the DE Exchanges and the
BATS Exchanges are the ``Exchanges'').\4\ On December 9, 2013, EDGA and
EDGX each filed an Amendment No. 1 to their respective proposed rule
changes. The proposed rule changes, as modified by Amendment No. 1,
were published for comment in the Federal Register on December 17,
2013.\5\ The Commission received no comments on the proposal. On
January 29, 2014, EDGA and EDGX each filed an Amendment No. 2 to their
respective proposed rule changes.\6\ This Order approves the proposed
rule changes, as modified by Amendment Nos. 1 and 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ The Commission approved corresponding proposed rule changes
submitted by the BATS Exchanges relating to the Combination. See
Securities Exchange Act Release No. 71375 (January 23, 2014), 79 FR
4771 (January 29, 2014) (approving SR-BATS-2013-059 and SR-BYX-2013-
039) (``BATS Exchanges Approval Order'').
    \5\ See Securities Exchange Act Release Nos. 71046 (December 11,
2013), 78 FR 76416 (SR-EDGA-2013-34) and 71045 (December 11, 2013)
78 FR 76480 (SR-EDGX-2013-43) (``Notices'').
    \6\ Amendment No. 2 makes technical amendments to language in
the DEI Certificate of Incorporation (as defined below) and the DE
Exchange Certificate of Incorporation (as defined below) based on
comments from the State of Delaware, Department of State, Division
of Corporations. Specifically, these comments are to: (1) Add
references to certain applicable Delaware General Corporations Law
sections in the DEI Certificate of Incorporation, (2) add the state
and zip code for DEI's registered office, and (3) add several
introductory paragraphs describing the Delaware filing history of
the DE Exchanges Certificate of Incorporation. Amendment No. 2 is
not subject to notice and comment because it is a technical
amendment that does not materially alter the substance of the
proposed rule change or raise any novel regulatory issues.
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    The Commission has reviewed carefully the proposed rule changes and
finds that the proposed rule changes are consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange.\7\ In particular, the
Commission finds that the proposed rule changes are consistent with

Sections 6(b)(1) and (3) of the Act,\8\ which, among other things,
requires a national securities exchange to be so organized and have the
capacity to be able to carry out the purposes of the Act, and to
enforce compliance by its members and persons associated with its
members with the provisions of the Act, the rules and regulations
thereunder, and the rules of the exchange, and assure the fair
representation of its members in the selection of its directors and
administration of its affairs, and provide that one or more directors
shall be representative of issuers and investors and not be associated
with a member of the exchange, broker, or dealer. The Commission also
finds that the proposal is consistent with Section 6(b)(5) of the
Act,\9\ which requires that the rules of the exchange 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.
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    \7\ In approving the proposed rule changes, the Commission has
considered their impact on efficiency, competition and capital
formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(1) and (b)(3).
    \9\ 15 U.S.C. 78f(b)(5).
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II. Discussion

A. Corporate Structure

1. Current Structure
    DE Holdings, a Delaware limited liability company, owns 100 percent
of the equity interest in Direct Edge, Inc., a Delaware corporation
(``DEI''). DEI, in turn, owns 100 percent of the equity interest of
each DE Exchange. In addition, DE Holdings owns 100 percent of the
equity interest in Direct Edge ECN LLC d/b/a DE Route, a Delaware
limited liability company and the routing broker-dealer for the DE
Exchanges (``DE Route'').
    As a limited liability company, ownership in DE Holdings is
represented by units held by ``LLC Members.'' Certain of the DE
Holdings LLC Members are Members \10\ or affiliates of Members of the
Exchange. International Securities Exchange Holdings, Inc. (``ISE
Holdings'') is the only LLC Member of DE Holdings to beneficially own
greater than 20 percent of the equity interest in DE Holdings.\11\
Other than ISE Holdings, the only firms beneficially owning ten percent
or greater of DE Holdings (but in each case less than 20 percent) are
Citadel Securities LLC, The Goldman Sachs Group, Inc., and an affiliate
of KCG Holdings, Inc. No LLC Member beneficially owns five percent or
greater, but less than ten percent of DE Holdings. Five other firms as
well as various individuals each beneficially own less than five
percent of DE Holdings.
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    \10\ With respect to each of the DE Exchanges, the term
``Member'' is defined in Rule 1.5(n) of the DE Exchanges' Rules as
``any registered broker or dealer, or any person associated with a
registered broker or dealer, that has been admitted to membership in
the Exchange.''
    \11\ For purposes of this Order, references to the beneficial
ownership of a ``firm'' refers to the aggregate beneficial ownership
of the firm and its affiliated entities. See Notices, supra note 5,
at 76417 n.13 and 76481 n.13.
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    BATS Global Markets, Inc., a Delaware corporation, owns 100 percent
of the equity interests in two registered national securities
exchanges, BATS and BYX, each a Delaware corporation. BATS Global
Markets, Inc. also owns 100 percent of the equity interest in BATS
Trading, Inc., a Delaware corporation (``BATS Trading''), that is a
broker-dealer registered with the Commission that provides routing
services outbound from and, in certain instances inbound to, each of
the BATS Exchanges. Currently, BATS Global Markets, Inc. is
beneficially owned primarily by a consortium of several unaffiliated
firms, including Members \12\ or affiliates of Members of the BATS
Exchanges. No firm beneficially owns 20 percent or greater of BATS
Global Markets, Inc., and the only firms beneficially owning ten
percent or greater of BATS Global Markets, Inc. are: (1) GETCO
Investments, LLC, an affiliate of KCG Holdings, Inc., (2) BGM Holding,
L.P., a holding company itself owned by entities affiliated with the
Spectrum Equity Investors and TA Associates Management private
investment funds, and (3) Strategic Investments I, Inc., an affiliate
of Morgan Stanley. Seven other firms each beneficially own five percent
or greater, but less than ten percent of BATS Global Markets, Inc.,
while seven other firms as well as various individuals each
beneficially own less than five percent of BATS Global Markets, Inc.
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    \12\ With respect to each of the BATS Exchanges, the term
``Member'' is defined in Rule 1.5(n) of the BATS Exchanges' Rules as
``any registered broker or dealer that has been admitted to
membership in the Exchange.''
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2. The Combination
    In connection with the Combination, several new entities were
formed. BATS Global Markets Holdings, Inc., a Delaware corporation, is
currently a wholly owned subsidiary of BATS Global Markets, Inc., and
is currently a shell company with no material assets or operations.
BATS Global Markets Holdings, Inc., in turn, owns 100 percent of the
equity interest in each of Blue Merger Sub Inc., a Delaware corporation
(``Blue Merger Sub''), and Delta Merger Sub LLC, a Delaware limited
liability company (``Delta Merger Sub''). Each of Blue Merger Sub and
Delta Merger Sub are currently shell companies with no material assets
or operations.
    As described in more detail below, at the closing of the
Combination (``Closing''), BATS Global Markets, Inc. and DE Holdings
will each become intermediate holding companies, held under a single
new holding company upon the Closing. The new holding company,
currently named ``BATS Global Markets Holdings, Inc.,'' will at that
time change its name to ``BATS Global Markets, Inc.'' In addition, the
current parent company of the BATS Exchanges, BATS Global Markets,
Inc., will at that time change its name to ``BATS Global Markets
Holdings, Inc.'' For ease of reference, this Order will refer to the
current parent company of each BATS Exchange as ``Current BGM'' when
referring to the entity prior to the Closing, and as ``BGM Holdings''
when referring to that entity after the Closing. The entity that will
become the new top-level holding company that will, after Closing, own
BGM Holdings and DE Holdings, will be referred to as ``New BGM.''
    At the Closing, among other things, (1) Blue Merger Sub will merge
with and into Current BGM, whereupon the separate existence of Blue
Merger Sub will cease and Current BGM (to be renamed ``BGM Holdings'')
will be the surviving company (the ``BATS Merger''); (2) Delta Merger
Sub will merge with and into DE Holdings, whereupon the separate
existence of Delta Merger Sub will cease and DE Holdings will be the
surviving company (the ``Direct Edge Merger''); (3) by virtue of the
BATS Merger and without any action required on the part of Current BGM,
New BGM, Blue Merger Sub or any holder of Current BGM stock, each
outstanding share of Current BGM stock issued and outstanding will be
converted into the right to receive shares of New BGM stock, and each
outstanding share of Blue Merger Sub issued and outstanding will be
converted into one share of Current BGM, such that Current BGM will
become a wholly owned subsidiary of New BGM; and (4) by virtue of the
Direct Edge Merger and without any action required on the part of DE
Holdings, New BGM, Delta Merger Sub, or any LLC Member, each LLC
Member's membership interests in DE Holdings will be converted into the
right to receive shares of New BGM stock, and each unit of ownership
interest of Delta Merger Sub issued and outstanding will be converted
into one

unit of ownership of DE Holdings, such that DE Holdings will become a
wholly owned subsidiary of New BGM.
    As a result of the Combination, New BGM will own: (1) 100 percent
of the equity interest in BGM Holdings (the entity previously referred
to as Current BGM), and (2) 100 percent of the LLC membership interests
in DE Holdings. BGM Holdings will continue to own 100 percent of the
equity interest in the BATS Exchanges and BATS Trading. DE Holdings
will continue to own 100 percent of the equity interest in DE Route and
DEI. DEI will, in turn, continue to own 100 percent of the equity
interest in the DE Exchanges. Each of the BATS Exchanges and BATS
Trading, on the one hand, and the DE Exchanges and DE Route, on the
other hand, will continue to operate separately.
    The ownership of New BGM, as the new top-level holding company for
the combined businesses, will be divided among the several firms and
individuals that previously held equity interests in each of Current
BGM and DE Holdings. Of the firms and individuals that are expected to
hold equity interests in New BGM after the Closing, none will
beneficially own 20 percent or greater of New BGM and only an affiliate
of KCG Holdings, Inc. will beneficially own ten percent or greater.
Seven firms will beneficially own five percent or greater, but less
than ten percent, while 12 other firms as well as various individuals
will each beneficially own less than five percent of New BGM.\13\
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    \13\ ISE Holdings, which will beneficially own greater than five
percent, but less than ten percent of New BGM, will receive common
stock of New BGM designated as Class A Non-Voting Common Stock. As
set forth in the New BGM Charter (as defined below), shares of Class
A Non-Voting Common Stock are generally non-voting, except with
respect to certain actions that would adversely affect the
preferences, rights or powers of the holders of Class A Non-Voting
Common Stock disproportionately relative to Voting Common Stock or
the Class B Non-Voting Common Stock. See proposed New BGM Charter,
Article FOURTH, para. (b)(ii). ISE Holdings' shares of Class A Non-
Voting Common Stock may convert to Voting Common Stock: (1)
Automatically with respect to any shares transferred to persons
other than Related Persons of ISE Holdings; (2) upon the termination
of the Investor Rights Agreement; and (3) automatically with respect
to any shares of Class A Non-Voting Common Stock sold by ISE
Holdings in any public offering of the stock of New BGM. See
proposed New BGM Charter, Article FOURTH, para. (c); and Investor
Rights Agreement, Section 2.2(j).
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B. Proposed Rule Changes

    Section 19(b) of the Act and Rule 19b-4 thereunder require a self-
regulatory organization (``SRO'') to file proposed rule changes with
the Commission. Although New BGM,\14\ DE Holdings, and DEI are not
SROs, certain provisions of their proposed certificates of
incorporation and bylaws, along with other corporate documents, are
rules of the exchange, if they are stated policies, practices, or
interpretations, as defined in Rule 19b-4 under the Act, and must be
filed with the Commission pursuant to Section 19(b)(4) of the Act and
Rule 19b-4 thereunder. Accordingly, each of the DE Exchanges filed with
the Commission the following documents, along with other corporate
documents, in connection with the Combination: (1) The proposed
Resolutions of the DE Holdings board of managers regarding the
Combination (the ``Resolutions'') making certain determinations
regarding New BGM and the impact of the Combination on the DE
Exchanges; (2) the proposed Amended and Restated Certificate of
Incorporation of New BGM (the ``New BGM Charter''); \15\ (3) the
proposed Amended and Restated Bylaws of New BGM (the ``New BGM
Bylaws''); \16\ (4) the proposed Seventh Amended and Restated Limited
Liability Company Operating Agreement of Direct Edge Holdings LLC (the
``New DE Holdings LLC Agreement''); (5) the proposed amendments to the
DEI Certificate of Incorporation (the ``DEI Certificate of
Incorporation''); (6) the proposed amendments to the Bylaws of DEI (the
``DEI Bylaws''); (7) the proposed amendments to the Certificate of
Incorporation of the DE Exchanges (each, and collectively, the ``DE
Exchange Certificate of Incorporation''); (8) the proposed amendments
to the Bylaws of the DE Exchanges (each, and collectively, the ``DE
Exchange Bylaws''); (9) the proposed amendments to Rule 2.3 of each of
the DE Exchanges to reflect the affiliation between each DE Exchange
and two additional registered national securities exchanges; (10) the
proposed amendments to Rule 2.10 of each of the DE Exchanges to reflect
the new affiliated entities of each DE Exchange; and (11) the proposed
amendments to Rule 2.12 of each of the DE Exchanges to reflect the
affiliation between the DE Exchanges and the routing broker for BATS
and BYX. Each of the DE Exchanges also requested that the Commission
approve the proposed indirect acquisition by an affiliate of the DE
Exchanges of a Member of the DE Exchanges and the resulting affiliation
between the DE Exchanges and the Member of the DE Exchanges, as
required under Exchange Rule 2.10.\17\
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    \14\ The DE Exchanges are filing with the Commission the New BGM
Charter and New BGM Bylaws because, as noted above, after the
Combination, New BGM will be the ultimate parent company of the DE
Exchanges, and, as such, the New BGM Charter and New BGM Bylaws will
be considered rules of the Exchange under Section 19(b)(1) of the
Act.
    \15\ The DE Exchanges note that the New BGM Charter is
substantially similar to the Current BGM Charter. See Notices, supra
note 5, at 76420 and 76484.
    \16\ The DE Exchanges note that the New BGM Charter is
substantially similar to the Current BGM Charter. See Notices, supra
note 5, at 76420 and 76484.
    \17\ See Notices, supra note 5, at 76440 and 76504.
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1. Voting and Ownership Limitations
    The New BGM Charter includes restrictions on the ability to own and
vote shares of capital stock of New BGM.\18\ These limitations are
designed to prevent any stockholder from exercising undue control over
the operation of any of the BATS Exchanges or the DE Exchanges and to
assure that the BATS Exchanges, the DE Exchanges, and the Commission
are able to carry out their regulatory obligations under the Act.
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    \18\ These provisions are generally consistent with ownership
and voting limits approved by the Commission for other SROs. See
e.g., Securities Exchange Act Release Nos. 70210 (August 15, 2013),
78 FR 51758 (August 21, 2013) (SR-NYSE-2013-42, SR-NYSEMKT-2013-50
and SR-NYSEArca-2013-62) (order approving proposed transaction in
which NYSE Euronext will become a wholly owned subsidiary of
IntercontinentalExchange Group, Inc.) (``IntercontinentalExchange
Group, Inc. Combination Order''); 62716 (August 13, 2010), 75 FR
51295 (August 19, 2010) (File No. 10-198) (order approving
registration application of BYX as a national securities exchange)
(``BYX Approval Order); 61698 (March 12, 2010), 75 FR 13151 (March
18, 2010) (File Nos. 10-194 and 10-196) (order approving
registration application of EDGX Exchange, Inc. and EDGA Exchange,
Inc.) (``EDGX and EDGA Approval Order''); 58375 (August 18, 2008),
73 FR 49498 (August 21, 2008) (File No. 10-182) (order approving
registration of BATS as a national securities exchange) (``BATS
Approval Order''); 55293 (February 14, 2007), 72 FR 8033 (February
22, 2007) (SR-NYSE-2006-120) (order approving proposed combination
between NYSE Group, Inc. and Euronext N.V.) (``NYSE-Euronext Merger
Order''); 53382 (February 27, 2006), 71 FR 11251 (March 6, 2006)
(SR-NYSE-2005-77) (order approving merger of New York Stock
Exchange, Inc. and Archipelago, and demutualization of New York
Stock Exchange, Inc.) (``NYSE Inc.-Archipelago Merger Order'');
53963 (June 8, 2006), 71 FR 34660 (June 15, 2006) (File No. SR-NSX-
2006-03) (``NSX Demutualization Order''); 53128 (January 13, 2006),
71 FR 3550 (File No. 10-131) (order approving registration
application of NASDAQ as a national securities exchange) (``NASDAQ
Approval Order''); 51149 (February 8, 2005), 70 FR 7531 (February
14, 2005) (SR-CHX-2004-26) (``CHX Demutualization Order''); and
49098 (January 16, 2004), 69 FR 3974 (January 27, 2004) (SR-Phlx-
2003-73) (``Phlx Demutualization Order'').
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    Specifically, the proposed New BGM Charter includes restrictions on
the ability to vote and own shares of stock of New BGM. Under the
proposed New BGM Charter: (1) No person, either alone or together with
its Related

Persons,\19\ at any time may, directly, indirectly or pursuant to any
voting trust, agreement, plan or other arrangement (other than the
Investor Rights Agreement), vote or cause the voting of shares of the
capital stock of New BGM or give any consent or proxy with respect to
shares representing more than 20 percent of the voting power of the
then issued and outstanding capital stock of New BGM,\20\ and (2) no
person, either alone or together with its Related Persons, enter into
any agreement, plan or other arrangement (other than the Investor
Rights Agreement) with any other Person,\21\ either alone or together
with its Related Persons, under circumstances that would result in the
shares of capital stock of New BGM that are subject to such agreement,
plan or other arrangement not being voted on any matter or matters or
any proxy relating thereto being withheld, where the effect of such
agreement, plan or other arrangement would be to enable any Person,
either alone or together with its Related Persons, to vote, possess the
right to vote or cause the voting of shares of the capital stock of New
BGM that would represent more than 20 percent of said voting power (the
``New BGM Voting Restrictions'').\22\
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    \19\ See proposed New BGM Charter, Article FIFTH, para. (a)(ii)
(defining ``Related Person''). See Notices, supra note 5, at 76420-
21 and 76484-85.
    \20\ See proposed New BGM Charter, Article FIFTH, para.
(b)(i)(C).
    \21\ See id. at Article FIFTH, para. (a)(i) (defining
``Person'').
    \22\ See id. at Article FIFTH, para. (b)(i)(C).
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    In addition, the New BGM Charter includes ownership restrictions
that provide that: (1) No Person, either alone or together with its
Related Persons, may own, directly or indirectly, of record or
beneficially, shares constituting more than 40 percent of any class of
capital stock of New BGM, and (2) no Member of any of the BATS
Exchanges or the DE Exchanges, either alone or together with its
Related Persons, may own, directly or indirectly, of record or
beneficially, shares constituting more than 20 percent of any class of
capital stock of New BGM (the ``New BGM Ownership Restrictions'').\23\
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    \23\ See id. at Article FIFTH, paras. (b)(i)(A) and (B). The
limitations imposed by the New BGM Ownership Restrictions and New
BGM Voting Restrictions shall not apply in the case of any class of
stock that does not have the right to vote in the election of
members of the board of directors of New BGM or on other matters
that may require the approval of the holders of voting shares of New
BGM (other than matters affecting the rights, preferences or
privileges of said class of stock). See id. at Article FIFTH, para.
(b)(ii)(A).
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    If any stockholder purports to transfer to any person any shares
that would violate the New BGM Voting Restrictions or New BGM Ownership
Restrictions (``New BGM Voting and Ownership Restrictions''), then New
BGM shall record on the books only that number of shares that would not
violate that restriction and shall treat the remaining shares as owned
by the purported transferor for all purposes.\24\ If any stockholder of
New BGM purports to vote, or grant any proxy or enter into any
agreement, plan or other arrangement relating to the voting of shares
that would violate the New BGM Voting and Ownership Restrictions, then
New BGM shall not honor such vote, proxy, agreement, plan or other
arrangement to the extent that such provisions would be violated and
any shares subject to that arrangement shall not be entitled to vote to
the extent of such violation.\25\
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    \24\ See id. at Article FIFTH, para. (d).
    \25\ Id. If any stockholder purports to sell, transfer, assign,
convert, pledge, or own any shares in violation of the New BGM
Voting and Ownership Restrictions, then New BGM shall have the right
to, and shall promptly after confirming such violation and to the
extent funds are legally available, redeem the shares transferred in
violation of the restriction. See id. at Article FIFTH, para. (e).
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    The New BGM Charter would provide that the New BGM Voting and
Ownership Restrictions would apply only for so long as New BGM directly
or indirectly controls a national securities exchange registered under
Section 6 of the Act with the Commission.\26\
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    \26\ See id. at Article FIFTH, para. (b)(i).
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    The New BGM board of directors may waive the New BGM Ownership
Restrictions applicable to non-Member stockholders and the New BGM
Voting Restrictions, if, in connection with taking such action, the
board of directors adopts a resolution stating that the waiver:

     Will not impair the ability of any exchange subsidiary to
carry out its functions and responsibilities as an ``exchange'' under
the Act and the rules and regulations promulgated thereunder;
     is otherwise in the best interests of New BGM, its
stockholders and its exchange subsidiaries; and
     will not impair the Commission's ability to enforce the
Act or the rules and regulations promulgated thereunder.\27\
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    \27\ See id. at Article FIFTH, para. (b)(ii)(B). In making this
determination, the BGM board of directors may impose on the Person
in question and its Related Persons such conditions and restrictions
that it may in its sole discretion deem necessary, appropriate or
desirable in furtherance of the objectives of the Act and the
governance of the applicable exchange subsidiary. Id.

Any such waiver would not be effective until approved by the Commission
pursuant to Section 19 of the Act.\28\ However, the New BGM board of
directors cannot waive the voting and ownership limits above 20 percent
for a Member of any of the BATS Exchanges or any of the DE Exchanges
and their Related Persons.\29\ Further, the New BGM board of directors
also cannot waive the voting and ownership limits above the 20%
threshold if such person or its Related Persons is subject to any
statutory disqualification (as defined in Section 3(a)(39) of the
Act).\30\
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    \28\ See id. at Article FIFTH, para. (b)(ii)(B).
    \29\ See id. at Article FIFTH, paras. (b)(i)(B) and (b)(ii)(B).
    \30\ See id. at Article FIFTH, para.(b)(iii).
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    Members that trade on an exchange traditionally have had ownership
interests in such exchange. As the Commission has noted in the past,
however, a member's interest in an exchange could become so large as to
cast doubt on whether the exchange can fairly and objectively exercise
its self-regulatory responsibilities with respect to that member.\31\ A
member that is a controlling shareholder of an exchange might be
tempted to exercise that controlling influence by directing the
exchange to refrain from, or the exchange may hesitate to, diligently
monitor and surveil the member's conduct or diligently enforce its
rules and the federal securities laws with respect to conduct by the
member that violates such provisions.\32\
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    \31\ See, e.g., IntercontinentalExchange Group, Inc. Combination
Order; BYX Approval Order; EDGX and EDGA Approval Order; BATS
Approval Order; NYSE-Euronext Merger Order; NYSE Inc.-Archipelago
Merger Order; NSX Demutualization Order; NASDAQ Approval Order; CHX
Demutualization Order; and Phlx Demutualization Order, supra note
18.
    \32\ See, e.g., id.
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    In addition, as proposed, DE Holdings will be a wholly-owned
subsidiary of New BGM and the New DE Holdings LLC Agreement identifies
this ownership structure.\33\ Any changes to the New DE Holdings LLC
Agreement, including any change in the provision that identifies New
BGM as the sole member of DE Holdings, must be filed with and approved
by the Commission pursuant to Section 19 of the Act.\34\ Similarly, as
proposed, DEI will be a wholly owned subsidiary of DE Holdings, and in
turn, each of the DE Exchanges will be a wholly-owned subsidiary of
DEI. The Certificate of Incorporation of DEI identifies DE Holdings as
the sole stockholder of

DEI.\35\ The Bylaws of the DE Exchanges identify DEI as the sole
stockholder of the DE Exchanges.\36\ Any changes to the DEI Certificate
of Incorporation, including any change in the provision that identifies
DE Holdings as the sole stockholder of DEI, must be filed with and
approved by the Commission pursuant to Section 19 of the Act.\37\
Similarly, any changes to the Bylaws of the DE Exchanges, including any
change in the provision that identifies DEI as the sole stockholder of
the DE Exchanges, must be filed with and approved by the Commission
pursuant to Section 19 of the Act.\38\ Further, pursuant to the New DE
Holdings LLC Agreement, New BGM may not sell, assign, transfer, convey,
gift, exchange or otherwise dispose of any or all of its interest in DE
Holdings except pursuant to an amendment to the New DE Holdings LLC
Agreement, which would not be effective until filed with and approved
by the Commission under Section 19 of the Exchange Act.\39\ Similarly,
pursuant to the DE Exchange Bylaws, DEI may not transfer or assign, in
whole or in part, its ownership interest in each DE Exchange.\40\
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    \33\ See proposed New DE Holdings LLC Agreement (identifying New
BGM as the sole LLC Member of the company).
    \34\ See id. at Article XII, Section 12.02(b) and 15 U.S.C.
78s(b).
    \35\ See proposed DEI Certificate of Incorporation, Article
SEVENTH, para. 4.
    \36\ See proposed DE Exchange Bylaws, Article I(cc).
    \37\ See proposed DEI Certificate of Incorporation, Article
SEVENTH, para.3.
    \38\ 15 U.S.C. 78s(b).
    \39\ See proposed New DE Holdings LLC Agreement, Article VII.
    \40\ See proposed DE Exchange Bylaws, Article IV, Section 7.
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    The Commission believes that these provisions are consistent with
the Act. These requirements should minimize the potential that a person
could improperly interfere with or restrict the ability of the
Commission or the Exchange to effectively carry out their regulatory
oversight responsibilities under the Act.
2. Jurisdiction; Books and Records; Due Regard
    As described above, following the Closing, New BGM will be the sole
LLC Member of DE Holdings, DE Holdings will be the sole stockholder of
DEI, and DEI will be the sole stockholder of the DE Exchanges. Although
New BGM, DE Holdings and DEI will not carry out any regulatory
functions, their activities with respect to the operation of the DE
Exchanges must be consistent with, and must not interfere with, the
self-regulatory obligations of each DE Exchange. The New BGM Charter,
New BGM Bylaws, New DE Holdings LLC Agreement and DEI Bylaws therefore
include certain provisions that are designed to maintain the
independence of the DE Exchanges' \41\ self-regulatory functions,
enable the DE Exchanges to operate in a manner that complies with the
federal securities laws, including the objectives of Sections 6(b) \42\
and 19(g) \43\ of the Act, and facilitate the ability of the DE
Exchanges and the Commission to fulfill their regulatory and oversight
obligations under the Act.\44\
---------------------------------------------------------------------------

    \41\ The provisions in the New BGM Holdings Charter applies to
``Exchange Subsidiaries,'' which is defined as any direct or
indirect subsidiary of New BGM that is a registered with the
Commission as a national securities exchange as provided in Section
6 of the Act. The DE Exchanges, as well as the BATS Exchanges, will
be Exchange Subsidiaries upon the Closing of the Combination.
    \42\ 15 U.S.C. 78f(b).
    \43\ 15 U.S.C. 78s(g).
    \44\ See e.g., proposed New BGM Bylaws, Article XIV; proposed
New DE Holdings LLC Agreement, Articles X and XI; and proposed DEI
Bylaws, Article VII.
---------------------------------------------------------------------------

    For example, under the New BGM Bylaws, New DE Holdings LLC
Agreement and DEI Bylaws, for so long as New BGM, DE Holdings or DEI,
as the case may be, directly or indirectly, controls either or both of
the DE Exchanges, the board of directors (or sole LLC Member in the
case of DE Holdings), officers, employees and agents of each of New
BGM, DE Holdings and DEI, must give due regard to the preservation of
independence of the self-regulatory functions of the DE Exchanges, as
well as to its obligations to investors and the general public and
shall not take any actions that would interfere with the effectuation
of any decisions by either of the boards of directors of the DE
Exchanges relating to its regulatory functions (including disciplinary
matters) or which would interfere with the ability of such exchange to
carry out its responsibilities under the Act.\45\ The New BGM Bylaws,
New DE Holdings LLC Agreement, and DEI Bylaws would further require
that New BGM, DE Holdings or DEI, as the case may be, comply with the
United States federal securities laws and rules and regulations
thereunder and shall cooperate with the Commission and each of the DE
Exchanges, pursuant to and to the extent of their respective regulatory
authority.\46\ In addition, the New BGM Bylaws, New DE Holdings LLC
Agreement, and DEI Bylaws provide that the officers, directors,\47\
employees and agents of New BGM, DE Holdings and DEI, as the case may
be, by virtue of the acceptance of their position, shall be deemed to
agree to: (1) Comply with the U.S. federal securities laws and the
rules and regulations thereunder; and (2) to cooperate with the
Commission and the DE Exchanges in respect of the Commission's
oversight responsibilities regarding the DE Exchanges and the self-
regulatory functions and responsibilities of the DE Exchanges, and New
BGM, DE Holdings and DEI will take reasonable steps to cause its
officers, directors, employees and agents to so cooperate.\48\
Furthermore, New BGM, DE Holdings and DEI and their respective
officers, directors, employees and agents will be deemed to irrevocably
submit to the jurisdiction of the U.S. federal courts, the Commission,
and each DE Exchange, as applicable, for purposes of any suit, action,
or proceeding pursuant to the U.S. federal securities laws or the rules
or regulations thereunder arising out of, or relating to, the
activities of such exchange.\49\
---------------------------------------------------------------------------

    \45\ See proposed New BGM Bylaws, Article XIV, Section 14.01;
proposed New DE Holdings LLC Agreement, Article X, Section 10.01;
and proposed DEI Bylaws Article VII, Section 7.1.
    \46\ See proposed New BGM Bylaws, Article XIV, Section 14.01;
proposed New DE Holdings LLC Agreement, Article X, Section 10.02(a);
and proposed DEI Bylaws, Article VII, Section 7.2.
    \47\ The Commission notes that DE Holdings does not have a board
of directors. Therefore, the proposed New DE Holdings LLC Agreement
does not reference directors in the provisions identified in this
section. Otherwise, the DE Holdings' provisions identified in this
section are substantively the same as those in the proposed New BGM
Bylaws and proposed DEI Bylaws.
    \48\ See proposed New BGM Bylaws, Article XIV, Section 14.04;
proposed New DE Holdings LLC Agreement, Article X, Section 10.02(a);
and proposed DEI Bylaws, Article VII, Section 7.2.
    \49\ See proposed New BGM Bylaws, Article XIV, Section 14.05;
proposed New DE Holdings LLC Agreement, Article X, Section 10.03(a);
and proposed DEI Bylaws, Article VII, Section 7.3.
---------------------------------------------------------------------------

    The New BGM Bylaws, New DE Holdings LLC Agreement, and DEI Bylaws
provide that New BGM, DE Holdings, DEI and their respective officers,
directors, employees and agents must submit to the Commission's
jurisdiction with respect to activities relating to any of the DE
Exchanges,\50\ and, for so long as New BGM, DE Holdings, and/or DEI
control, directly or indirectly, such DE Exchange, New BGM, DE Holdings
and DEI, as the case may be, agree to provide the Commission and each
DE Exchange with access to its books and records that are related to
the operation or administration of each DE Exchange.\51\ In addition,
to the extent they are related to the operation or administration of
the DE Exchanges, the books, records, premises, officers, directors,
agents, and employees of New BGM, DE Holdings and DEI shall be deemed
to be the books, records, premises, officers, directors, agents, and

employees of the respective DE Exchange for purposes of, and subject to
oversight pursuant to, the Act.\52\ The New BGM Bylaws, New DE Holdings
LLC Agreement, and DEI Bylaws further provide that all books and
records of New BGM, DE Holdings and DEI shall be maintained at a
location within the United States.\53\
---------------------------------------------------------------------------

    \50\ Id.
    \51\ See proposed New BGM Bylaws, Article XIV, Section 14.03;
proposed New DE Holdings LLC Agreement, Article XI, Section
11.02(b); and proposed DEI Bylaws, Article V, Section 5.8(b).
    \52\ Id.
    \53\ See proposed New BGM Bylaws, Article XIV, Section 14.03;
and proposed New DE Holdings LLC Agreement, Article XI, Section
11.01(b); and proposed DEI Bylaws, Article VII, Section 7.5. See
also proposed DE Exchange Bylaws, Article XI, Section 3.
---------------------------------------------------------------------------

    The New BGM Bylaws, New DE Holdings LLC Agreement, and DEI Bylaws
also provide that all books and records of each DE Exchange reflecting
confidential information pertaining to the self-regulatory function of
the DE Exchanges (including but not limited to disciplinary matters,
trading data, trading practices and audit information) that shall come
into the possession of New BGM, DE Holdings or DEI, as the case may be,
shall not be made available other than to those officers, directors,
employees and agents of New BGM, DE Holdings or DEI, as the case may
be, that have a reasonable need to know the contents thereof, and shall
be retained in confidence by New BGM, DE Holdings, or DEI, the members
of their respective board of directors (as applicable), their officers,
employees and agents, and not used for any non-regulatory purposes.\54\
The New BGM Bylaws, New DE Holdings LLC Agreement, and DEI Bylaws,
however, specify that the New BGM Bylaws, New DE Holdings LLC
Agreement, and DEI Bylaws (including these confidentiality provisions)
shall not be interpreted so as to limit or impede the rights of the
Commission or the DE Exchanges to access and examine such confidential
information pursuant to the federal securities laws and the rules and
regulations thereunder, or to limit or impede the ability of any
officers, directors, employees or agents of New BGM, DE Holdings or
DEI, as the case may be, to disclose such confidential information to
the Commission or the DE Exchanges.\55\
---------------------------------------------------------------------------

    \54\ See proposed New BGM Bylaws, Article XIV, Section 14.02;
proposed New DE Holdings LLC Agreement, Article XI, Section
11.02(a); and DEI Bylaws, Article V, Section 5.8(a).
    \55\ See id.
---------------------------------------------------------------------------

    The New BGM Charter, New DE Holdings LLC Agreement and DEI Bylaws
provide that, for so long as New BGM, DE Holdings or DEI, as the case
may be, controls, directly or indirectly, a registered national
securities exchange, before any amendment to or repeal of any provision
of the proposed New BGM Charter, New DE Holdings LLC Agreement or DEI
Bylaws, as the case may be, may be effective, those changes must be
submitted to the board of directors of each of the DE Exchanges, and if
the amendment is required to be filed with, or filed with and approved
by the Commission pursuant to Section 19(b) of the Act,\56\ such change
shall not be effective until filed with, or filed with and approved by,
the Commission.\57\ Each DE Exchange represents that these provisions
will assist the Exchange in fulfilling its self-regulatory obligations
and in administering and complying with the requirements of the
Act.\58\
---------------------------------------------------------------------------

    \56\ 15 U.S.C. 78s(b).
    \57\ See proposed New BGM Charter, Article TWELFTH; proposed New
DE Holdings LLC Agreement, Article XII, Section 12.02(b); and
proposed DEI Bylaws, Article VI, Section 6.4.
    \58\ See Notices, supra note 5, at 76421 and 76486.
---------------------------------------------------------------------------

    The Commission finds that these provisions are consistent with the
Act, and that they are intended to assist each DE Exchange in
fulfilling its self-regulatory obligations and in administering and
complying with the requirements of the Act. The Commission also notes
that, even in the absence of these provisions, under Section 20(a) of
the Act,\59\ any person with a controlling interest in any of the DE
Exchanges shall be jointly and severally liable with and to the same
extent that each DE Exchange is liable under any provision of the Act,
unless the controlling person acted in good faith and did not directly
or indirectly induce the act or acts constituting the violation or
cause of action. In addition, Section 20(e) of the Act \60\ creates
aiding and abetting liability for any person who knowingly provides
substantial assistance to another person in violation of any provision
of the Act or rule thereunder. Further, Section 21C of the Act \61\
authorizes the Commission to enter a cease-and-desist order against any
person who has been ``a cause of'' a violation of any provision of the
Act through an act or omission that the person knew or should have
known would contribute to the violation.
---------------------------------------------------------------------------

    \59\ 15 U.S.C. 78t(a).
    \60\ 15 U.S.C. 78t(e).
    \61\ 15 U.S.C. 78u-3.
---------------------------------------------------------------------------

3. Change in Control
    Upon the Closing of the Combination, New BGM will become the sole
owner of DE Holdings. The current Limited Liability Company Operating
Agreement of DE Holdings (``Current DE Holdings LLC Agreement'') \62\
includes certain restrictions on the ability to vote and own units of
DE Holdings. Specifically, the Current DE Holdings LLC Agreement
provides that: (1) No Person,\63\ either alone or together with its
Related Persons,\64\ may own, directly or indirectly, of record or
beneficially, Units representing in the aggregate a Percentage Interest
\65\ of more than 40 percent of DE Holdings, and no Member, either
alone or together with its Related Persons, may own, directly or
indirectly, of record or beneficially, Units representing in the
aggregate a Percentage Interest more than 20 percent of DE Holdings
(``Current DE Holdings Ownership Limitation''), and (2) subject to an
exception for ISE Holdings, no Person, either alone or together with
its Related Persons, at any time, may, directly, indirectly or pursuant
to any of various arrangements, vote or cause the voting of Units or
give any consent or proxy with respect to Units representing a
Percentage Interest more than 20 percent of DE Holdings (``Current DE
Holdings Voting Limitation'').\66\
---------------------------------------------------------------------------

    \62\ DE Holdings currently operates pursuant to the Sixth DE
Holdings LLC Agreement. However, the Fourth DE Holdings LLC
Agreement was the last version filed with and approved by the
Commission. See Notices, supra note 5, at 76424 n.71 and 76488 n.71.
    \63\ See Current DE Holdings LLC Agreement, Article I, Section
1.1 (defining ``Person'').
    \64\ See id. at Article I, Section 1.1 (defining ``Related
Persons''). See Notices, supra note 5, at 76416 n.17 and 76480 n.17.
    \65\ Percentage Interest means, with respect to a LLC Member,
the ratio of the number of Units held by the LLC Member to the total
of all of the issued and outstanding Units, expressed as a
percentage. For purposes of the Current DE Holdings Voting
Limitation and the Current DE Holdings Ownership Limitation,
Percentage Interest also includes Units owned, directly or directly,
of record or beneficially, by a Person, either alone or together
with its Related Persons. See Current DE Holdings LLC Agreement,
Article I, Section I, Section 1.1 (also defining ``Units'' and
``Person'').
    \66\ See Current DE Holdings LLC Agreement, Article XII, Section
12.1(a).
---------------------------------------------------------------------------

    The Current DE Holdings Operating Agreement also provides that the
Current DE Holdings Ownership Limitation and the Current DE Holdings
Voting Limitation may be waived (except with respect to Exchange
members and their Related Persons) pursuant to an amendment to the
Current DE Holdings LLC Agreement adopted by the board of managers of
DE Holdings, if, in connection with the adoption of such amendment, the
board of managers adopts a resolution stating that it is the
determination of such board that such amendment: (1) Will not impair
the ability of each DE Exchange to carry out its functions and
responsibilities under the Act and the rules and regulations
promulgated thereunder; (2) is otherwise in the best interests of DE
Holdings, its LLC Members, and the DE Exchanges; (3)

will not impair the ability of the Commission to enforce the Act and
the rules and regulations promulgated thereunder; and (4) shall not be
effective until it is filed with and approved by the Commission.\67\
---------------------------------------------------------------------------

    \67\ See Current DE Holdings LLC Agreement, Article XII, Section
12.1(b). In granting such a waiver, the DE Holdings board of
directors has the discretion to impose on the person and its Related
Persons, such conditions and restrictions that it deems necessary,
appropriate or desirable in furtherance of the objectives of the Act
and the rules and regulations promulgated thereunder, and the
governance of each DE Exchange. Id.
---------------------------------------------------------------------------

    In connection with the Combination, the Current DE Holdings
Operating Agreement will be amended and restated to (among other
changes): (1) remove the Current DE Holdings Ownership Limitation and
the Current DE Holdings Voting Limitation and (2) specify that the sole
stockholder of DE Holdings will be New BGM. In addition, as noted
below, the New BGM Charter, which will become effective
contemporaneously with the Closing, will contain ownership and voting
limitation provisions that are substantively the same as the Current DE
Holdings Ownership Limitation and the Current DE Holdings Voting
Limitation.
    Because the Current DE Holdings LLC Agreement will be amended to
eliminate the Current DE Holdings Ownership Limitation and the Current
DE Holdings Voting Limitation contemporaneously with the Combination,
New BGM's acquisition of ownership and voting rights in DE Holdings
upon Closing would not cause New BGM to contravene the Current DE
Holdings Ownership Limitation or the Current DE Holdings Voting
Limitation. Therefore, in this instance, although New BGM will possess
ownership and voting rights in excess of the Current DE Holdings
Ownership Limitation and the Current DE Holdings Voting Limitation, no
waiver of these provisions is necessary.
    Nevertheless, because the Combination will result in a change of
ownership of DE Holdings (in that New BGM will become the sole
stockholder of DE Holdings), the DE Exchanges and the board of managers
of DE Holdings represented that it was appropriate for the board of
managers of DE Holdings to adopt the Resolutions, which set forth
certain determinations with respect to New BGM and the Combination
similar to those that would have been necessary to waive the Current DE
Holdings Ownership Limitation and Current DE Holdings Voting
Limitation.
    Specifically, the board of managers of DE Holdings made the
determination that the consummation of the Combination: (1) Will not
impair the ability of each DE Exchange to carry out its functions and
responsibilities under the Act and the rules and regulations
promulgated thereunder, is in the best interests of DE Holdings, its
LLC Members and the DE Exchanges, and will not impair the ability of
the Commission to enforce the Act and the rules and regulations
promulgated thereunder; (2) the acquisition of the proposed share
ownership and the acquisition or exercise of the proposed voting rights
by New BGM in DE Holdings will not impair the ability of each DE
Exchange to carry out its functions and responsibilities as an
``exchange'' under the Act and the rules and regulations promulgated
thereunder, that it is otherwise in the best interests of the DE
Holdings, its LLC Members and the DE Exchanges, and that it will not
impair the ability of the Commission to enforce the Act and the rules
and regulations promulgated thereunder; (3) no party to the
Combination, including New BGM, nor any of its Related Persons, is
subject to ``statutory disqualification'' within the meaning of Section
3(a)(39) of the Act; \68\ and (4) neither New BGM, nor any of its
Related Persons (excluding BATS Trading, which is a Member of the DE
Exchanges),\69\ is a Member.\70\
---------------------------------------------------------------------------

    \68\ 15 U.S.C. 78c(a)(39).
    \69\ As noted below, BATS Trading is a routing broker-dealer and
a Member that is affiliated with the DE Exchanges. As part of the
proposed rule changes, the DE Exchanges seek for the Commission to
approve BATS Trading's affiliation with the DE Exchanges pursuant to
Rules 2.10 and 2.12 of each DE Exchange.
    \70\ The Resolutions also contain a determination that the
execution and delivery of the merger agreement by New BGM
constituted notice of New BGM's intention to acquire ownership and
voting rights in excess of the Current DE Holdings Ownership
Limitation and Current DE Holdings Voting Limitation, respectively,
in writing and not less than 45 days before the Closing. See Current
DE Holdings Operating Agreement, Article XII, Section 12.1(d).
---------------------------------------------------------------------------

    The Commission believes that it is consistent with the Act to allow
New BGM to wholly-own and vote all of the outstanding units of DE
Holdings. The Commission notes that, as the new top-level holding
company for the combined businesses, New BGM will have ownership
divided among the several firms and individuals that previously held
equity interests in each of Current BGM and DE Holdings.\71\ According
to the DE Exchanges, of the firms and individuals that are expected to
hold equity interests in New BGM after the Closing, none will
beneficially own 20 percent or greater of New BGM and only an affiliate
of KCG Holdings, Inc. will beneficially own 10 percent or greater.\72\
The Commission also notes that, while the Current DE Holdings Ownership
Limitation and Current DE Holdings Voting Limitation will no longer be
in the New DE Holdings LLC Agreement, the New DE Holdings LLC Agreement
will specify that DE Holdings' sole stockholder will be New BGM, and
the New BGM Charter will contain substantively identical ownership and
voting limitation provisions.\73\ Further, as discussed above, New BGM
has included in its corporate documents certain provisions designed to
maintain the independence of each DE Exchange's regulatory functions
from New BGM, DE Holdings and DEI.\74\ Accordingly, the Commission does
not believe that the Combination will impair the ability of either DE
Exchange to carry out its functions and responsibilities as an
``exchange'' under the Act and the rules and regulations promulgated
thereunder, or the ability of the Commission to enforce the Act and the
rules and regulations promulgated thereunder.
---------------------------------------------------------------------------

    \71\ See Notices, supra note 5, at 76418 and 76482.
    \72\ See id.
    \73\ See proposed New DE Holdings LLC Agreement and proposed New
BGM Charter, Article FIFTH.
    \74\ See proposed New BGM Bylaws, Article XIV, proposed New DE
Holdings LLC Agreement Articles X and XI; and proposed DEI Bylaws
Articles V and VII.
---------------------------------------------------------------------------

4. Miscellaneous Changes to the Corporate Governance Documents of DE
Holdings, DEI and the DE Exchanges
    As noted above the Current DE Holdings Operating Agreement will be
amended and restated to (among other changes): (1) Remove the Current
DE Holdings Ownership Limitation and the Current DE Holdings Voting
Limitation and (2) specify that the sole stockholder of DE Holdings
will be New BGM.\75\ As described in more detail in the Notices, the
other proposed changes to the Current DE Holdings Operating Agreement
are to reflect DE Holdings' proposed new status as an intermediate
holding company and to delete, or replace as appropriate, various other
provisions that are applicable to a limited liability company with
multiple LLC Members, but not to one with a sole LLC Member.\76\
---------------------------------------------------------------------------

    \75\ See supra Section II.B.3.
    \76\ See Notices, supra note 5, at 76425-26 and 76489-90
(discussing changes to provisions that were adopted in light of DE
Holdings being owned by multiple LLC Members; replacing provisions
containing procedures for transfer of units with a provision
prohibiting any transfers; replacing various board of managers
governance provisions with provisions that provide that DE Holdings
will be managed by its sole LLC Member; and replacing provisions
governing distributions and calculations of profit and loss with
more simplified provisions).

---------------------------------------------------------------------------

    The DE Exchanges also propose various changes to the DEI
Certificate of Incorporation and the DEI Bylaws, as described in more
detail in the Notices.\77\ For example, the DE Exchanges propose to
amend the DEI Certificate of Incorporation to delete certain provisions
that describe circumstances that require the majority or supermajority
vote of the LLC Members or the board of managers of DE Holdings.
According to the DE Exchanges, these provisions will no longer be
necessary because, upon Closing, DE Holdings will no longer have a
board of managers and will only have one LLC Member.\78\ The proposed
rule change also modifies the language in the amendment provision in
the DEI Certificate of Incorporation and the DEI Bylaws to conform them
to the procedures in the New BGM Bylaws.\79\ Further, the DE Exchanges
propose to delete references to ``Owner Directors''\80\ in the DEI
Bylaws because the DE Exchanges propose to eliminate that category of
directors from their board.
---------------------------------------------------------------------------

    \77\ See Notices, supra note 5, at 76426-27 and 76490-91.
    \78\ See Notices, supra note 5, at 76427 and 76491.
    \79\ Id. See also proposed DEI Certificate of Incorporation,
Article SEVENTH, para. 4 (``For so long as the Corporation shall
control, directly or indirectly, an Exchange Subsidiary, before any
amendment to or repeal of any provision of this Certificate of
Incorporation shall be effective, those changes shall be submitted
to the board of directors of each Exchange Subsidiary and if the
same must be filed with, or filed with and approved by, the
Securities and Exchange Commission (the ``SEC'') before the changes
may be effective under Section 19 of the Exchange Act and the rules
promulgated thereunder by the SEC or otherwise, then the proposed
changes to this Certificate of Incorporation of this Corporation
shall not be effective until filed with, or filed with and approved
by, the SEC, as the case may be.''); and proposed DEI Bylaws,
Article VI, para. 6.4 (proposing similar changes to the amendment
provision).
    \80\ See Notices, supra note 5 at 76427 and 76491 (defining
``Owner Directors'').
---------------------------------------------------------------------------

    The DE Exchanges also propose to delete a provision in the DEI
Bylaws relating to the handling of regulatory funds in the possession
of DEI.\81\ The DE Exchanges note that, pursuant to the rules of the DE
Exchanges, DEI is not permitted to come into possession of regulatory
funds and therefore retaining that provision in the corporate documents
is unnecessary and potentially confusing.\82\ The DE Exchanges also
propose various other minor changes to conform the DEI corporate
governance documents to those of the BATS Exchanges and other
ministerial changes, as described in more detail in the Notices.\83\
---------------------------------------------------------------------------

    \81\ See Notices, supra note 5, at 76428 and 76492.
    \82\ Id. Specifically, the DE Exchanges Bylaws each prohibit the
DE Exchanges from distributing any regulatory funds to DEI and
require that such funds only be applied to fund the legal and
regulatory operations of the DE Exchanges or pay restitution and
disgorgement of funds intended for customers. See DE Exchange
Bylaws, Article X, Section 4.
    \83\ See Notices, supra note 5, at 76426-29 and 76490-93.
---------------------------------------------------------------------------

    In addition, as described in more detail in the Notices, each DE
Exchange proposes to revise its DE Exchange Certificate of
Incorporation and DE Exchange Bylaws to conform them to certificates of
incorporation and bylaws of the BATS Exchanges.\84\ The DE Exchanges
stated that they believed that it was important to have a consistent,
uniform approach to corporate governance for all of the Exchanges held
under New BGM.\85\
---------------------------------------------------------------------------

    \84\ See Notices, supra note 5, at 76429-39 and 76493-503
(describing in detail changes to the DE Exchanges corporate
documents to unify the governance and corporate practices of all
four Exchanges).
    \85\ The DE Exchanges are proposing several amendments to the DE
Exchange Bylaws that reflect changes that the BATS Exchanges
proposed to make to their bylaws as a result of the Combination. The
BATS Exchanges described these proposed revisions in the BATS
Exchanges' companion rule filings related to the Combination. See
Securities Exchange Act Release Nos. 71023 (December 6, 2013), 78 FR
75607 (December 12, 2013) (SR-BATS-059) and 71024 (December 6,
2013), 78 FR 75585 (December 12, 2013) (SR-BYX-2013-039). See also
Notices, supra note 5, at 76429 and 76493.
---------------------------------------------------------------------------

    The Commission finds that these provisions are consistent with the
Act. In large part, the proposed changes discussed in this section
conform the corporate governance documents of DE Holdings, DEI and the
DE Exchanges with provisions previously approved and in BATS' corporate
documents and rules prior to the Combination. Other proposed changes
correspond to provisions in BATS' corporate documents and rules
approved by the Commission as part of the Combination.\86\ The
remaining changes update the governing documents of DE Holdings, DEI
and the DE Exchanges to reflect the new corporate structure and other
ministerial changes.
---------------------------------------------------------------------------

    \86\ See BATS Exchanges Approval Order, supra note 4.
---------------------------------------------------------------------------

C. Affiliation Between BATS Exchanges and DE Exchanges

    Rule 2.3 of each of the DE Exchanges generally provides that, in
order to be eligible for membership in a DE Exchange, a registered
broker or dealer is required to be a member of another national
securities association or national securities exchange. As discussed
above, as a result of the Combination, the BATS Exchanges will become
affiliated with the DE Exchanges. The Exchange believes that it is
appropriate to limit membership to registered broker-dealers that are
members of at least one national securities association or national
securities exchange that is not affiliated with the DE Exchanges.
Therefore, the DE Exchanges propose to amend Rule 2.3 of each of the DE
Exchanges to specify that a registered broker-dealer will be eligible
for membership only if it is a member of a national securities
association or national securities exchange other than or in addition
to BATS, BYX, EDGA or EDGX.
    The Commission notes that the proposed changes to Rule 2.3 of each
of the DE Exchanges extends the membership eligibility criteria in a
way that is consistent with the current Rule 2.3 of each of the BATS
Exchanges, taking into account the each DE Exchange's affiliation with
each other and the DE Exchanges new affiliation with the BATS Exchanges
after the Closing.

D. Affiliation With BATS Trading

    As discussed above, as a result of the Combination, New BGM will,
indirectly, wholly own the BATS Exchanges, the DE Exchanges, BATS
Trading and DE Route. BATS Trading is a registered broker-dealer and a
member of Financial Industry Regulation Authority. BATS Trading is also
a member of each of the BATS Exchanges and the DE Exchanges.\87\
---------------------------------------------------------------------------

    \87\ See Notices, supra note 5, at 76440 and 76504.
---------------------------------------------------------------------------

    Rule 2.10 of each DE Exchange generally provides that, without the
prior approval of the Commission, (1) each DE Exchange or any entity
with which each DE Exchange is affiliated (as defined in Rule 12b-2
under the Act), may not directly or indirectly acquire or maintain an
ownership interest in a Member of each DE Exchange, and (2) a Member of
each DE Exchange may not be or become an affiliate of the DE Exchange,
or an affiliate of any affiliate of the DE Exchanges. Rule 2.10 of each
of the DE Exchanges, however, provides that nothing in Rule 2.10 shall
prohibit a DE Exchange from being an affiliate of its member, DE Route,
or the other DE Exchange.\88\ The DE Exchanges note that the purpose of
Rule 2.10 is to prevent or manage potential conflicts of interest that
could arise from the DE Exchanges or their affiliates having an
ownership interest in a Member, particularly with respect to the
Exchanges' obligation under Section 19(g) of the Act \89\ to enforce
its Members' compliance with the Act, the Commission's rules
thereunder, and DE Exchanges' Rules.\90\
---------------------------------------------------------------------------

    \88\ See infra note 98 and accompanying text.
    \89\ 15 U.S.C. 78s(g).
    \90\ See Notices, supra note 5, at 76440 and 76504.
---------------------------------------------------------------------------

    BATS Trading is currently a Member of each DE Exchange. The DE
Exchanges

proposed to become affiliated with BATS Trading, and BATS Trading
provides certain routing services to the DE Exchanges. Specifically,
the DE Exchanges proposed to receive through BATS Trading orders routed
inbound to the DE Exchanges from each of the BATS Exchanges, both of
which will also be affiliates of the DE Exchanges as a result of the
Combination. Accordingly, the DE Exchanges have asked the Commission to
approve an amendment to Rule 2.10 that will permit the affiliation
between each of the DE Exchanges and their Member, BATS Trading.\91\
---------------------------------------------------------------------------

    \91\ The current Rule 2.10 of each of the DE Exchanges states
that nothing in the rule shall prohibit each DE Exchange from being
an affiliate of DE Route or the other DE Exchange. Because the DE
Exchanges will be affiliated with BATS Trading and the BATS
Exchanges, as well as DE Route, after Closing, the DE Exchanges
propose to expand this provision to specifically permit the DE
Exchanges' affiliation with BATS Trading and the BATS Exchanges.
    The DE Exchanges also propose to make several changes to Rule
2.10 of each DE Exchange to reflect the proposed change in the
corporate structure of the DE Exchanges after Closing. Specifically,
Rule 2.10 currently states that nothing in Rule 2.10 shall prohibit
a Member or its affiliate from acquiring or holding an equity
interest in DE Holdings that is permitted by the DE Holdings
Ownership and Voting Limitations. Furthermore, Rule 2.10 currently
states, in relevant part, that nothing in Rule 2.10 shall prohibit a
Member from being or becoming an affiliate of the DE Exchanges, or
an affiliate of any affiliate of the DE Exchanges, solely by reason
of such Member or any officer, director, manager, managing member,
partner or affiliate of such Member being or becoming a director
serving on the board of directors of DE Holdings. Because New BGM
will replace DE Holdings as the ultimate parent company of the DE
Exchanges after Closing, New BGM's governing documents, as opposed
to the revised DE Holdings governing documents, set forth the
relevant ownership and voting limitations, and provide for Member
representation on the New BGM board of directors. Therefore, the DE
Exchanges propose to replace the references to DE Holdings and its
governing documents in Rule 2.10 with references to New BGM and its
governing documents. See Notices, supra note 5, at 76440 and 76504.
---------------------------------------------------------------------------

    Recognizing that the Commission has previously expressed concern
regarding the potential for conflicts of interest in instances where a
member firm is affiliated with an exchange, particularly where a member
is routing orders to such affiliated exchange,\92\ each DE Exchange
previously implemented limitations and conditions to the affiliation
between each DE Exchange and DE Route, also an affiliated member, to
permit each DE Exchange to accept inbound orders that DE Route routes
in its capacity as a facility of an affiliated exchange (EDGA or EDGX
as applicable).\93\ Again recognizing the Commission's concerns, the DE
Exchanges have now proposed that BATS Trading operate as an affiliated
inbound router subject to substantially similar limitations and
conditions.\94\
---------------------------------------------------------------------------

    \92\ See e.g., Securities Exchange Act Release No. 53382
(February 27, 2006), 71 FR 11251 (March 6, 2006). See also
Securities Exchange Act Release No. 57648 (April 11, 2008), 73 FR
20981 (April 17, 2008).
    \93\ See Rule 2.12 of each of the DE Exchanges. See also
Securities Exchange Act Release No. 61698, (March 12, 2010), 75 FR
13151 (March 18, 2010) (approving registration application of EDGA
and EDGX and approving conditions and limitations which allowed EDGA
and EDGX to receive inbound routes of orders by DE Route in its
capacity as an order routing facility of EDGX and EDGA on a twelve
month pilot). The Commission later approved proposals to make the
pilots permanent. See Securities Exchange Act Release No. 69870
(June 27, 2013), 78 FR 40225 (July 3, 2013) (EDGX-2013-17); and
Securities Exchange Act Release No. 69871 (June 27, 2013), 78 FR
40253 (July 3, 2013) (EDGA-2013-13).
    \94\ See Notices, supra note 5, at 76439 and 76503.
---------------------------------------------------------------------------

    Specifically, the DE Exchanges proposed that BATS Trading,
operating as a facility of the BATS Exchanges, provide routing services
from each of the BATS Exchanges to each DE Exchange, subject to the
following conditions and limitations set forth in the proposed Rule
2.12(a) of each DE Exchange: \95\
---------------------------------------------------------------------------

    \95\ See Rule 2.12 of each of the DE Exchanges. See also
Notices, supra note 5, at 76439 and 76503. Additionally, Rule
2.12(b) will require that BATS Trading operate as an outbound router
on behalf of each of the BATS Exchanges in accordance with the rules
of each BATS Exchange.
---------------------------------------------------------------------------

     Each DE Exchange would enter into (1) a plan pursuant to
Rule 17d-2 under the Exchange Act with a non-affiliated SRO to relieve
each DE Exchange of regulatory responsibilities for BATS Trading with
respect to rules that are common rules between each DE Exchange and the
non-affiliated SRO, and (2) a regulatory services contract with a non-
affiliated SRO to perform regulatory responsibilities for BATS Trading
for unique rules of each DE Exchange.
     The regulatory services contract would require the DE
Exchanges to provide the non-affiliated SRO with information, in an
easily accessible manner, regarding all exception reports, alerts,
complaints, trading errors, cancellations, investigations, and
enforcement matters (collectively ``Exceptions'') in which BATS Trading
is identified as a participant that has potentially violated the rules
of the DE Exchanges or Commission rules, and would require that the
non-affiliated SRO provide a report, at least quarterly, to the DE
Exchanges quantifying all such exception reports, alerts, complaints,
trading errors, cancellations, investigations, and enforcement matters
in which BATS Trading is identified as a participant that has
potentially violated the rules of the DE Exchanges or the Commission.
     Each DE Exchange, on behalf of the holding company
indirectly owning the DE Exchanges, would establish and maintain
procedures and internal controls reasonably designed to ensure that
BATS Trading does not develop or implement changes to its system on the
basis of non-public information obtained as a result of its affiliation
with the DE Exchanges, until such information is available generally to
similarly situated members of the DE Exchanges in connection with the
provision of inbound order routing to the DE Exchanges.
In addition, in the Notices, the DE Exchanges also stated that the
provision of such routing services also is conditioned on the
requirement that each DE Exchange may furnish to BATS Trading the same
information and on the same terms as the Exchange makes available in
the normal course of business to other uses.\96\
---------------------------------------------------------------------------

    \96\ See Notices, supra note 5, at 76439 and 76503.
---------------------------------------------------------------------------

    Although the Commission continues to be concerned about potential
unfair competition and conflicts of interest between an exchange's
self-regulatory obligations and its commercial interest when the
exchange is affiliated with one of its members, for the reasons
discussed below, the Commission believes that it is consistent with the
Act to permit BATS Trading to be affiliated with the DE Exchanges and
to provide inbound routing to the DE Exchanges, subject to the
conditions described above.
    The DE Exchanges have proposed four conditions applicable to BATS
Trading's inbound routing activities, which are enumerated above. The
Commission believes that these conditions mitigate its concerns about
potential conflicts of interest and unfair competitive advantage. In
particular, the Commission believes that a non-affiliated SRO oversight
of BATS Trading,\97\ combined with the non-affiliated SRO's monitoring
of BATS Trading's compliance with the equity trading rules and
quarterly reporting to each DE Exchange, will help to protect the
independence of each DE Exchange's regulatory responsibilities with
respect to BATS Trading. The Commission also believes that the
requirement that each DE Exchange establish and maintain procedures and
internal controls reasonably designed to ensure that BATS Trading does
not develop or implement changes to its system based on non-public
information obtained as a result of its affiliation with the DE
Exchanges, until such

information is available generally to similarly situated members of the
DE Exchanges, is reasonably designed to ensure that BATS Trading cannot
misuse any information advantage it may have because of its affiliation
with the DE Exchanges.
---------------------------------------------------------------------------

    \97\ The oversight will be accomplished through the Rule 17d-2
agreement and the regulatory contract.
---------------------------------------------------------------------------

    Further, the Commission notes that the proposed conditions for the
operation of BATS Trading as an affiliated inbound router on behalf of
each DE Exchange are consistent with conditions the Commission has
approved for other exchanges.\98\ The Commission therefore finds the
proposed operation of BATS Trading as an affiliated inbound router of
the DE Exchanges is consistent with the Act.
---------------------------------------------------------------------------

    \98\ See, e.g., Securities Exchange Act Release Nos. 62716
(August 13, 2010), 75 FR 51295 (August 19, 2010) (order approving
the exchange registration of BATS Y-Exchange, Inc.), and 65456
(September 30, 2011), 76 FR 62118 (October 6, 2011) (order approving
a proposal by NYSE Arca, Inc. (``NYSE Arca'') to make permanent the
pilot program that permits NYSE Arca to accept inbound orders routed
by its affiliated broker-dealer).
    They are also consistent with the conditions and limitations on
inbound routing to the DE Exchange by its affiliate DE Route. See
supra note 96 and accompanying text.
---------------------------------------------------------------------------

III. Conclusion

    For the foregoing reasons, the Commission finds that the proposed
rule changes are consistent with the Act and the rules and regulations
thereunder applicable to a national securities exchange.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\99\ that the proposed rule changes (SR-EDGA-2013-34 and SR-EDGX-2013-
43), as amended, are approved. For the Commission, by the Division of
Trading and Markets, pursuant to delegated authority.\100\
---------------------------------------------------------------------------

    \99\ 15 U.S.C. 78s(b)(2).
    \100\ 17 CFR 200.30-3(a)(12).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-02382 Filed 2-4-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 189 (Tuesday, September 29, 2020)]
[Notices]
[Pages 61085-61087]
[FR Doc No: 2020-21527]

-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket No. FRA-2020-0027-N-23]

Proposed Agency Information Collection Activities; Comment
Request

AGENCY: Federal Railroad Administration (FRA), U.S. Department of
Transportation (DOT).

ACTION: Notice of information collection; request for comment.

-----------------------------------------------------------------------

SUMMARY: Under the Paperwork Reduction Act of 1995 (PRA) and its
implementing regulations, FRA seeks approval of the Information
Collection Request (ICR) abstracted below. Before submitting this ICR
to the Office of Management and Budget (OMB) for approval, FRA is
soliciting public comment on specific aspects of the activities
identified in the ICR.

DATES: Interested persons are invited to submit comments on or before
November 30, 2020.

ADDRESSES: Submit comments and recommendations for the proposed ICR to
Ms. Hodan Wells, Information Collection Clearance Officer at email:
<EMAIL_ADDRESS>or telephone:<PHONE_NUMBER>. Please refer to the
assigned OMB control number in any correspondence submitted. FRA will
summarize comments received in response to this notice in a subsequent
notice and include them in its information collection submission to OMB
for approval.

SUPPLEMENTARY INFORMATION: The PRA, 44 U.S.C. 3501-3520, and its
implementing regulations, 5 CFR part 1320, require Federal agencies to
provide 60-days' notice to the public to allow comment on information
collection activities before seeking OMB approval of the activities.
See 44 U.S.C. 3506, 3507; 5 CFR 1320.8 through 1320.12. Specifically,
FRA invites interested parties to comment on the following ICR
regarding: (1) Whether the information collection activities are
necessary for FRA to properly execute its functions, including whether
the activities will have practical utility; (2) the accuracy of FRA's
estimates of the burden of the information collection activities,
including the validity of the methodology and assumptions used to
determine the estimates; (3) ways for FRA to enhance the quality,
utility, and clarity of the information being collected; and (4) ways
for FRA to minimize the burden of information collection activities on
the public, including the use of automated collection techniques or
other forms of information technology. See 44 U.S.C. 3506(c)(2)(A); 5
CFR 1320.8(d)(1).
    FRA believes that soliciting public comment may reduce the
administrative and paperwork burdens associated with the collection of
information that Federal regulations mandate. In summary, FRA reasons
that comments received will advance three objectives: (1) Reduce
reporting burdens; (2) organize information collection requirements in
a ``user-friendly'' format to improve the use of such information; and
(3) accurately assess the resources expended to retrieve and produce
information requested. See 44 U.S.C. 3501.
    The summary below describes the ICR that FRA will submit for OMB
clearance as the PRA requires:
    Title: Training, Qualification, and Oversight for Safety-Related
Railroad Employees.
    OMB Control Number: 2130-0597.
    Abstract: In 2014, FRA published a final rule establishing minimum
training standards for all safety-related railroad employees, as
required by the Rail Safety Improvement Act of 2008. The final rule
requires each railroad or contractor that employs one or more safety-
related employees to develop and submit a training program to FRA for
approval and to designate the minimum training qualifications for each
occupational category of employee. Additionally, the rule requires most
employers to conduct periodic oversight of their own employees and
annual written reviews of their training programs to close performance
gaps.
    FRA will use the information collected to ensure each employer--
railroad or contractor--conducting operations subject to part 243
develops, adopts, submits, and complies with a training program for
each category and subcategory of safety-related railroad employee. Each
program must have training components identified so that FRA will
understand how the program works when it reviews the program for
approval. Further, FRA will review the required training programs to
ensure they include: Initial, ongoing, and on-the-job criteria; testing
and skills evaluation measures designed to foster continual compliance
with Federal standards; and the identification of critical safety
defects and plans for immediate remedial actions to correct them.
    In response to petitions for reconsideration, FRA has extended the
effective date for developing the required training program under Sec.
243.101 for employers with 400,000 or more total annual employee work
hours

to January 1, 2020, and for employers with fewer than 400,000 total
annual employee work hours to May 1, 2021.
    Type of Request: Extension with change (revised estimates) of a
currently approved collection.
    Affected Public: Businesses.
    Form(s): N/A.
    Respondent Universe: 1,155 railroads/contractors/training
organizations/learning institutions.
    Frequency of Submission: On occasion.
    Reporting Burden:

----------------------------------------------------------------------------------------------------------------
                                  Respondent      Total annual     Average time    Total annual     Total cost
       CFR section \1\             universe        responses      per responses    burden hours   equivalent \2\
----------------------------------------------------------------------------------------------------------------
243.101(a)(2)--Training        1,046 railroads/ 298 training     250 hours......          74,500      $5,736,500
 program required for each      contractors.     programs.
 employer not covered by
 (a)(1) and subject to this
 part by May 1, 2021.
--(b) Submission by new        10 new           10 training      20.............             200          24,000
 employers commencing           railroads/       programs.
 operations after Jan. 1,       contractors.
 2020 not covered by (a)(2).
--(e) Contractor's duty to     400 railroads/   50 documents...  15 minutes.....            12.5             963
 validate approved program to   contractors.
 a railroad. (Revised
 requirement).
--(f) Railroad's duty to       10 new           10 copies......  2 minutes......              .3              23
 retain copies of               railroads.
 contractor's validation
 document (Revised
 requirement).
243.103(d)--Training           1,155 railroads/ 70 modified      5..............             350          26,950
 components identified in       contractors.     training
 program; modifications to                       programs.
 components of the training
 programs.
243.109(b)--Previously         1,155 railroads/ 10               8..............              80           6,160
 approved programs requiring    contractors/     informational
 an informational filing when   learning         filings.
 modified.                      institutions.
--(c) New portions or          10 railroads/    10 revised       16.............             160          12,320
 substantial revisions to an    contractors.     training
 approved training program.                      programs.
--(c) New portions or          5 railroads/     5 revised        8..............              40           3,080
 substantial revisions to an    contractors.     training
 approved training program                       programs.
 found non-conforming to this
 part by FRA--revisions
 required.
--(d)(1)(i) Copy of            10 railroads/    25 copies......  10 minutes.....             4.2             323
 additional submissions,        contractors.
 resubmissions, and
 informational filings to
 labor organization
 presidents.
--(d)(1)(ii) Railroad          228 railroads/   76 affirming     10 minutes.....            12.7             978
 statement affirming that a     contractors.     statements.
 copy of submissions,
 resubmissions, or
 informational filings has
 been served to labor
 organization presidents.
--(d)(2) Labor comments on     228 railroads'   3 comments.....  30 minutes.....             1.5             116
 railroad training program      labor
 submissions, resubmissions,    organizations.
 or informational filings.
243.111(g)--Safety-related     109 TO/LI......  5,450 records..  5 minutes......           454.2          34,973
 railroad employees
 instructed by training
 organizations and learning
 institutions (TO/LI) --
 recordkeeping.
--(h) TO/LI to provide         109 TO/LI......  545 records....  5 minutes......            45.4           3,496
 student's training
 transcript or training
 record to any employer upon
 request by the student.
243.201(a)(2)--Designation of  1,039 railroads/ 346 designation  15 minutes.....            86.5           6,661
 existing safety-related        contractors.     lists.
 railroad employees by job
 category (for employers not
 covered by (a)(1) and
 subject to this part by
 January 1, 2022).
--(b) New employers operating  10 new           10 designation   15 minutes.....             2.5             193
 after January 1, 2020, not     railroads/       lists.
 covered by (a)(2),             contractors.
 designation of safety-
 related employees by job
 category--Lists.
--(c) Training records of      4,800 employees  4,800 records..  15 minutes.....           1,200          92,400
 newly hired employees or
 those assigned new safety-
 related duties.
--(d)(1)(i) Requests for       4,800 employees  960 record       5 minutes......              80           6,160
 relevant qualification or                       requests.
 training record from an
 entity other than current
 employer.
243.203--(a)-(e)               1,155 railroads/ 1,046            30 minutes.....             523          40,271
 Recordkeeping--Systems set     contractors/     recordkeeping
 up to meet FRA requirements.   TOLI.            systems.
--(f) Transfer of records to   1,155 railroads/ 3 records......  30 minutes.....             1.5             116
 successor employer.            contractors/
                                TOLI.
243.205(c)--Railroad           300 contractors  100              5 minutes......             8.3             639
 identification of                               identification
 supervisory employees who                       s.
 conduct periodic oversight
 tests by category/
 subcategory.

--(f) Notification by RR of    300 contractors  90 employee      10 minutes.....              15           1,155
 contractor employee non-                        notices.
 compliance with Federal laws/
 regulations/orders to
 employee and employee's
 employer.
--(f) Notification by RR of    300 contractors  270 employer     10 minutes.....              45           3,465
 contractor employee non-                        notices.
 compliance with Federal laws/
 regulations/orders to
 employee and employee's
 employer.
--(i) and (j) Employer         1,046 railroads/ 150,000 records  5 minutes......          12,500         962,500
 records of periodic            contractors.
 oversight.
243.207(a)--Written annual     22 railroads...  22 reviews.....  16.............             352          27,104
 review of safety data
 (Railroads with 400,000
 annual employee work hours
 or more).
--(b) Railroad copy of         22 railroads...  22 review        5 minutes......             1.8             139
 written annual review at                        copies.
 system headquarters.
--(e) Railroad notification    22 railroads...  2 notifications  15 minutes.....              .5              39
 to contractor of relevant
 training program adjustments.
243.209(a)-(b)--Railroad       746 railroads..  746 lists......  30 minutes.....             373          28,721
 maintained list of
 contractors utilized.
--(c) Railroad duty to update  746 railroads..  75 updated       15 minutes.....            18.8           1,444
 list of contractors utilized                    lists.
 and retain record for at
 least 3 years showing if a
 contractor was utilized in
 last 3 years.
                              ----------------------------------------------------------------------------------
    Total....................  1,155 railroads/ 165,054          N/A............          91,069       7,020,889
                                contractors/     responses.
                                training
                                organizations/
                                learning
                                institutions.
----------------------------------------------------------------------------------------------------------------
\1\ Note: The current inventory exhibits a total burden of 282,824 hours while that of this requesting notice is
  91,069 hours. FRA determined many of the estimates were initial estimates and outdated. Moreover, other
  estimates were not derived from PRA requirements, thus leading to the increased figures in the current
  inventory, which were decreased accordingly in this notice. Also, totals may not add due to rounding.
\2\ The dollar equivalent cost is derived from the Surface Transportation Board's Full Year Wage A&B data series
  using the appropriate employee group hourly wage rate that includes a 75-percent overhead charge.

    Total Estimated Annual Responses: 165,054.
    Total Estimated Annual Burden: 91,069 hours.
    Total Estimated Annual Burden Hour Dollar Cost Equivalent:
$7,020,889.
    Under 44 U.S.C. 3507(a) and 5 CFR 1320.5(b) and 1320.8(b)(3)(vi),
FRA informs all interested parties that a respondent is not required to
respond to, conduct, or sponsor a collection of information that does
not display a currently valid OMB control number.

    Authority: 44 U.S.C. 3501-3520.

Brett A. Jortland,
Deputy Chief Counsel.
[FR Doc. 2020-21527 Filed 9-28-20; 8:45 am]
BILLING CODE 4910-06-P