In addition to amending the composition requirements of the Equities Nominating Committee, the Exchange also proposes to amend NYSE Arca Rules 3.2(b)(2)(C)(i) to expand the eligibility for fair representation directors. Currently, the Equities Nominating Committee may nominate ETP Holders or Allied Persons of ETP Holders to serve on the NYSE Arca Board. The Exchange proposes to expand the eligibility for fair representation directors by amending this rule to allow the Equities Nominating Committee to publish the name of an Associated Person of an ETP Firm as well.III. Discussion and Commission Findings
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.19
In particular, the Commission finds that the proposed rule changes are consistent with Section 6(b)(3) of the Act,20
which, among other things, requires that the rules of an exchange assure a fair representation of its members in the selection of its directors and administration of its affairs and provides 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. As the Exchange notes, the proposed rule changes are consistent with the composition requirements set forth in the governing documents of other self-regulatory organizations.21
The Exchange is not proposing to alter the number of fair representation candidates on the boards or any other aspect of the NYSE Arca Board's composition or nomination process.
The proposed rule change also furthers the objectives of Section 6(b)(6) of the Act,22
because it provides for appropriate discipline for violations of Exchange rules and regulations. The Commission believes that the proposed rule change will expand the available candidates with industry knowledge that are eligible for membership on the Options and Equities Committees that are involved in reviewing disciplinary actions against OTP Holders, OTP Firms, and ETP Holders and advising on rule changes related to disciplinary matters and trading rules.
The Commission also believes that the proposed rule change furthers the objectives of Section 6(b)(5) of the Act23
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 regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Specifically, the Commission believes the proposed rule change would expand the pool of candidates eligible for membership on the NYSE Arca Board and committees of NYSE Arca and NYSE Arca Equities and thereby increase the breadth of industry knowledge that would be available to these entities, which should benefit the public interest.IV. 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 Act24
that the proposed rule changes (SR-NYSEArca-2012-103), are approved.
Kevin M. O'Neill,