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From Securities Regulation Daily, August 16, 2013

SEC grants approval of rule changes related to ICE acquisition of NYSE

By Matthew Garza, J.D.

The SEC has approved proposed rule changes submitted by IntercontinentalExchange Group, Inc. (ICE) as part of its acquisition of NYSE Euronext after determining that the company would fulfill the requirements set forth in Exchange Act Section 6(b) for the combined entity to be registered as a national securities exchange. The Commission noted that the combined entity will be a for-profit, publicly traded holding company listed on the exchange.

The SEC said a core aspect of the structure of the combination would be that it will maintain local regulation of the marketplace, members and issuers so that these parties will continue to be regulated in the same manner they are currently regulated.

The proposed rule changes submitted in connection with the combination will satisfy the Exchange Act’s requirement that a national securities exchange have the capacity to enforce compliance with the Act and with exchange rules, 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, among other requirements.

Restrictions. The combined entity will have in place an ownership restriction that would provide that no person or related persons beneficially own more than 20 percent of the outstanding shares representing votes entitled to be cast on any matter. It will also have a voting restriction that would limit the voting power of individual stock holders or related persons to 10 percent of the outstanding votes entitled to be cast, although both provisions may be waived by the board of directors under certain circumstances.

Proposed corporate documents include provisions designed to maintain the independence of the U.S. regulated subsidiaries’ self-regulatory functions. The SEC said these provisions along with certain change of control limitations should minimize the potential for interference with the regulatory oversight responsibilities of the Commission and the company’s U.S. regulated subsidiaries.

Companies: IntercontinentalExchange Group, Inc.; NYSE Euronext.

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