[Federal Register Volume 84, Number 215 (Wednesday, November 6, 2019)]
[Notices]
[Pages 59854-59855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24180]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87436; File No. 10-237]
MEMX LLC; Notice of Filing of Application, as Amended, for
Registration as a National Securities Exchange Under Section 6 of the
Securities Exchange Act of 1934
October 31, 2019.
On September 9, 2019, MEMX LLC (``MEMX'' or ``Applicant'') filed
with the Securities and Exchange Commission (``Commission'') a Form 1
application under the Securities Exchange Act of 1934 (``Exchange
Act''), seeking registration as a national securities exchange under
Section 6 of the Exchange Act. On October 23, 2019, MEMX submitted
Amendment No. 1 to its Form 1 application.\1\ MEMX's Form 1
application, as amended, provides detailed information on how it
proposes to satisfy the requirements of the Exchange Act.
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\1\ In Amendment No. 1, Applicant submitted updated portions of
its Form 1 application, including Exhibits A-5 (Second Amended and
Restated LLC Agreement of MEMX LLC), B (Rules of MEMX), C-2 (Third
Amended and Restated LLC Agreement of MEMX Holdings LLC), and C-4
(Amended and Restated LLC Agreement of MEMX SubCo LLC).
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The Commission is publishing this notice to solicit comments on
MEMX's Form 1 application. The Commission will take any comments it
receives into consideration in making its determination about whether
to grant the Applicant's request to register as a national securities
exchange. The Commission will grant the registration if it finds that
the requirements of the Exchange Act and the rules and regulations
thereunder with respect to MEMX are satisfied.\2\
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\2\ 15 U.S.C. 78s(a).
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As discussed in the Form 1 application, MEMX would be a subsidiary
of its parent company, MEMX Holdings, LLC (``MEMX Holdings''), which
would directly hold 99.5% of the equity of MEMX and indirectly hold the
other 0.5% of the equity of MEMX through its 100% ownership of MEMX
SubCo LLC.\3\ In turn, MEMX Holdings would be owned by a group of nine
investors that include broker-dealers, retail brokers, and banks, eight
of which have the ability to appoint a director to the board of MEMX
Holdings.\4\ Three of those investors also would have the ability to
nominate a director to the board of MEMX on a rotating schedule.\5\
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\3\ A similar ownership structure exists for MEMX Execution
Services LLC, which would act as an optional outbound routing broker
for MEMX.
\4\ See Exhibit B (Directors and Observers Schedule) to the
Third Amended and Restated LLC Agreement of MEMX Holdings.
\5\ See ``Exchange Director Nominating Member'' as defined in
Article 1.1 of the Third Amended and Restated LLC Agreement of MEMX
Holdings. See also Exhibit J (Exchange Director Nomination Rotation)
to the Third Amended and Restated LLC Agreement of MEMX Holdings.
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The governing documents for MEMX can be found in Exhibit A to
MEMX's Form 1 application, and a listing of the officers and directors
of MEMX can be found in Exhibit J. The governing documents for MEMX
Holdings and MEMX SubCo LLC can be found in Exhibit C to MEMX's Form 1
application. One notable novel governance provision in the LLC
Agreement of MEMX Holdings concerns quorum requirements for the board
of directors that would require the presence of certain named investor-
[[Page 59855]]
appointed directors to have a quorum to conduct business.\6\
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\6\ See Article VIII, Section 8.6 of the Third Amended and
Restated LLC Agreement of MEMX Holdings.
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With respect to its trading system, the Form 1 application further
provides that MEMX would operate a fully automated electronic trading
platform for the trading of National Market System stocks through
unlisted trading privileges with a continuous automated matching
function. MEMX would not maintain a physical trading floor. Liquidity
would be derived from orders to buy and orders to sell submitted to
MEMX electronically by its registered broker-dealer members from remote
locations. MEMX would have one class of membership open to registered
broker-dealers, and also would allow members to register under MEMX
rules as market makers on MEMX and be subject to certain specified
requirements and obligations set forth in MEMX's proposed rules.
According to the Applicant, it ``intends for its System to be
relatively simple, without many of the complex order types or
instructions available on other national securities exchanges.'' \7\
While MEMX's proposed rulebook generally conforms to the rules of other
exchanges,\8\ one novel feature of MEMX's proposed trading rules is an
optional feature on random replenishment for reserve orders that would
vary the time intervals of each replenishment.\9\
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\7\ Form 1, Exhibit E at 16.
\8\ See, e.g., Rulebook of Cboe EDGX Exchange, Inc., available
at https://cdn.cboe.com/resources/regulation/rule_book/EDGX_Rulebook.pdf.
\9\ See Proposed MEMX Rule 11.6(k)(1)(A).
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A more detailed description of the manner of operation of MEMX's
proposed system can be found in Exhibit E to the Applicant's Form 1
application. The proposed rulebook for the proposed exchange can be
found in Exhibit B to MEMX's Form 1 application. A complete set of
forms concerning membership and access can be found in Exhibit F to
MEMX's Form 1 application.
MEMX's Form 1 application, including all of the Exhibits referenced
above, is available online at www.sec.gov/rules/other.shtml as well as
in the Commission's Public Reference Room. Interested persons are
invited to submit written data, views, and arguments concerning the
Applicant's Form 1, including whether the application is consistent
with the Exchange Act.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number 10-237 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number 10-237. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (http://www.sec.gov/rules/other.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to MEMX's Form 1 filed with the Commission, and
all written communications relating to the application between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make publicly available. All
submissions should refer to File Number 10-237 and should be submitted
on or before December 23, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(71)(i).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-24180 Filed 11-5-19; 8:45 am]
BILLING CODE 8011-01-P