90 FR 132 pgs. 31360-31362 - In the Matter of the Application of Texas Stock Exchange LLC for Registration as a National Securities Exchange; Order Instituting Proceedings To Determine Whether To Grant or Deny an Application for Registration as a National Securities Exchange Under Section 6 of the Securities Exchange Act of 1934
Type: NOTICEVolume: 90Number: 132Pages: 31360 - 31362
Pages: 31360, 31361, 31362Docket number: [Release No. 34-103422; File No. 10-249]
FR document: [FR Doc. 2025-13080 Filed 7-11-25; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103422; File No. 10-249]
In the Matter of the Application of Texas Stock Exchange LLC for Registration as a National Securities Exchange; Order Instituting Proceedings To Determine Whether To Grant or Deny an Application for Registration as a National Securities Exchange Under Section 6 of the Securities Exchange Act of 1934
July 9, 2025.
I. Introduction
[top] On January 31, 2025, Texas Stock Exchange LLC ("TXSE") filed with the Securities and Exchange Commission ("Commission") a Form 1 application ("Form 1") under the Securities Exchange Act of 1934 ("Act"), seeking
Footnotes:
1 ?15 U.S.C. 78f.
2 ?In Amendment No. 1, TXSE submitted updated portions of its Form 1, including Exhibits A-3 (Proposed First Amended and Restated Limited Liability Company Agreement of Texas Stock Exchange LLC), B-1 (Rules of Texas Stock Exchange LLC), C (information regarding subsidiaries or affiliates), E (description of the proposed operation of the exchange), H (listing applications), J (list of officers, governors, members of all standing committees, or persons performing similar functions), and K (shareholders owning 5% or more). TXSE's Form 1 as amended, including all its exhibits, is available at: https://www.sec.gov/rules-regulations/other-commission-orders-notices-information/txse-form-1.
3 ? See Securities Exchange Act Release No. 102773 (Apr. 4, 2025), 90 FR 15375.
4 ?The public comment file for TXSE's Form 1 (File No. 10-249) is available on the Commission's website at: https://www.sec.gov/comments/10-249/10-249.htm.
Section 19(a)(1) of the Act? 5 requires the Commission, within ninety days of the date of publication of notice of an application for registration as a national securities exchange, or such longer period as to which the applicant consents, to, by order, grant such registration? 6 or institute proceedings to determine whether such registration should be denied. 7 This order is instituting proceedings under Section 19(a)(1)(B) of the Act? 8 to determine whether TXSE's application for registration as a national securities exchange should be granted or denied, and provides notice of the grounds for denial under consideration by the Commission, as set forth below.
Footnotes:
5 ?15 U.S.C. 78s(a)(1).
6 ?15 U.S.C. 78s(a)(1)(A).
7 ?15 U.S.C. 78a(a)(1)(B).
8 ?15 U.S.C. 78s(a)(1)(B).
II. Overview of TXSE's Trading System
TXSE proposes to operate a fully automated limit order book for orders to buy and sell securities with a continuous automated matching function. TXSE would execute orders in price/time priority, and would "rank equally priced trading interest within the System in time priority in the following order: (i) The portion of a Limit Order with a Displayed instruction; (ii) Limit Orders with a Non-Displayed instruction (including the Reserve Quantity of Limit Orders); and (iii) Orders with a Peg instruction, ranked in priority based upon the time such orders were initially received by the System."? 9 TXSE would not maintain a physical trading floor. Liquidity would be derived from orders to buy and orders to sell submitted to TXSE electronically by its registered broker-dealer members from remote locations. TXSE proposes to have one class of membership open to registered broker-dealers, and also would allow members to register under TXSE rules as market makers on TXSE and be subject to certain specified requirements and obligations set forth in TXSE's proposed rules.
Footnotes:
9 ?Proposed TXSE Rule 11.008. Capitalized terms used but not defined herein have the meanings specified in Exhibit B-1.
A more detailed description of the manner of operation of TXSE's proposed system can be found in Exhibit E to TXSE's Form 1. The proposed rulebook for the proposed exchange can be found in Exhibit B to TXSE's Form 1. A complete set of forms concerning membership and access can be found in Exhibit F to TXSE's Form 1.
With respect to governance, TXSE would be a subsidiary of its parent company, TXSE Group Inc. ("TXSE Group"), which would directly hold 100% of the equity of TXSE. In turn, TXSE Group would be owned by a group of investors that are party to a stockholders' agreement ("Stockholders' Agreement"). The Stockholders' Agreement would provide a 40% cap on beneficial ownership of stock of TXSE Group by any person (alone or together with its related persons) and would further cap beneficial ownership of TXSE Group by members of TXSE at 20%.
The governing documents for TXSE can be found in Exhibit A to TXSE's Form 1, and a listing of the officers and directors of TXSE can be found in Exhibit J. The governing documents for TXSE Group, including the Stockholders' Agreement, can be found in Exhibit C to TXSE's Form 1.
III. Proceedings To Determine Whether To Grant or Deny the Application and Grounds for Potential Denial Under Consideration
As required by Section 19(a)(1)(B) of the Act, 10 the Commission is hereby providing notice of grounds for denial under consideration, as set forth below. Institution of such proceedings is appropriate at this time in view of the issues raised by the application. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved.
Footnotes:
10 ?15 U.S.C. 78s(a)(1)(B).
Under Section 19(a)(1) of the Act, the Commission shall grant an application for registration as a national securities exchange if the Commission finds that the requirements of the Act and the rules and regulations thereunder with respect to the applicant are satisfied. The Commission shall deny such application for registration if it does not make such a finding. 11 Under Section 6(b) of the Act, an exchange shall not be registered as a national securities exchange unless the Commission determines that it has satisfied the relevant requirements of the Act. 12 In particular, Section 6(b)(1) of the Act requires that the Commission determine that an exchange is so organized and has the capacity to carry out the purposes of the Act. 13 In addition, under Section 6(b)(3) of the Act, the Commission must determine that the rules of the exchange assure a 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. 14 Section 6(b)(5) of the Act requires that the rules of the exchange be designed, among other things, 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 mechanisms of a free and open market and a national market system, and in general to protect investors and the public interest. 15 Finally, under Section 6(b)(8) of the Act, the Commission must determine that the rules of the exchange do not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of Act. 16 The Commission requests comment on all aspects of TXSE's Form 1, including comment on any specific Exhibits, 17 as well as any information or data that would help the Commission's review of TXSE's Form 1.
Footnotes:
11 ?15 U.S.C. 78s(a)(1).
12 ?15 U.S.C. 78f.
13 ?15 U.S.C. 78f(b)(1).
14 ?15 U.S.C. 78f(b)(3).
15 ?15 U.S.C. 78f(b)(5).
16 ?15 U.S.C. 78f(b)(8).
17 ? See supra note 2.
IV. Request for Written Comment
[top] The Commission requests that interested persons provide written views and data with respect to TXSE's Form 1 and any relevant issues.
Electronic Comments
• Use the Commission's internet comment form ( https://www.sec.gov/rules/sro.shtml ); or
• Send an email to rule-comments@sec.gov . Please include File No. 10-249 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 No. 10-249. 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 ( https://www.sec.gov/rules/other ). Copies of the submission, all subsequent amendments, all written statements with respect to TXSE'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 a.m. and 3 p.m. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to File No. 10-249 and should be submitted on or before August 4, 2025.
By the Commission.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-13080 Filed 7-11-25; 8:45 am]
BILLING CODE 8011-01-P