UNDERTAKING RELATING TO THE OVERSIGHT OF AFFILIATED MARKETS
BETWEEN THE U.S. SECURITIES AND EXCHANGE COMMISSION AND
THE SWISS FINANCIAL MARKET SUPERVISORY AUTHORITY
Background
1.
In December 2007, pursuant to a corporate transaction, Eurex Frankfurt AG (“Eurex”) acquired International Securities Exchange Holdings, Inc. (“ISE Holdings”) and its wholly owned subsidiary, International Securities Exchange, LLC (“ISE, LLC”) (“Acquisition”). Eurex is a wholly owned subsidiary ofEurex ZUrich AG, which is jointly owned and operated by Deutsche Borse AG (“DBAG”) and the SIX Swiss Exchange AG (“SWX”).
2.
In December 2008, ISE Holdings acquired a 31.54% interest in Direct Edge Holdings, LLC (“Direct Edge”).
3.
SWX is headquartered in ZUrich and operates Switzerland’s national stock exchange. It is subject to Swiss law, namely the Swiss Federal Act on Stock Exchanges and Securities Trading, and is supervised by the Swiss Financial Market Supervisory Authority] (“FINMA”). SWX is wholly owned by SIX Group AG. (Eurex ZUrich AG, SWX and SIX Group AG are collectively referred to as ”the Swiss Companies”).
4.
ISE, LLC is a U.S. national securities exchange registered under Section 6 ofthe Securities Exchange Act of 1934 (“Exchange Act”) and subject to oversight by the U.S. Securities and Exchange Commission (“SEC,,).2
5.
Direct Edge intends to register its two new wholly-owned subsidiaries, EDGX Exchange, Inc. (“EDGX”) and EDGA Exchange, Inc. (“EDGA”), as national securities exchanges under Section 6 of the Exchange Act. Ifthe SEC approves the exchange registrations of EDGX and EDGA, EDGX and EDGA will be subject to oversight by the SEC.
6.
As used in this Undertaking, “U.S. Markets” means ISE, LLC, EDGX, EDGA and any national securities exchange registered under Section 6 ofthe Exchange Act that ISE Holdings may, in the future, control, directly or indirectly.3
On January 1,2009, the Swiss Federal Banking Commission (‘SFBC”), the Swiss Federal Office ofPrivate Insurance and the Swiss Anti-Money Laundering Control Authority merged to form FINMA, a new consolidated financial regulator for Switzerland.
2 On December 12,2007, the SEC and the SFBC signed an Undertaking (“December 2007 Undertaking”), substantially similar to the one herein, relating to ISE, LLC. FINMA is the successor authority to the SFBC with respect to that Undertaking.
3 In the event that ISE Holdings, in the future, controls, directly or indirectly, additional U.S. securities exchanges that would be covered by this Undertaking (“Future Exchanges”), the SEC will notify FINMA as soon as practicable. The Undertaking will not become effective as to Future Exchanges until appropriate regulatory approvals and new or supplemental corporate resolutions, as necessary, are finalized.
Access to Information in Switzerland
7.
Irrespectiveofthenationality oftheowners ofaU.S.exchange,theSEChasastatutory obligation to oversee a U.S. exchange’s compliance with its obligations under the Exchange Act.
8.
Persons who control a U.S. securities exchange~ whether foreign or domestic, have committed through their governing documents that, among other things, their books and records related to the activities ofthe exchange are subject at all times to inspection and copying by the SEC and the exchange, are deemed to be the books and records ofthe exchange for pwposes of and subject to oversight pursuant to the U.S. securities laws~ and will be kept in the United States.
9.
While the SEC anticipates that it will be able to secure most~ ifnot all, ofthe information it requires directly from the U.S. Markets, it may, from time to time, request that SWX or one ofthe other Swiss Companies provide the SEC with information related to the activitiesofthe U.S. Markets, includingbooks and records related to the activities ofthe
U.S. Markets.
10.
Swiss legal provisions4 may restrict the Swiss Companies~ ability to provide the SEC directly with access to information~ including books and records, related to the activities ofthe U.S. Markets.
Procedure for Delivery of Information
11. In orderto facilitate theability ofthe Swiss Companies to meettheirobligations as owners ofa U.S. securities exchangeS in a manner consistent with Swiss law, the SEC and FINMA have developed a procedure by which FINMA undertakes to serve as a conduit for the delivery ofinformation and participate in oral exchanges between the SEC and the Swiss Companies6 (“Procedure”). Pursuant to this Procedure, where necessitated by Swiss law:
1. Where the SEC makes a request to any ofthe Swiss Companies for information related to the activities ofa U.S. Market, including books and records related to the activities ofsuch U.S. Market, FINMA shall deliver to the SEC without delay any responsive information provided to FINMA by the Swiss Companies;
4 These legal provisions may include, without limitation, Article 271 ofthe Swiss Penal Code.
s Commitments by the Swiss Companies, in connection with their involvement in the activities ofthe U.S. Markets, to comply with the U.S. federal securities laws and the rules and regulations thereunder and to cooperate with the SEC will be reflected in binding corporate resolutions.
6 The Procedure established under this Undertaking covers the Swiss Companies, as well as any other companies incorporated under Swiss Jaw that may become future direct or indirect owners ofthe U.S. Markets.
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11. Written requests for information, including books and records, related to the activities ofa U.S. Market shall be made by the SEC directly to the Swiss Companies, and FINMA will be copied on any such requests; and
111. A FINMA staffmember shall participate in any oral exchanges between the SEC and any ofthe Swiss Companies.
12. Notwithstanding this Procedure, the Swiss Companies remain fully responsible for meetingall oftheirobligationsasowners ofaU.S. securitiesexchange,to besetforth in binding corporate resolutions.
General Cooperation
13. Through this Undertaking, the SEC and FINMA (collectively, “the Authorities”) also express their willingness to cooperate with each other in the interest offulfilling their respective regulatory mandates, particularly in the areas ofinvestor protection, fostering market integrity, and maintaining confidence and systemic stability related to the oversight ofthe U.S. and Swiss markets that become affiliated through a common ownership structure as the result ofthe Acquisition, consistent with, and as permitted by, the laws and regulations that govern the Authorities.
General Provisions
14.
This Undertaking does not create any legally binding obligations, confer any rights, or supersede domestic laws.
15.
In orderto enhancethe quality ofcooperation, from time to timerepresentatives ofthe Authorities intend to discuss the scope and operation ofthis Undertaking.
16.
This Undertaking will become effective upon approval by SEC Commission order of EDGX’s and EDGA’s applications for exchange registration.
17.
Once it becomes effective, this Undertaking will supersede the December 2007
Undertaking.
18.
Cooperation in accordance with this Undertaking will continue until the expiration of30 days after either the SEC or FINMA gives written notice ofits intent to terminate to the other Authority. Ifeither Authority gives such notice, the Procedure will remain in effect with respect to all requests for information that were made by the SEC to any ofthe Swiss Companies before the effective date ofnotification until the SEC terminates the matter for which assistance was requested.
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Contact Persons
19. The following are the points ofcontact to this Undertaking:
i. For FINMA
Head, II International I Markets I Cooperation Swiss Financial Market Supervisory Authority Einsteinstrasse 2 3003 Berne, Switzerland Tel. 41-31-327 9418 Fax41-31-3279101
Head, Markets Swiss Financial Market Supervisory Authority Einsteinstrasse 2 3003 Berne, Switzerland Tel. 41-31-327 92 50 Fax 41-31-327 91 01
11. For the SEC
Director, Office of International Affairs
U.S. Securities and Exchange Commission 100 F Street NE Washington DC 20549 Tel. 202-551-6690 Fax. 202-770-9280
Director, Division ofTrading and Markets
U.S. Securities and Exchange Commission 100 F Street NE Washington DC 20549 Tel. 202-551-5500 Fax. 202-772-9273
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Signed
For the United States Securities and Exchange Commission
Eugen Haltiner Chainnan For the Swiss Financial Market Supervisory Authority
Urs Zulauf / Head, Strategic and CentiaJ. Services
For the Swiss Financial Market Supervisory Authority
https://www.sec.gov/about/offices/oia/oia_bilateral/switzerland_sfbc.pdf
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