Notice2026-03607
Self-Regulatory Organizations; 24X National Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Limited Liability Agreement of 24X US Holdings LLC Related to a Transaction
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 24, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 36 (Tuesday, February 24, 2026)</title>
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[Federal Register Volume 91, Number 36 (Tuesday, February 24, 2026)]
[Notices]
[Pages 8937-8944]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03607]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104871; File No. SR-24X-2026-04]
Self-Regulatory Organizations; 24X National Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Limited Liability Agreement of 24X US Holdings LLC Related to
a Transaction
February 19, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on February 10, 2026, 24X National Exchange LLC
(``24X'' or the ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I and II below, which Items have been prepared by
the Exchange. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the limited liability agreement for
24X US Holdings LLC, the parent company of the Exchange in connection
with the issuance of Voting Common Units of 24X US Holdco upon the
conversion of a convertible promissory note. The proposed rule change
is available on the Exchange's website at <a href="https://equities.24exchange.com/regulation">https://equities.24exchange.com/regulation</a> and at the principal office of the
Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is filing with the Commission a proposed rule change
to amend and restate the Third Amended and Restated Limited Liability
Company Agreement (the ``24X US Holdco LLC Agreement'') of 24X US
Holdings LLC (``24X US Holdco'') as the Fourth Amended and Restated
Limited Liability Company Agreement of 24X US Holdco to include
amendments related to the issuance of Voting Common Units of 24X US
Holdco to Rakuten Securities Holdings, Inc. (``Rakuten'') upon the
conversion of a convertible promissory note as part of a capital raise
(the ``Transaction''), and various clarifying, updating, conforming,
and other non-substantive amendments to the 24X US Holdco LLC
Agreement. Each of these proposed amendments is discussed below.
(i) Rakuten Transaction
On May 27, 2025, 24X issued to Rakuten a convertible promissory
note in exchange for certain consideration, and, on September 18, 2025,
24X and Rakuten agreed to convert the convertible promissory note into
893,087 Voting Common Units of 24X US Holdco, subject to the
effectiveness of this filing. The Exchange proposes to amend the 24X US
Holdco LLC Agreement to facilitate the Transaction, including
authorizing the issuance of Voting Common Units and to reflect the
admission of Rakuten as a Member of 24X US Holdco.\5\
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\5\ A ``Member'' of 24X US Holdco is defined in Exhibit B of the
24X US Holdco LLC Agreement as ``each Person signing this Agreement
and any Person who subsequently is admitted as a member in the
Company.''
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The Exchange proposes to amend the 24X US Holdco LLC Agreement to
allow the issuance of Voting Common Units, which are the same type of
membership interest (i.e., have the same privileges, preference,
duties, liabilities, obligations and rights) as the existing interest
held by 24X Bermuda Holdco, which currently wholly owns 24X US Holdco,
to Rakuten pursuant to the Transaction. With the completion of the
Transaction, 24X Bermuda Holdco's proportionate ownership of 24X US
Holdco would be reduced by approximately 9% from 100% to approximately
91%. Accordingly, 24X Bermuda Holdco will continue to own its ownership
interest in 24X US Holdco pursuant to the existing exceptions to the
ownership and voting limitation provisions for 24X Bermuda Holdco in
the 24X US Holdco LLC Agreement after giving effect to the Transaction
and the proposed amendments to the 24X US Holdco LLC Agreement.\6\ 24X
believes that the exceptions to the ownership and voting limitations
provisions for 24X Bermuda Holdco remain appropriate because the
governance and oversight of the Exchange would not change with the
proposed amendments to the 24X US Holdco LLC Agreement.\7\ 24X Bermuda
Holdco would remain the Manager of 24X US Holdco, and would continue to
have control over decision making for 24X US Holdco.\8\
Correspondingly, Rakuten would own approximately 9% of 24X US Holdco.
Accordingly, Rakuten will not exceed any ownership or voting
limitations applicable to the Members set forth in the 24X US Holdco
LLC Agreement after giving effect to the Transaction and the proposed
amendments to the 24X US Holdco LLC Agreement. The proceeds from the
Transaction could be used by 24X US Holdco and its subsidiary, the
[[Page 8938]]
Exchange, for regulation and operation of the Exchange.
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\6\ See Section III(c)(ii)(A) of 24X US Holdco LLC Agreement.
\7\ With the completion of this Transaction, subject to any
applicable regulatory requirements, 24X anticipates that Rakuten
will participate as an observer on the Board of Managers of 24X
Bermuda Holdco.
\8\ See Section IV(a) of 24X US Holdco LLC Agreement.
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(ii) Issuance of Voting Common Units
To facilitate the Transaction, which involves the issuance of
Voting Common Units, the Exchange proposes to amend the 24X US Holdco
LLC Agreement to allow 24X US Holdco to issue Voting Common Units.
Specifically, the Exchange proposes to revise paragraph (a) of Section
III of the 24X US Holdco LLC Agreement to reference the authority to
issue 9,900,000 Voting Common Units, for a total of 11,000,000 total
Common Units (including both Non-Voting and Voting Common Units).
Specifically, the Exchange proposes to revise paragraph (a) of Section
III of the 24X US Holdco LLC Agreement to read as follows:
The Company \9\ is authorized to issue 11,000,000 Common Units
as follows: (1) 9,900,000 Voting Common Units, and (2) 1,100,000
Non-Voting Common Units. The Non-Voting Common Units may be issued
or reserved for issuance pursuant to the Warrant Performance
Incentive Program (as defined below). Authorization of any
additional Units or any newly created class or series of Units may
only be effected by an amendment of this Agreement pursuant to
paragraphs (a) and (b) of Section XI and approval by the Manager.
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\9\ ``The Company,'' as used herein, means 24X US Holdco, unless
otherwise noted.
Correspondingly, the Exchange proposes to amend Exhibit B of the
24X US Holdco LLC Agreement by defining the new term of ``Voting Common
Units'' used in paragraph (a) of Section III of the 24X US Holdco. The
Exchange proposes to define a ``Voting Common Unit'' as ``a common Unit
that carries the right to vote as provided under this Agreement.'' \10\
A Voting Common Unit represents a common membership interest in 24X US
Holdco that provides the holder with voting rights with regard to 24X
US Holdco.
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\10\ The term ``Unit'' is defined in Exhibit B of the 24X US
Holdco LLC Agreement to mean ``the limited liability company
interests issued by the Company to the Members and, where
applicable, having the powers, preferences, priorities and rights
and the qualifications, limitations and restrictions set forth in
this Agreement. For the sake of clarity, the Units shall constitute
the `limited liability company interests' of the Company for all
purposes of, and within the meaning set forth in, the Act and shall
represent interests in ownership, Profits and Losses of the
Company.''
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(iii) Drag-Along Right
The Exchange proposes to add to the 24X US Holdco LLC Agreement a
description of the drag-along right applicable to a holder of any Unit.
Specifically, the Exchange proposes to amend Section XIII of the 24X US
Holdco LLC Agreement to include the following statement: ``With respect
to any holder of any Unit, such holder shall have the rights and be
subject to the obligations set forth on Exhibit C-2.'' The Exchange
also proposes to add Exhibit C-2, which describes the drag-along right,
to the 24X US Holdco LLC Agreement.
Proposed Exhibit C-2 to the 24X US Holdco LLC Agreement describes
the drag-along right applicable to the holder of any Unit in the event
of a Sale of the Company. A drag-along right is a common corporate
method for ensuring the possibility of a complete sale of a company,
allowing a majority shareholder (or a designated group) to require the
minority shareholders to sell their shares under the same terms and
conditions when the majority wishes to exit a company, and the acquiror
of the company wishes to own 100% of the company. Such drag-along
rights are similar to those currently in place for parent companies of
other national securities exchanges.\11\
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\11\ See, e.g., Drag-along Rights, Section 10.4 of the Eighth
Amended and Restated Limited Liability Company Agreement of MEMX
Holdings LLC; Drag-Along Right, Section 7.7 of the Second Amended
and Restated Limited Liability Company Agreement of BOX Holdings
Group LLC.
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Proposed paragraph 1 of Exhibit C-2 defines the term ``Sale of the
Company,'' where ``the Company'' refers to 24X US Holdco. A ``Sale of
the Company'' would mean either:
(a) a single transaction or series of related transactions in
which a Person, or a group of affiliated Persons, acquires from one
or more Members Units representing a majority of the outstanding
equity of the Company or of the outstanding voting power of the
Company; (b) a sale, exclusive license or other disposition of all
or substantially all of the properties and assets of the Company and
its Subsidiaries, taken as a whole, in a single transaction or
series of related transactions; or (c) a merger, reorganization or
consolidation of the Company with or into another entity, or the
Transfer of Units to a Person, or group of affiliated Persons, and
in any such merger, reorganization, consolidation or Transfer the
surviving or acquiring entity or such Person or group would hold a
majority of the outstanding equity of the Company or of the
outstanding voting power of the Company. For avoidance of doubt, any
transaction remains subject to Sections III(c) and VII(c).
Proposed paragraph 2 of Exhibit C-2 describes the actions to be
taken with regard to the drag-along right. Specifically, proposed
paragraph 3 of Exhibit C-2 states:
If the Manager and 24X Bermuda Holdings approve a Sale of the
Company, then, subject to satisfaction of the conditions in Section
3 below, each Member and the Company hereby agree: (a) to vote all
Units in favor of such Sale of the Company; (b) to sell the same
proportion of Units beneficially held by such Member as is being
sold by 24X Bermuda Holdings; (c) to refrain from exercising any
dissenters' rights or rights of appraisal under Applicable Law, and
(d) to execute and deliver all related documentation and take such
action as reasonably requested by the Manager or 24X Bermuda
Holdings to carry out the terms of this Section 2.
Proposed paragraph 3 of Exhibit C-2 describes the conditions
related to the drag-along right. Specifically, proposed paragraph 3 of
Exhibit C-2 states the following:
A Member will not be required to comply with Section 2 in
connection with any proposed Sale of the Company (the ``Proposed
Sale''), unless: (a) representations and warranties to be made by
such Member are limited to authority, ownership, ability to convey
title to Units free and clear of all liens and encumbrances and such
other customary representations and warranties that are made by all
Members; (b) the Member is not liable for the breach of any
representation, warranty or covenant made by any other Person in
connection with the Proposed Sale, other than the Company; (c)
liability shall be limited to such Member's applicable share (based
on the proceeds payable to each Member) of a negotiated aggregate
indemnification amount that applies equally to all Members but does
not exceed the amount of consideration payable to such Member,
except for fraud by such Member; (d) each Member of each class or
series will receive the same form of consideration as received by
other Members of the same class or series.
Proposed paragraph 4 of Exhibit C-2 describes the irrevocable proxy
and power of attorney related to the drag-along right. Specifically,
proposed paragraph 4 of Exhibit C-2 states the following:
Each Member hereby appoints as the proxy of such Member and
hereby grants a power of attorney to the Manager of the Company,
with full power of substitution, with respect to a Sale of the
Company pursuant to Section 2, and hereby authorizes the Manager to
represent and vote, if and only if the Member (i) fails to vote, or
(ii) attempts to vote inconsistent with the terms of this Exhibit,
all of such Member's Units in favor of the approval of any Sale of
the Company. The power of attorney granted hereunder shall authorize
the Manager of the Company to execute and deliver the documentation
referred to in this Exhibit on behalf of any party failing to do so
within five (5) business days of a request by the Company. Each of
the proxy and power of attorney granted pursuant to this Section 4
is given in consideration of the agreements and covenants of the
Company and the Members in connection with the transactions
contemplated by this Agreement and, as such, each is coupled with an
interest and shall be irrevocable unless and until this Agreement
terminates or expires.
[[Page 8939]]
(iv) Additional Members and Rakuten Transaction
The Exchange proposes to revise the 24X US Holdco LLC Agreement to
address the addition of Rakuten as a Member, alongside existing Member
24X Bermuda Holdco. Specifically, the Exchange proposes to revise the
Explanatory Statement to the 24X US Holdco LLC Agreement to describe
the changes to be made in connection with the Transaction.
Specifically, paragraphs B., C. and D. of the Explanatory Statement
would state the following:
B. 24X Bermuda Holdings determined to amend and restate the
Original Agreement pursuant to that Amended and Restated Limited
Liability Company Agreement of the Company dated October 21, 2022
and subsequently pursuant to the Second Amended and Restated Limited
Liability Company Agreement dated December 9, 2024 and the Third
Amended and Restated Limited Liability Company Agreement dated
September 19, 2025 (the Existing Agreement'').
C. On September 18, 2025, pursuant to the certain Subscription
Agreement dated September 18, 2025 between the Company and Rakuten
Securities Holdings, Inc. (``Rakuten''), the Company converted that
certain Convertible Promissory Note with the Company (``Note''),
issued to Rakuten and dated as of May 27, 2025, into 893,087 Voting
Common Units of the Company in full satisfaction and discharge of
the Company's obligations under the Note, and such Note
automatically and irrevocably was terminated and of no further force
and effect and Rakuten became a Member of the Company.
D. As a result of the conversion as described in paragraph C,
24X Bermuda Holdings and Rakuten desire to amend and restate the
Existing Agreement to reflect the admission of Rakuten as a Member
and make certain other changes, all as more particularly set forth
herein and all of the requirements to amend and restate the Existing
Agreement as set forth therein have been satisfied.
The Exchange also proposes to amend Exhibit A of the 24X US Holdco
LLC Agreement to include the updated ownership interests of 24X Bermuda
Holdco and Rakuten. Specifically, the chart in Exhibit A would be
revised to indicate that 24X Bermuda Holdco would own 90.97% of the
Voting Common Units and 9,000,000 Voting Common Units, and that Rakuten
would own 9.03% of the Voting Common Units and 893,087 Voting Common
Units. In addition, Exhibit A would be revised to indicate that the
total number of Voting Common Units is 9,893,087.
The Exchange also proposes to add a new paragraph (c) to Section XI
of the 24X US Holdco LLC Agreement which would state that ``Any
amendment to or repeal of any provision of this Agreement that would
disproportionately and adversely affect one Member's economic rights or
specific rights, benefits, or privileges as explicitly provided in this
Agreement to such Member, but not any other Member's economic rights
shall require the prior written consent of such affected Member.'' Such
a membership right is similar to those currently in place for parent
companies of other national securities exchanges.\12\
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\12\ See, e.g., Section 4.7 of the Eighth Amended and Restated
Limited Liability Company Agreement of MEMX Holdings LLC; Section
18.1(b) of the Second Amended and Restated Limited Liability Company
Agreement of BOX Holdings Group LLC.
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Correspondingly, the Exchange proposes to revise paragraph (a) of
Section XI of the 24X US Holdco LLC Agreement to reflect the new
paragraph (c) of Section XI. With this change, paragraph (a) of Section
XI would state that ``[s]ubject to paragraphs (b) and (c) of this
section XI, this Agreement may be amended or repealed, or a new Limited
Liability Company Agreement may be adopted, by the written consent of
24X Bermuda Holdings.''
In addition, the Exchange proposes to make certain additional
changes to the 24X US Holdco LLC Agreement to reflect the fact that 24X
US Holdco will now have two Members, rather than just the one Member,
24X Bermuda Holdco. Such changes include:
<bullet> Revising the introductory paragraph to the 24X US Holdco
LLC Agreement to indicate that ``each of the parties listed on the
signature pages hereto, each a Member'';
<bullet> Revising the final sentence in the Explanatory Statement
to replace the reference to ``24X Bermuda Holdings'' with ``the
Members''; and
<bullet> Revising Section IV to replace the reference to ``24X
Bermuda Holdings'' with ``each Member.''
Finally, the Exchange proposes to add paragraph (f) to Section III
of the 24X US Holdco LLC Agreement to address certain pre-emptive
rights for Members of 24X US Holdco. A pre-emptive rights provision is
a typical request from a new investor that wants to have the ability to
maintain its ownership percentage if the company at issue decides to
raise additional funds from third party investors that invest after the
first investor's investment. In such an event, the first investor would
be permitted to purchase a portion of the newly issued securities such
that the first investor can keep its same percentage. Such pre-emptive
rights are similar to those currently in place for another parent
company of a national securities exchange as approved by the
Commission.\13\ Proposed paragraph (f)(i) of Section III would state
the following:
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\13\ See, e.g., Pre-Emptive Rights, Article IX of the Eighth
Amended and Restated Limited Liability Company Agreement of MEMX
Holdings LLC.
If the Company proposes to issue any of its Voting Common Units,
Non-Voting Common Units, or any newly created class or series of
Units, or any securities convertible into Units (collectively,
``Newly Issued Securities''), the Company shall provide written
notice to all Members prior to issuing such Newly Issued Securities
to any third party. Such notice shall specify the type, quantity,
proposed issue price, and other material terms and conditions of the
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Newly Issued Securities.
Proposed paragraph (f)(ii) of Section III would state the
following:
Each voting Member (each, an ``Existing Member'') shall have the
right (the ``Pre-emptive Right'') to subscribe for and acquire such
number of Newly Issued Securities as may be necessary to maintain
its then-current Percentage Interest (calculated based on the
Percentage Interest as set forth in Exhibit A of this Agreement) on
the same terms and conditions (excluding any specific additional
rights, privileges, or benefits offered to third parties, such as
board seats or information rights, which should be negotiated
separately) as those proposed to be offered to third parties, within
20 business days (the ``Exercise Period'') following the Company's
notice of its proposal to issue such Newly Issued Securities to a
third party. An Existing Member may exercise its Pre-emptive Right
by delivering written notice to the Company within the Exercise
Period.
Proposed paragraph (f)(iii) of Section III would state the
following:
If any Existing Member does not exercise all or part of its Pre-
emptive Right within the Exercise Period, the Company may issue the
unexercised Newly Issued Securities to a third party on terms no
less favorable than those offered to such Existing Member. However,
the Company must complete the issuance of such Newly Issued
Securities within 90 days after the expiration of the Exercise
Period (or such longer period as required to obtain any regulatory
approvals). If the issuance is not completed within this period, the
Company shall follow the procedures set forth in this Section again
before issuing such Newly Issued Securities to any third party.
(v) Tax Matters
The Exchange proposes to revise the 24X US Holdco LLC Agreement to
enable 24X US Holdco to comply with the requirements of Treasury
Regulation Section 1.704-1(b)(2)(iv). This change is related to the
move from one owner to more than one owner of 24X US Holdco.
(A) Section V of the 24X US Holdco LLC Agreement
The Exchange proposes to revise Section V of 24X US Holdco LLC
Agreement to address this Treasury
[[Page 8940]]
Regulation. Section V of 24X US Holdco LLC Agreement states that
``[c]ash Flow for each taxable year of the Company shall be distributed
to the Members, at such time as determined by the Manager, in
proportion to the Percentage Interest of each Member. Except as
otherwise required by Section 704 of the Code, all Profit or Loss shall
be allocated to the Members in proportion to their respective
Percentage Interest. If the Company is dissolved, the assets of the
Company shall be distributed as provided in Section VIII.'' The
Exchange proposes to revise this provision, creating paragraphs (a)
through (d) to address distributions and allocations. Proposed
paragraph (a) would state that ``Except as provided in Sections V(b)
and V(c), Cash Flow for each taxable year of the Company shall be
distributed to the Members, at such time as determined by the Manager,
in proportion to the Percentage Interest of each Member.'' Proposed
paragraph (b) of Section V of the 24X US Holdco LLC Agreement would
state the following:
The Company shall, subject to available Cash Flow, distribute
amounts to or on behalf of each Member equal to the Required Tax
Distribution amount for such Member, pro rata based on the
respective Required Tax Distribution amounts of the Members;
provided, however, that no Required Tax Distributions shall be made
in the year in which the Company is liquidated. Required Tax
Distributions shall be treated as advances of distributions pursuant
to this Agreement and shall be applied against and reduce any future
amounts distributable to or payable to the Member (or such Member's
successor in interest).
Proposed paragraph (c) of Section V of the 24X US Holdco LLC
Agreement would state that ``[i]f the Company is dissolved, the assets
of the Company shall be distributed as provided in Section VIII.'' This
statement is currently set forth in Section V. Finally, proposed
paragraph (d) of Section V of the 24X US Holdco LLC Agreement would
state the following:
Except as required by Section 704 of the Code, Net Profits and
Net Losses (and items thereof) and taxable income or taxable loss
(and items thereof) of the Company shall be allocated to the Members
in accordance with Exhibit D.
The Exchange proposes certain changes to the definitions set forth
in Exhibit B to the 24X US Holdco LLC Agreement in light of the above
changes to Section V of the 24X US Holdco LLC Agreement. First, the
Exchange proposes to add the following definition of ``Required Tax
Distribution,'' a term used in proposed Section V of the 24X US Holdco
LLC Agreement:
``Required Tax Distribution'' means, with respect to any Member
holding Units, an amount equal to the Applicable Percentage of the
amount by which (x) the aggregate amount of Net Profits and items of
taxable income and gain of the Company allocated to such Member in
respect of such Member's Units pursuant to Section 5(b) plus any
guaranteed payments for the use of capital under Section 707(c) of
the Code accrued in respect of a Member's Units during the term of
the Company exceeds (y) the aggregate amount of Net Losses and items
of taxable loss or deduction of the Company allocated to such Member
in respect of such Units pursuant to Section 5(b) during the term of
the Company, minus the aggregate amount of distributions and any
guaranteed payments for the use of capital under Section 707(c) of
the Code previously made or paid to such Member in respect of such
Units under Section 5 during the term of the Company.
In addition, the Exchange proposes to add the following definition
of ``Applicable Percentage,'' a term used in the definition of
``Required Tax Distribution,'' to Exhibit B of the 24X US Holdco LLC
Agreement:
``Applicable Percentage'' means, when computing the Required Tax
Distribution amount in respect of any taxable year or taxable years,
the sum of the highest individual federal tax rate (including any
surcharges) and the highest individual marginal income tax rate in
the State of New York at which income of the Company allocated to
any Member could be taxed under the Code or the laws of the State of
New York, as applicable, for the taxable year or taxable years in
question (determined taking the character of the income into
account; i.e., capital gain or ordinary income).
Finally, with the proposed deletion of the terms ``Profit'' and
``Loss'' from Section V of the 24X US Holdco LLC Agreement, the
Exchange, correspondingly, proposes to delete the definition of
``Profit'' and ``Loss'' from Exhibit B of the 24X US Holdco LLC
Agreement. Exhibit B of the 24X US Holdco LLC Agreement currently
defines ``Profit'' and ``Loss'' to ``mean, for each taxable year of the
Company (or other period for which Profit and Loss must be computed),
the Company's taxable income or loss determined in accordance with the
Code.'' The Exchanges proposes to add a definition of ``Net Profts''
and ``Net Losses'' to Exhibit B, which would state that `` 'Net
Profits' and ``Net Losses' are defined as set forth in Exhibit D.''
(B) Exhibit D of the 24X US Holdco LLC Agreement
The Exchange also proposes to add Exhibit D to the 24X US Holdco
LLC Agreement to enable 24X US Holdco to comply with the requirements
of Treasury Regulation Section 1.704-1(b)(2)(iv). Proposed Exhibit D
would include the following provisions.
The proposed introductory paragraph to Exhibit D would state that
``[t]he provisions of this Exhibit D are included in order to enable
the Company to comply with the requirements of Treasury Regulation
Section 1.704-1(b)(2)(iv). For purposes of this Exhibit D, ``Member''
shall include any Person treated as an owner of the Company for U.S.
federal income tax purposes.''
Proposed paragraph 1 of Exhibit D sets forth definitions of terms
used in Exhibit D. Specifically, proposed paragraph 1 of Exhibit D
would provide the following definitions:
<bullet> Proposed paragraph 1.a of Exhibit D would state the
following:
a. ``Adjusted Capital Account'' means, for each Member, such
Member's Capital Account balance increased by such Member's share of
``minimum gain'' and of ``partner nonrecourse debt minimum gain''
(as determined pursuant to Treasury Regulation Sections 1.704-2(g)
and 1.704-2(i)(5), respectively).
<bullet> Proposed paragraph 1.b of Exhibit D would state the
following:
b. ``Capital Account'' means a separate account maintained for
each Member and adjusted in accordance with Treasury Regulations
under Code Section 704. To the extent consistent with such Treasury
Regulations, the adjustments to such accounts shall include the
following:
i. There shall be credited to each Member's Capital Account the
amount of any cash (which shall not include imputed or actual
interest on any deferred contributions) actually contributed by such
Member to the capital of the Company, the fair market value (without
regard to Code Section 7701(g)) of any property contributed by such
Member to the capital of the Company net of any liabilities the
Company is considered to assume or take subject to, the amount of
any other liabilities of the Company assumed by the Member, and such
Member's share of the Net Profits of the Company and of any items in
the nature of income or gain separately allocated to the Members.
ii. There shall be charged against each Member's Capital Account
the amount of all cash distributions to such Member, the fair market
value (without regard to Code Section 7701(g)) of any property
distributed to such Member by the Company net of any liabilities
that such Member is considered to assume or take subject to, the
amount of any other liabilities of the Member assumed by the
Company, and such Member's share of the Net Losses of the Company
and of any items in the nature of loss or deduction separately
allocated to the Members.
iii. In the event any interest in the Company is transferred in
accordance with the terms of the Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it
relates to the transferred interest.
<bullet> Proposed paragraph 1.c of Exhibit D would state the
following:
[[Page 8941]]
c. ``Net Profits'' and ``Net Losses'' mean the taxable income or
loss, as the case may be, for a period as determined in accordance
with Code Section 703(a) (for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss)
computed with the following adjustments:
i. Items of gain, loss, and deduction (including depreciation,
amortization or other cost recovery deductions) shall be computed
based upon the Gross Asset Values of the Company's assets (in
accordance with Treasury Regulation Sections 1.704-1(b)(2)(iv)(g)
and/or 1.704-3) rather than upon the assets' adjusted bases for
federal income tax purposes;
ii. Any tax-exempt income received by the Company shall be
included as an item of gross income;
iii. The amount of any adjustment to the Gross Asset Value of
any Company asset pursuant to Code Section 734(b) or Code Section
743(b) that is required to be reflected in the Capital Accounts of
the Members pursuant to Treasury Regulation Section 1.704-
1(b)(2)(iv)(m) shall be treated as an item of gain (if the
adjustment is positive) or loss (if the adjustment is negative), and
only such amount of the adjustment shall thereafter be taken into
account in computing items of income and deduction;
iv. Any expenditure of the Company described in Code Section
705(a)(2)(B) (including any expenditures treated as being described
in Section 705(a)(2)(B) pursuant to Treasury Regulations under Code
Section 704(b)) shall be treated as a deductible expense;
v. The amount of items of income, gain, loss or deduction
specially allocated to any Members pursuant to Section 3(b) below
shall not be included in the computation;
vi. The amount of any unrealized gain or unrealized loss
attributable to an asset at the time it is distributed in kind to a
Member (such gain or loss determined as if the Company had sold the
asset at its fair market value (taking Code Section 7701(g) into
account)) shall be included in the computation as an item of income
or loss, respectively; and
vii. The amount of any unrealized gain or unrealized loss with
respect to the assets of the Company that is reflected in an
adjustment to the Gross Asset Value of the Company's assets pursuant
to the definition of ``Gross Asset Value'' shall be included in the
computation as items of income or loss, respectively.
<bullet> Proposed paragraph 1.d of Exhibit D would state the
following:
d. ``Target Balance'' means, for each Member at any point in
time, either (i) a positive amount equal to the net amount, if any,
the Member would be entitled to receive or (ii) a negative amount
equal to the net amount the Member would be required to pay or
contribute to the Company or to any third party, assuming, in each
case that (A) the Company sold all of its assets for an aggregate
purchase price equal to their aggregate Gross Asset Value (assuming
for this purpose only that the Gross Asset Value of any asset that
secures a liability that is treated as ``nonrecourse'' for purposes
of Treasury Regulation Section 1.1001-2 is no less than the amount
of such liability that is allocated to such asset in accordance with
Treasury Regulation Section 1.704-2(d)(2)); (B) all liabilities of
the Company were paid in accordance with their terms from the
amounts specified in clause (A) of this sentence; (C) any Member
that was obligated to contribute any amount to the Company under
this Agreement or otherwise (including the amount a Member would be
obligated to pay to any third party pursuant to the terms of any
liability or pursuant to any guaranty, indemnity or similar
ancillary agreement or arrangement entered into in connection with
any liability of the Company) contributed such amount to the
Company; (D) all liabilities of the Company that were not completely
repaid pursuant to clause (B) of this sentence were paid in
accordance with their terms from the amounts specified in clause (C)
of this sentence; and (E) the balance, if any, of any amounts held
by the Company was distributed to the Members in accordance with
Section VIII of the Agreement.
Proposed paragraph 2 of Exhibit D describes the maintenance of
capital accounts. Specifically, proposed paragraph 2 of Exhibit D would
state that ``[t]he Company shall establish and maintain a separate
Capital Account for each Member in accordance with Treasury Regulations
under Section 704 of the Code.''
Proposed paragraph 3 of Exhibit D describes the allocation of net
profits and net losses. Specifically, proposed paragraph 3 of Exhibit D
would state the following:
a. Basic Allocations
i. Net Profits and Net Losses of the Company for any fiscal
period shall be allocated, after giving effect to Section 3(b) below
and any actual contributions and distributions made during such
fiscal period, among the Members in such proportions and in such
amounts as may be necessary so that following such allocations, the
Adjusted Capital Account balance of each Member equals such Member's
then Target Balance.
ii. If the amount of Net Profits or Net Losses allocable to the
Members pursuant to Section 3(a)(i) for a period is insufficient to
allow the Adjusted Capital Account balance of each Member to equal
such Member's Target Balance, such Net Profits or Net Losses shall
be allocated among the Members in such a manner as to decrease the
differences between the Members' respective Adjusted Capital Account
balances and their respective Target Balances in proportion to such
differences.
b. Regulatory Allocations. Notwithstanding the provisions of
Section 3(a) above, the following allocations of Net Profits, Net
Losses, and items thereof shall be made in the following order of
priority:
i. Items of income or gain (computed with the adjustments
contained in the definition of Net Profits and Net Losses) for any
taxable period shall be allocated among the Members in the manner
and to the minimum extent required by the ``minimum gain
chargeback'' provisions of Treasury Regulation Section 1.704-2(f)
and Treasury Regulation Section 1.704-2(i)(4).
ii. All ``nonrecourse deductions'' (as defined in Treasury
Regulation Section 1.704-2(b)(1)) of the Company for any taxable
period shall be allocated among the Members in the same manner as
are Net Profits and Net Losses; provided, however, that nonrecourse
deductions attributable to ``partner nonrecourse debt'' (as defined
in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated to
the Members in accordance with the provisions of Treasury Regulation
Section 1.704-2(i)(1).
iii. Items of income or gain (computed with the adjustments
contained in the definition of Net Profits and Net Losses) for any
taxable period shall be allocated among the Members in the manner
and to the extent required by the ``qualified income offset''
provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d).
iv. In no event shall Net Losses of the Company be allocated to
a Member if such allocation would cause or increase a negative
balance in such Member's Capital Account (determined, for purposes
of this subsection (iv) only, by decreasing the Member's Capital
Account balance by the amounts specified in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)).
c. Tax Allocations. Except as otherwise provided herein or as
required by Section 704 of the Code, for tax purposes, all items of
income, gain, loss, deduction or credit shall be allocated among the
Members in the same manner as are Net Profits and Net Losses;
provided, however, that if the Gross Asset Value of any property of
the Company differs from its adjusted basis for tax purposes, then
items of income, gain, loss, deduction or credit related to such
property for tax purposes shall be allocated among the Members so as
to take account of the variation between the adjusted basis of the
property for tax purposes and its Gross Asset Value in the manner
provided for under Code Section 704(c) using any permitted method as
selected by the Manager in its discretion.
d. Allocations of Debt. The indebtedness of the Company shall be
allocated among the Members under Code Section 752 as determined by
the Manager in accordance with Code Section 752.
e. Allocations Upon Transfer or Admission. In the event that a
Member acquires an interest in the Company either by transfer from
another Member or by acquisition from the Company, the Net Profits,
Net Losses, and items thereof attributable to the interest so
transferred or acquired shall be allocated among the Members based
on a method chosen by the Manager, in its discretion, which method
shall comply with Section 706 of the Code and shall be binding on
all Members. For purposes of determining the date on which the
transfer or acquisition occurs, the Company may make use of any
convention allowable under Section 706(d) of the Code.
f. Timing of Allocations. Allocations of Net Profits, Net Losses
and other items of income, gain, loss and deduction pursuant to
Sections
[[Page 8942]]
3(a) and 3(b) shall be made for each taxable year as of the end of
such taxable year; provided, however, that if the Gross Asset Values
of the assets of the Company are adjusted pursuant to the definition
of ``Gross Asset Value,'' the Manager may allocate Net Profits, Net
Losses and other items of income, gain, loss and deduction as of the
date of such adjustment and treat such date as the end of a taxable
year.
g. Adjustment Upon Exercise of Noncompensatory Options. If the
Company issues any securities that are treated as noncompensatory
options, as defined in Treasury Regulation Section 1.721-2, the
Manager shall make such adjustments to the Gross Asset Value of the
Company's assets, allocation of Net Profits and Net Losses, Capital
Accounts and allocations of items for income tax purposes as it may
in good faith determine may be necessary to comply with the
provisions of the Treasury Regulations pertaining to the treatment
of ``non-compensatory options'' issued on February 4, 2013 or any
successor provisions relating thereto and to properly reflect the
economic sharing arrangement associated with the non-compensatory
options.
Proposed paragraph 4 of Exhibit D addresses tax audits.
Specifically, proposed paragraph 4 of Exhibit D would state the
following:
a. The Partnership Representative shall have sole authority to
act on behalf of the Company for purposes of subchapter C of Chapter
63 of the Code and any comparable provisions of state or local
income tax laws and shall serve as the Company's Partnership
Representative until his, her or its resignation or until the
designation of his, her or its successor by the Manager, whichever
occurs sooner.
b. To the extent that, as a result of a determination by a
taxing authority or adjudicative body, there is any adjustment for
the purposes of any tax law to any items of income gain, loss,
deduction or credit of the Company for any taxable period, the
Company will use commercially reasonable efforts to cause the
financial burden of any ``imputed underpayment'' (as determined
under Code Section 6225) and associated interest, adjustments to tax
and penalties (an ``Imputed Underpayment'') arising from a
partnership-level adjustment that are imposed on the Company to be
borne by the Members and former Members to whom such Imputed
Underpayment relates as reasonably determined by the Partnership
Representative after consulting with the Company's accountants or
other advisers, taking into account any differences in the amount of
taxes attributable to each Member because of such Member's status,
nationality or other characteristics.
c. The Members agree that, upon the Partnership Representative's
reasonable request, they shall provide it with any information
regarding their individual tax returns and liabilities that may be
relevant under Code Section 6225(c) or other state or local rule and
file amended tax returns as provided in Code Section 6225(c) or the
applicable state or local laws, with timely payment of any tax due.
d. All obligations of the Members set forth in this Section 4
will continue with respect to each Member until such Member is
released in writing by the Company from such any such obligation,
even if such Member ceases to be a Member. If any Member ceases to
be a Member, such Member shall keep the Company advised of its
contact information until released in writing by the Company from
such obligation.
Proposed paragraph 5 of Exhibit D addresses withholding and taxes.
Specifically, proposed paragraph 5 of Exhibit D would state the
following:
Notwithstanding anything to the contrary herein, to the extent
that the Manager reasonably determines that the Company is required
pursuant to applicable law, or elects pursuant to applicable law
(including with respect to so-called ``pass-through entity taxes''
or any Imputed Underpayment), either (a) to pay tax (including
estimated tax) on a Member's allocable share of the Company's items
of income or gain, whether or not distributed, or (b) to withhold
and pay over to the tax authorities any portion of a distribution
otherwise distributable to a Member, the Company may pay over such
tax or such withheld amount to the tax authorities, and such amount
shall be treated, in the discretion of the Manager, as (i) a
distribution to such Member at the time it is paid to the tax
authorities (which distributions shall reduce the amount of
distributions to which the Member would otherwise be entitled), or
(ii) a demand loan to such Member, on such reasonable terms as the
Manager shall determine to be appropriate (which terms shall include
the payment of interest by the Member on such loan). Repayment of
any such demand loan by the Member will not be considered a capital
contribution for purposes of the Agreement. Taxes withheld on
amounts directly or indirectly payable to the Company and taxes
otherwise paid by the Company (other than in the case where the
amount of taxes paid by the Company is treated as a demand loan to
the Member) shall be treated for purposes of the Agreement as
distributed to the appropriate Members and paid by the appropriate
Members to the relevant taxing jurisdiction.
(vi) Miscellaneous Non-Substantive Changes
In addition to the changes set forth above, the Exchange proposes
to make the following non-substantive changes to the 24X US Holdco LLC
Agreement:
<bullet> Renumbering Sections VI, VII, XII and XIV of the 24X US
Holdco LLC Agreement;
<bullet> Revising Section VI of the 24X US Holdco LLC Agreement (as
proposed, paragraph (b)) to indicate that Officers are authorized and
appointed, not elected;
<bullet> Replacing ``applicable law'' with ``Applicable Law'' in
Section VI (as proposed, paragraph (c)) and Section IX(a), of the 24X
US Holdco LLC Agreement.
<bullet> Changing pronoun references to the Manager from ``his'' to
``its'' in Section III (a) (as proposed, Section III(b)), Section IV,
Section VI (now paragraphs (b), (c) and (d)), Section VII(a), and the
definition of ``Gross Asset Value'' in Exhibit B of the 24X US Holdco
LLC Agreement;
<bullet> Replacing ``his fair market value'' with ``Fair Market
Value'' in Section VII(a) of the 24X US Holdco LLC Agreement;
<bullet> Replacing references to ``holders'' with holder in
paragraph (d)(iii) (paragraph (e)(iii) as proposed) of Section VII of
the 24X US Holdco LLC Agreement;
<bullet> Removing the parenthetical ``(as in effect following the
effective date of its amendment by Section 1101 H.R. 1314)'' set forth
in Section X of the 24X US Holdco LLC Agreement;
<bullet> Deleting the phrase ``customs and usage'' from the
definition of ``Applicable Law'' in Exhibit B of the 24X US Holdco LLC
Agreement;
<bullet> Deleting the term ``share'' from the phrase ``voting
equity share capital'' from the definition of ``Control'' in and adding
``(a)'' to Exhibit B of the 24X US Holdco LLC Agreement;
<bullet> Adding the clarifying phrase ``whether by operation of law
or otherwise'' to the definition of ``Transfer'' in Exhibit B of the
24X US Holdco LLC Agreement; and
<bullet> Replacing the reference to ``the Member'' with ``a
Member'' in the definition of ``Unit'' in Exhibit B of the 24X US
Holdco LLC Agreement.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Exchange Act \14\ in general, and furthers the
objectives of Section 6(b)(5) of the Exchange Act \15\ in particular,
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 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) of the Exchange Act \16\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
[[Page 8943]]
customers, issuers, brokers, or dealers. The Exchange also believes
that the proposed rule change would further the objectives of Section
6(b)(1) of the Act,\17\ in particular, in that such amendments enable
the Exchange to be so organized as to have the capacity to be able to
carry out the purposes of the Act and to comply with the provisions of
the Act, the rules and regulations thereunder, and the rules of the
Exchange.
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\14\ 15 U.S.C. 78f.
\15\ 15 U.S.C. 78f(b)(5).
\16\ See id.
\17\ 15 U.S.C. 78f(b)(1).
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The Exchange believes that the proposed amendments to the 24X US
Holdco LLC Agreement related to the Transaction, including the issuance
of the Voting Common Units, are consistent with the Act. Such proposed
changes to the 24X US Holdco LLC Agreement would facilitate additional
investment and funding into 24X US Holdco resulting from the conversion
of the convertible promissory note into Voting Common Units pursuant to
the Transaction, and such proceeds could be used by 24X US Holdco and
its subsidiary, the Exchange, for the regulation and the operation of
the Exchange, which, in turn, would enable the Exchange to be organized
as to have the capacity to carry out the purposes of the Act and to
comply with the provisions of the Act, the rules and regulations
thereunder, and the rules of the Exchange, and, in turn, would protect
investors and the public interest.
The Exchange also believes that the proposal for the Voting Common
Units to be the same type of membership interest as the existing
interest held by 24X Bermuda Holdco is consistent with the Act because,
as described above, the Voting Common Units would have the same
privileges, preference, duties, liabilities, obligations and rights,
and be subject to the same voting construct, as ownership interests
under the current 24X US Holdco LLC Agreement. This would provide for a
governance structure of 24X US Holdco that is consistent with the
structure currently in place, which was previously approved by the
Commission.\18\ As the Voting Common Units are the same type of
membership interest as the existing ownership interest of 24X Bermuda
Holdco and do not otherwise impact the governance of 24X US Holdco or
the Exchange, the Exchange believes that the creation of the Voting
Common Units and related amendments to the 24X US Holdco LLC Agreement
associated with the Voting Common Units relate solely to the
administration of 24X US Holdco and the Transaction, and that such
amendments would not impact the governance or operations of the
Exchange. Accordingly, the Exchange does not believe the issuance of
the Voting Common Units or the Transaction would in any way restrict
the Exchange's ability to be organized as to have the capacity to carry
out the purposes of the Act and to comply with the provisions of the
Act, the rules and regulations thereunder, and the rules of the
Exchange, nor does the Exchange believe that the issuance of the Voting
Common Units or the Transaction would be unfairly discriminatory. As
noted above, the governance and oversight of the Exchange would not
change with the proposed amendments to the 24X US Holdco LLC Agreement.
24X Bermuda Holdco would remain the Manager of 24X US Holdco, and would
continue to have control over decision making for 24X US Holdco.\19\
Rakuten would not have decision making authority with regard to the
governance and operation of the Exchange. For example, Rakuten would
not have the right to choose members of the Exchange Board or its
officers.\20\
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\18\ See Securities Exchange Act Rel. No. 101777 (Nov. 27,
2024), 89 FR 97092 (Dec. 6, 2024).
\19\ See Section IV(a) of 24X US Holdco LLC Agreement.
\20\ See, e.g., Sections 6.1 and 8.1 of the Exchange LLC
Agreement.
---------------------------------------------------------------------------
As noted above, 24X Bermuda Holdco's proportionate ownership of 24X
US Holdco will be reduced by approximately 9% as a result of the
Transaction, from 100% to approximately 91%. Accordingly, 24X Bermuda
Holdco will continue to own its ownership interest in 24X US Holdco
pursuant to the existing exceptions to the ownership and limitation
provisions in 24X US Holdco. Correspondingly, Rakuten would own about
9% of 24X US Holdco. Accordingly, Rakuten would not exceed any
ownership or voting limitations applicable to the Members set forth in
the 24X US Holdco LLC Agreement after giving effect to the Transaction
and the proposed amendments to the Holdco LLC Agreement.
The Exchange believes that the other proposed amendments to the 24X
US Holdco LLC Agreement are consistent with the Act. The drag-along
rights, as proposed in Exhibit C-2 of the 24X US Holdco LLC Agreement,
are common corporate mechanisms for ensuring a complete sale of a
company, and thereby a clear and smoother ownership transition.
Moreover, such drag-along rights are similar to those currently in
place for parent companies of other national securities exchanges as
approved by the Commission.\21\ Similarly, the pre-emptive rights in
proposed Section III(f) of the 24X US Holdco LLC Agreement are also
common corporate mechanisms that allow a new investor to maintain its
ownership percentage if the company at issue decides to raise
additional funds from third party investors that invest after the first
investor's investment. Moreover, such pre-emptive rights are similar to
those currently in place for another parent company of a national
securities exchange as approved by the Commission.\22\ Furthermore,
proposed new paragraph (c) to Section XI of the 24X US Holdco LLC
Agreement which would state that ``Any amendment to or repeal of any
provision of this Agreement that would disproportionately and adversely
affect one Member's economic rights or specific rights, benefits, or
privileges as explicitly provided in this Agreement to such Member, but
not any other Member's economic rights shall require the prior written
consent of such affected Member,'' also is a common corporate mechanism
to protect a Member's investment. Such a membership right is similar to
those currently in place for parent companies of other national
securities exchanges as approved by the Commission.\23\ In addition,
the Exchange does not believe that each of these proposed provision
would be unfairly discriminatory as they apply to each Member on the
same terms and conditions, and the Commission has found similarly
provision to be consistent with the Exchange Act.
---------------------------------------------------------------------------
\21\ See, e.g., Drag-along Rights, Section 10.4 of the Eighth
Amended and Restated Limited Liability Company Agreement of MEMX
Holdings LLC; Drag-Along Right, Section 7.7 of the Second Amended
and Restated Limited Liability Company Agreement of BOX Holdings
Group LLC.
\22\ See, e.g., Pre-Emptive Rights, Article IX of the Eighth
Amended and Restated Limited Liability Company Agreement of MEMX
Holdings LLC.
\23\ See, e.g., Section 4.7 of the Eighth Amended and Restated
Limited Liability Company Agreement of MEMX Holdings LLC; Section
18.1(b) of the Second Amended and Restated Limited Liability Company
Agreement of BOX Holdings Group LLC.
---------------------------------------------------------------------------
Finally, the proposed addition of Exhibit D to the 24X US Holdco
LLC Agreement would enable 24X US Holdco to comply with the
requirements of Treasury Regulation Section 1.704-1(b)(2)(iv). The new
Exhibit D to the 24X US Holdco LLC Agreement would address regulatory
requirements related to the move from one to more than one owner of 24X
US Holdco. In addition, the Exchange does not believe that proposed
Exhibit D of the 24X US Holdco LLC Agreement would be unfairly
discriminatory as it applies to each Member on the same terms and
conditions, and it is intended to address regulatory requirements
related to the multiple owners of 24X US Holdco.
[[Page 8944]]
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act. The Exchange
believes that the proposed rule change regarding the Transaction will
enhance the diversity of ownership of the Exchange. Upon the issuance
of the Voting Common Units pursuant to the Transaction, the ownership
of 24X US Holdco will be distributed among more holders. In addition,
the Exchange believes that, by providing the additional funding for the
Exchange, the Transaction will allow for enhanced competition in the
equities markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \24\ and Rule 19b-
4(f)(6) \25\ thereunder.
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\24\ 15 U.S.C. 78s(b)(3)(A).
\25\ 17 CFR 240.19b-4. In addition, Rule 19b-4(f)(6) requires a
self-regulatory organization to give the Commission written notice
of its intent to file the proposed rule change, along with a brief
description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \26\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\27\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requests
that the Commission waive the 30-day operative delay so that the
proposal may become operative immediately upon filing. The Exchange
states that waiver of the operative delay would permit the Exchange to
amend the Holdco LLC Agreement to allow for the Voting Common Units in
order to facilitate the closing of the Transaction. The Exchange also
states that waiver of the 30-day operative delay would allow the
Transaction to move forward, thereby allowing additional funding to 24X
US Holdco and its subsidiary, the Exchange. For these reasons, and
because the proposal raises no new or novel legal or regulatory issues,
the Commission finds that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission waive the 30-day operative delay and
designates the proposed rule change to be operative upon filing.\28\
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\26\ 17 CFR 240.19b-4(f)(6).
\27\ 17 CFR 240.19b-4(f)(6)(iii).
\28\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#146661787139777b7979717a6067546771773a737b62"><span class="__cf_email__" data-cfemail="c6b4b3aaa3eba5a9ababa3a8b2b586b5a3a5e8a1a9b0">[email protected]</span></a>. Please include
file number SR-24X-2026-04 on the subject line.
Paper Comments
<bullet> 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 SR-24X-2026-04. 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 (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. 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 number SR-24X-2026-04 and should be submitted on
or before March 17, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12) and (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-03607 Filed 2-23-26; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on February 24, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.