SEC Division of Corporation Finance no-action letter: Intercontinental Exchange, Inc.

COVINGTON David L.Kornblau
BEIJING BRUSSELS DUBAI JOHANNESBURG LONDON Covington&Burling LLP LOS ANGELES NEW YORK SAN FRANCISCO SEOUL The New York TimesBuilding SHANGHAI SILICON VALLEY WASHINGTON 620Eighth Avenue NewYork,NY10018-1405 T +12128411084 dkornbIau@cov.com By Email Timothy Henseler Chief,Office ofEnforcement Liaison Division ofCorporation Finance U.S. Securities and Exchange Commission 100 F Street,N.E. Washington,DC 20549 Nevy York Stock Exchange LLC and NYSE American Dear Mr.Henseler:
Wesubmitthis letter on behalfofour client Intercontinental Exchange,Inc.("ICE"),a reporting company with a class ofsecurities registered under Section 12ofthe Securities Exchange Act of1934,in connection with the settlement ofan administrative proceeding against the above-referenced indirect subsidiaries ofICE(together,the"NYSE"or the"Exchanges"), which are national securities exchanges registered with the Securities and Exchange Commission. ICE requests a determination by the Commission that,for good cause shown,ICE should not,as a result ofthe settlement,be deemed an"ineligible issuer" as defined in Rule 405 under the Securities Actof1933(the"Securities Act"). ICE requests that this determination be made by the Division ofCorporation Finance,acting pursuant to its delegated authority,or the Commission itself, to be effective upon entry ofthe order in the above-referenced settled administrative proceeding(the"Order"). We believe that relieffrom the ineligible-issuer provisions is appropriate for the reasons set forth below,including that(i)the violative conduct described in the Order occurred at two jointly operated indirect ICE subsidiaries,had no connection to ICE's role as an issuer of securities, and lasted for less than approximately 47 minutes on a single day more than two years ago;(ii)the Order states that the subsidiaries' conduct was merely negligent,and does notfind any criminal conduct or scienter;(iii)ICE has never before requested a waiver ofany disqualification or been disqualified from ineligible-issuer status;(iv)the subsidiaries have taken reasonable steps to enhance their policies and procedures to prevent a recurrence ofthe conduct; and(v)ICE's loss ofits status as a Weil-Known Seasoned Issuer("WKSI")would harm NY:1071025-13

COVINGTON
Timothy Henseler,Esq. shareholders by unfairly and needlessly interfering with the company's ability to raise capital efficiently. Background Following discussions with the Division ofEnforcement,the NYSE has submitted an offer ofsettlement pursuant to which it consents to the entry ofthe Order but neither admits nor denies any ofthe findings or violations described in the Order. In relevant part,the Order contains the following findings by the Commission: On July 8,2015,the NYSEsuspended intra-day trading for approximately three and one-halfhours (the"Shutdown"). During the 47 minutes before the Shutdown,the Exchanges experienced escalating connectivity problems between their trading units and the communications"gateways"used by customers,which eventually prevented many customersfrom being able to consistently access quotations in a majority ofthe sjonbols traded on the Exchanges("Impaired Symbols"). Asa result,quotations in the Impaired Symbols were no longer automated. Nonetheless,during this time period,the Exchanges continued to disseminate quotations for the Impaired Symbols marked as "automated." The quotations that were inaccurately identified as automated after the Exchanges had reason to believe otherwise constituted negligent misrepresentations ofmaterial facts to market participants in violation ofSection 17(a)(2)ofthe Securities Act. Discussion In 2005,the Commission revised the registration, communications,and offering procedures under the Securities Act.* As part ofthese reforms,the Commission created a category ofissuer under Rule 405 known as the"ineligible issuer." Rule 405 defines"ineligible issuer"to include any issuer ofsecurities with respect to which the following is true:"Within the past three years...,the issuer or any entity that at the time was a subsidiary ofthe issuer was made the subject ofany...administrative...order arising out ofa governmental action that... requires that the person cease and desist from violating the anti-fraud provisions ofthe federal securities laws...." The Order requires the NYSEto cease and desist from violating Section 17(a)(2)ofthe Securities Act,which is an anti-fraud provision. Because the NYSEis an indirect subsidiary ofICE,^ the Order,absent a waiver,would cause ICE to become an ineligible issuer.

• See Securities Offering Reform,Securities Act Release No.8591,Exchange ActRelease No.
  52,056,Investment Company Act Release No.26,993,70Fed.Reg.44,722,44,790(Aug.3, 2005). ^ ICE owns 12 exchanges and six clearinghouses in the United States and otherjurisdictions. The NYSE is owned by NYSEGroup,Inc., a subsidiary ofNYSE Holdings LLC,which is a subsidiary ofIntercontinental Exchange Holdings,Inc., which in turn is owned by ICE.

COVINGTON
Timothy Henseler,Esq.
Reasonsfor Granting a Waiver
Rule 405 authorizes the Commission to determine,"upon a showing ofgood cause,that it is not necessary under the circumstances that the issuer be considered an ineligible issuer." For the reasons explained below,we respectfully submitthat good cause exists for the Commission to determine that it is not necessary that ICE be considered an ineligible issuer under Rule 405. Our views are outlined in accordance with the Revised Statement on Well-Known Seasoned Issuer Waivers issued by the Division ofCorporation Finance on April 24,2014. Reliabilitv ofDisclosure: Resnonsibilitv for and Duration ofthe Violations The findings in the Order have nothing to do with ICE's ability to file reliable reports with the Commission. None ofthe findings underlying the Order pertains to activities undertaken by ICE,its executives,or other affiliates or subsidiaries in connection with ICE's role as an issuer ofsecurities. Nor does the violative conduct pertain to ICE'sfilings with the Commission. Instead,the Order relates to mismarked quotations issued by a subsidiary(the NYSE),over a period limited to,at most,47 minutes during a single morning over two years ago. The Order does notfind that any scienter or criminal conduct occurred. Noemployees ofthe NYSE or ICE are named as respondents or charged with violating the securities laws in connection with the Order. The misrepresentations described in the Order were a product ofautomated NYSEsystems;to the extent that individuals were involved,they were low-level employees in the operation ofa subsidiary(NYSE),notICE officers or directors. Senior ICE management became involved only in the decision to suspend trading after the quotes had already been disseminated as automated. No senior ICE officers were aware ofor disregarded any warning signs,and the continued designation ofquotations as automated during a briefperiod prior to the decision to suspend trading did not reflect any"tone at the top"that condoned or chose to ignore any misconduct. Asa result,the findings in the Order do not call into question the reliability ofany ofICE's current or future disclosures as an issuer ofsecurities. Remedial Steps Taken ICE and the NYSE have fully cooperated with the Commission's inquiry into this matter. The NYSE responded to all document requests by the Staffand made the NYSE'semployees available for investigative testimony. The NYSE has also voluntarily taken substantial remedial steps. The Order finds that, after July 8,2015,the NYSEenhanced its policies and procedures to include appropriate standards for determining ifcustomer connectivity issues are insufficient to maintain automated quotations and,ifsuch a determination is made,to suspend trading. The NYSE now has in place a failure scenario grid that outlines specific conditions under which the exchange's executive

COVINGTON
Timothy Henseler,Esq. management considers whether to delay the opening oftrading in one or more stocks or,during the trading day,to consider whether to suspend trading and,iftrading is suspended,whether and when trading may resume. For example,ifconnectivity problems like those experienced on July 8,2015,were to recur,the executive managementofthe exchange would apply objective connectivity thresholds supplied by the failure scenario grid to determine ifa trading suspension is required. First Waiver Request ICE has never before been found to be an ineligible issuer or received,or even had reason to request,a WKSI-related waiver. Accordingly,this is ICE's first request for a WKSI-related waiver. Impact ifthe Waiver is Denied ICE's WKSIstatus is important to ICE,which is a leading operator ofexchanges and clearing houses around the world,and a leading provider ofdata and listing services. ICE is continually investing in technology to better its markets and its business. Loss ofWKSIstatus could substantially prejudice ICE's ability to raise capital to invest in and expand these market services. Should ICE become an ineligible issuer,it would lose the ability to(i)offer additional securities ofclasses covered by a registration statement withoutfiling a new registration statement,(ii)register additional classes ofsecurities not covered by the registration statement by filing an immediately effective post-effective amendment,(iii)omit certain information from the prospectus,(iv)take advantage ofpay-as-you go fees,(v)qualify a new indenture under the Trust Indenture Actof1939,ifneeded,without filing or having the Commission declare effective a new registration statement,or(vi)use a free writing prospectus other than one that contains only a description ofthe terms ofthe offered securities or the offering itself. For example,in the last three years,ICE has availed itselfofWKSIstatus on multiple occasions to raise capital as part ofits efforts to expand its services to the market. In 2015,it relied on its WKSIstatus to make secondary offerings ofcommon shares in connection with its acquisitions ofa provider offinancial market data,analytics,and related trading solutions,and a provider ofa technology platform for electronic and hybrid trade execution. ICE also relied on its WKSIstatus to issue $2,500,000,000 ofsenior notes in 2015 and $1,000,000,000 ofsenior notes in 2017. In addition, denial ofa waiver would result in a disproportionate hardship to ICE,since the violations described in the Order did not concern the company's financial disclosure, were not based on criminal conduct or scienter,occurred at a subsidiary,have been fully remediated, and were extremely brief. Applying ineligible issuer status to ICE would not be necessary to achieve the purpose ofthe Order and would be unduly severe.

COVINGTON
Timothy Henseler,Esq.
Conclusion
Subjecting ICE to ineligible issuer status is not necessary or appropriate,is not in the public interest,and would disserve the Commission's mission to protect investors and promote capital formation. Accordingly, we respectfully request the Commission to determine that ICE should not be considered an ineligible issuer under Rule 405 as a result ofthe Order entered in this matter. Very truly yours. David L. Komblau cc(by email):
Erin Wilson,Division ofCorporation Finance
Sheldon Pollock,Division ofEnforcement,New York Regional Office