[Federal Register Volume 75, Number 87 (Thursday, May 6, 2010)]
[Notices]
[Pages 25010-25012]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-10646]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62010; File No. SR-SCCP-2010-01]
Self-Regulatory Organizations; Stock Clearing Corporation of
Philadelphia; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Regarding Amendments to the By-Laws of The NASDAQ OMX
Group, Inc.
April 30, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on April 9, 2010, the Stock
Clearing Corporation of Philadelphia (``SCCP'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change described in Items I, II, and III below, which items have been
prepared primarily by SCCP. SCCP filed the proposal pursuant to Section
19(b)(3)(A)(iii) of the Act \2\ and Rule 19b-4(f)(6) \3\ thereunder so
that the proposal was effective upon filing with the Commission. The
Commission is publishing this notice to solicit comments on the rule
change from interested parties.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78s(b)(3)(A)(iii).
\3\ 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
SCCP is filing the proposed rule change relating to amendments to
the By-Laws of its parent corporation The NASDAQ OMX Group, Inc.
(``NASDAQ OMX'').\4\
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\4\ Article Eighth, Paragraph B of the Restated Certificate of
Incorporation of NASDAQ OMX and Section 11.3 of the By-Laws provides
that proposed amendments to the By-Laws are to be reviewed by the
Board of Directors of each regulatory subsidiary of NASDAQ OMX and
under certain circumstances be filed with the Commission.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, SCCP 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. SCCP has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.\5\
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\5\ The Commission has modified the text of the summaries
prepared by SCCP.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NASDAQ OMX has proposed making certain amendments to its By-Laws to
make improvements in its governance. In SR-NASDAQ-2010-025, The NASDAQ
Stock Market LLC (``NASDAQ Exchange'') sought and received Commission
approval to adopt these By-Laws changes as part of the rules of NASDAQ
Exchange.\6\ SCCP is now submitting this filing regarding these By-Law
changes. The text of the changes to the By-Laws of NASDAQ OMX can be
viewed at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/pdf/sccp-filings/2010/SR-SCCP-2010-01.pdf.
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\6\ Securities Exchange Act Release No. 61876 (April 8, 2010),
75 FR 19436 (April 14, 2010) (SR-NASDAQ-2010-025).
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The NASDAQ OMX By-Laws previously provided that each director
receiving a plurality of the votes at any election of directors at
which a quorum was present was duly elected to the board of directors
(``Board''). Under Corporate Governance Guidelines adopted by the
Board, however, any director in an uncontested election who received a
greater number of votes ``withheld'' from his or her election than
votes ``for'' such election was required to tender his or her
resignation promptly following receipt of the certification of the
stockholder vote. The NASDAQ OMX Nominating & Governance Committee
(``Nominating & Governance Committee'') then considered the resignation
offer and recommended to the Board whether or not to accept it. Within
90 days after the certification of the election results, the Board
determined whether to accept or reject the resignation. Promptly
thereafter, the Board announced its decision by means of a press
release. In a contested election (i.e., where the number of nominees
exceeded the number of directors to be elected), the unqualified
plurality standard controlled.
Uncontested Election:
NASDAQ OMX recently amended its by-laws to adopt a majority vote
standard. Specifically By-Law Article IV, Section 4.4 was amended to
provide that in an uncontested election, directors shall be elected by
holders of a majority of the votes cast at any meeting for the election
of directors at which a quorum is present.\7\ Under the majority voting
standard, a nominee
[[Page 25011]]
who fails to receive the requisite vote will not be duly elected to the
Board. The By-Laws also now require that any incumbent director
nominee, as a condition to his or her nomination for reelection to the
Board, must submit in writing an irrevocable resignation, the
effectiveness of which is conditioned upon the director's failure to
receive the requisite vote in any uncontested election and the Board's
acceptance of the resignation. Acceptance of the resignation by the
Board shall be in accordance with the policies and procedures adopted
by the Board for such purpose.
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\7\ NASDAQ OMX also amended its Corporate Governance Guidelines
to reflect the majority vote standard for uncontested director
elections.
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Contested Election:
NASDAQ OMX codified its process for a contested election. The
directors will continue to be elected by a plurality vote in a
contested election. There is no change to the process for contested
elections because if a majority voting standard were to apply in a
contested election, the likelihood of a ``failed election'' (i.e., a
situation in which no director receives the requisite vote) would be
more pronounced. Moreover, the rationale underpinning the majority
voting policy does not apply in contested elections where stockholders
are offered a choice among competing candidates. Directors are elected
by a plurality of votes present in person or represented by proxy at a
meeting convened for that purpose. The directors who receive the
greatest number of votes cast will be elected.
General Election Requirements:
The following requirements apply to elections of directors and were
not amended. Each share of common stock has one vote,\8\ subject to the
voting limitation in NASDAQ OMX's certificate of incorporation that
generally prohibits a holder from voting in excess of 5% of the total
voting power of NASDAQ OMX.\9\ In addition, each note holder is
entitled to the number of votes equal to the number of shares of common
stock into which such note could be converted on the record date,
subject to the 5% voting limitation contained in the certificate of
incorporation.
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\8\ NASDAQ OMX Certificate of Incorporation at Article IV,
C.1(a).
\9\ NASDAQ OMX Certificate of Incorporation at Article IV,
C.1(b)2.
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At a meeting to elect directors, the presence of holders of a
majority (greater than 50%) of NASDAQ OMX voting securities constitutes
a quorum. Presence may be in-person or by proxy. Any securities not
voted will not impact the vote.
2. Statutory Basis
SCCP believes that the proposed rule change is consistent with
Section 17A of the Act,\10\ as amended, and with Section 17A(b)(3)(A)
of the Act,\11\ in particular, because it is designed to ensure that
SCCP is so organized and has the capacity to be able to facilitate the
prompt and accurate clearance and settlement of securities transactions
and to enforce compliance by its participants with the rules of the
clearing agency.
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\10\ 15 U.S.C. 78q-1.
\11\ 15 U.S.C. 78q-1(b)(3)(A).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
SCCP does not believe that the proposed rule change will have any
impact or impose any burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments relating to the proposed rule change were not and
are not intended to be solicited or received. SCCP will notify the
Commission of any written comments received by SCCP.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective upon filing
pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-
4(f)(6) \13\ thereunder because the proposed rule change does not (i)
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not become operative for 30 days after the
date of filing, or such shorter time as the Commission may designate if
consistent with the protection of investors and the public interest. At
any time within sixty days of the filing of the proposed rule change,
the Commission may summarily abrogate 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.
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
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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
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-SCCP-2010-01 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Elizabeth
M. Murphy, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-SCCP-2010-01. This file
number should be included on the subject line if e-mail 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change 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 web site 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
am and 3 pm. Copies of such filings also will be available for
inspection and copying at the principal office of SCCP and on SCCP's
Web site at http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/pdf/sccp-filings/2010/SR-SCCP-2010-01.pdf.
All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-SCCP-2010-01
and should be submitted on or before May 27, 2010.
[[Page 25012]]
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10646 Filed 5-5-10; 8:45 am]
BILLING CODE 8011-01-P