[Federal Register Volume 76, Number 86 (Wednesday, May 4, 2011)]
[Notices]
[Pages 25396-25397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-10855]
[[Page 25396]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64356; File No. SR-BSECC-2011-002]
Self-Regulatory Organizations; The Boston Stock Exchange Clearing
Corporation; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to Amendments to the By-Laws of its Parent
Corporation, the NASDAQ OMX Group, Inc.
April 27, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), \1\ notice is hereby given that on April 14, 2011, the
Boston Stock Exchange Clearing Corporation (``BSECC'') 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 BSECC. BSECC 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
The proposed rule change relate to amendments to the By-Laws of
BSECC's parent corporation, The NASDAQ OMX Group, Inc. (``NASDAQ
OMX'').
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, BSECC 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. BSECC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.\4\
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\4\ The Commission has modified the text of the summaries
prepared by BSECC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
NASDAQ OMX recently made certain clarifying amendments to its By-
Laws.\5\ Specifically, the recently approved NASDAQ OMX rule change:
(i) Amended the name of the Nominating Committee to the Nominating &
Governance Committee; (ii) amended the NASDAQ OMX PHLX, Inc. reference
to reflect a recent conversion to a limited liability company; and
(iii) clarified By-Law Article IV, Section 4.4 that broker nonvotes are
not counted as a vote cast either ``for'' or ``against'' a director in
an uncontested election.\6\
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\5\ Securities Exchange Act Release No. 34-64285 (April 8,
2011), 76 FR 21085 (April 14, 2011) (File No. SR-NASDAQ-2011-025)
(``Approval Order''). SR-NASDAQ-2011-025 was filed by NASDAQ Stock
Market LLC on behalf of NASDAQ OMX to amend the By-Laws of its
parent corporation.
\6\ Id.
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NASDAQ OMX By-Laws previously provided for a Nominating Committee,
which is appointed pursuant to the By-Laws. In addition to the
responsibilities listed in By-Law Article IV, Section 4.13(h), the
Nominating Committee also conducts certain governance functions such as
consulting with the Board of Directors (``Board'') and the management
to determine the characteristics, skills, and experience desired for
the Board as a whole and for its individual members, overseeing the
annual director evaluation, and reviewing the overall effectiveness of
the Board. Accordingly, NASDAQ OMX renamed and changed all references
to the ``Nominating Committee'' in the By-Laws, to the ``Nominating &
Governance Committee'' so that the title of the committee accurately
reflects all of its current functions, including those that are deemed
governance functions. The proposal to rename the Nominating Committee
did not change the function of the committee but was intended to
clarify the current functions and its governance role with respect to
the Board selection process.
Additionally, NASDAQ OMX amended Article 1, Section (o) of NASDAQ
OMX's By-Laws to change the reference to ``NASDAQ OMX PHLX, Inc.'' to
``NASDAQ OMX PHLX LLC'' to reflect a recently filed rule change to
convert NASDAQ OMX PHLX from a Delaware corporation to a Delaware
limited liability company.\7\
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\7\ Securities Exchange Act Release No. 34-62783 (August 27,
2010), 75 FR 54204 (September 3, 2010) (File No. SR-Phlx-2010-104).
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Finally, NASDAQ OMX added the words ``and broker nonvotes'' to
NASDAQ OMX's By-Law Article IV, Section 4.4 to make clear that broker
nonvotes will not be counted as votes cast either ``for'' or
``against'' that director's election. In its filing to amend NASDAQ
OMX's By-Laws, NASDAQ Stock Market LLC noted that NASDAQ OMX's past
practice has been to not count a broker nonvote as a vote cast either
for or against a director's election.\8\ Accordingly, this change
clarifies this practice by codifying it into the By-Laws, especially in
light of NASDAQ OMX's recent change to a majority vote standard in the
uncontested election of directors.
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\8\ Securities Exchange Act Release No. 34-63925 (February 17,
2011), 76 FR 10418 (February 24, 2011) (File No. SR-NASDAQ-2011-
025).
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In 2010, NASDAQ OMX amended its By-Laws to state that in an
uncontested election, a majority voting standard would apply to the
election of its directors, requiring directors to be elected by the
holders of a majority of the votes cast at any meeting for the election
of directors at which a quorum is present in an uncontested
election.\9\ A plurality standard would still remain in a contested
election. While in its filing to amend NASDAQ OMX's By-Laws, NASDAQ
Stock Market LLC noted that it has always been NASDAQ OMX's practice to
not count broker nonvotes ``for'' or ``against'' in director elections,
the Commission noted in its Approval Order that the impact of the
broker nonvote and how such votes are counted will take on added
significance under NASDAQ OMX's newly adopted majority vote standard
for director elections. Although in its filing NASDAQ Stock Market LLC
stated that under Delaware case law,\10\ broker nonvotes are not
considered as votes cast for or against a proposal or director nominee,
BSECC proposes the change for clarity and transparency purposes.
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\9\ Securities Exchange Act Release 34-61786 (April 8, 2010), 75
FR 19436 (April 14, 2010) (File No. SR-NASDAQ-2010-025).
\10\ Berlin v. Emerald Partners, 552 A.2d 482 494 (Del Supr.
1988).
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BSECC believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\11\ in general, and with Sections
6(b)(1) and 6(b)(5) of the Act,\12\ in particular, in that the proposal
enables BSECC to be so organized as to have the capacity to be able to
carry out the purposes of the Act, the rules and regulations
thereunder, and self-regulatory organization rules, and 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
[[Page 25397]]
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities, to remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest.
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\11\ 15 U.S.C. 78f.
\12\ 15 U.S.C. 78f(b)(1),(5).
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BSECC believes that changing the name of the Nominating Committee
to the Nominating and Governance Committee and amending references to
an exchange name to reflect a corporate change to a limited liability
company are both clarifying in nature. The changes will ensure that the
committee's title accurately reflects its functions and will ensure
that the By-Laws accurately and properly reflect an exchange entity
name. As discussed above, the amendment that broker nonvotes will not
be counted as a vote either ``for'' or ``against'' in director
elections will codify NASDAQ OMX's past practice, providing clarity and
transparency. Accordingly BSECC believes that the amendments are
consistent with investor protection and the public interest.
(B) Self-Regulatory Organization's Statement on Burden on Competition
BSECC 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 have not been
solicited or received. BSECC will notify the Commission of any written
comments received by BSECC.
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 \13\ and Rule 19b-
4(f)(6) \14\ thereunder because the 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 after the date of the filing, or such
shorter time as the Commission may designate. 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 should be approved or disapproved.
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6). 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 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.
NASDAQ OMX PHLX LLC has satisfied this requirement.
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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-BSECC-2011-002 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BSECC-2011-002. 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 a.m. and 3 p.m. Copies of such filings also will be
available for inspection and copying at the principal office of BSECC
and on BSECC's Web site at http://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/pdf/bsecc-filings/2011/SR-BSECC-2011-002.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-BSECC-2011-002
and should be submitted on or before May 25, 2011.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-10855 Filed 5-3-11; 8:45 am]
BILLING CODE 8011-01-P