17730 Federal Register / Vol. 76, No. 61 / Wednesday, March 30, 2011 / Notices 

13See S. Rep. No. 111–176, at 136 (2010). 

14As noted above, Section 6(b)(10) also prohibits 

broker voting for director elections, except for 

uncontested director elections of registered 

investment companies, and also ‘‘any other 

significant matter, as determined by the 

Commission, by rule.’’ CHX already prohibits broker 

voting in director elections except for uncontested 

director elections for registered investment 

companies. See CHX Article 8, Rule 14(c)(4)(s) and 

note 15, infra. As to other matters, the Commission 

has not, to date, adopted rules concerning other 

significant matters where uninstructed broker votes 

should be prohibited, although it may do so in the 

future. Should the Commission adopt such rules, 

we would expect CHX to adopt coordinating rules 

promptly to comply with the statute. 

15As the Commission stated in approving NYSE 

rules prohibiting broker voting in the election of 

directors, having those with an economic interest in 

the company vote the shares, rather than the broker 

who has no such economic interest, furthers the 

goal of enfranchising shareholders. See Securities 

Exchange Act Release No. 60215 (July 1, 2009), 74 

FR 33293 (July 10, 2009) (SR–NYSE–2006–92). 

16 15 U.S.C. 78s(b)(2). 

17See supra note 5. 

18 15 U.S.C. 78s(b)(2). 

19 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(1). 

4 17 CFR 240.19b–4. 

must be designed to promote just and 

equitable principles of trade, 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, and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Commission believes that the 

proposal is consistent with Section 

6(b)(10) of the Act because it adopts 

revisions that comply with that section. 

As noted in the accompanying Senate 

Report, Section 957, which adopts 

Section 6(b)(10), reflects the principle 

that ‘‘final vote tallies should reflect the 

wishes of the beneficial owners of the 

stock and not be affected by the wishes 

of the broker that holds the shares.’’ 13

The proposed rule change will make 

CHX rules compliant with the new 

requirements of Section 6(b)(10) by 

prohibiting broker-dealers, who are not 

beneficial owners of a security, from 

voting uninstructed shares with respect 

to any matter on executive 

compensation.14

The Commission believes that the 

proposal is consistent with Section 

6(b)(5) of the Act because the proposal 

will further investor protection and the 

public interest by assuring that 

shareholder votes on executive 

compensation matters are made by those 

with an economic interest in the 

company, rather than by a broker that 

has no such economic interest, which 

should enhance corporate governance 

and accountability to shareholders.15

The Commission notes that the CHX’s 

new rule prohibiting uninstructed 

broker votes on executive compensation 

covers the specific items identified in 

Section 951 of the Dodd-Frank Act, as 

well as any other matter concerning 

executive compensation, and has been 

drafted broadly to reflect the 

requirements of Section 6(b)(10) of the 

Act. The proposed rule language also 

specifically states that a broker vote on 

any executive compensation matter 

would not be permitted even it would 

otherwise qualify for an exception from 

any item under Article 8, Rule 14. The 

Commission believes this provision will 

make clear that any past practice or 

interpretation that may have permitted 

a broker vote on an executive 

compensation matter, under existing 

rules, will no longer be applicable and 

is superseded by the newly adopted 

provisions. 

Finally, the Commission notes that 

the change to reflect that the CHX rules 

prohibit not only the giving of a proxy, 

but also the authorization of the proxy, 

should help to clarify the intent of the 

CHX proxy rules and is consistent with 

the requirements of Section 6 of the Act. 

Based on the above, the Commission 

believes that CHX’s proposal will 

further the purposes of Sections 6(b)(5) 

and 6(b)(10) of the Act by ensuring that 

brokers, holding shares on behalf of 

beneficial owners, are not voting 

uninstructed shares on matters relating 

to executive compensation, which 

should enhance corporate 

accountability to shareholders. The rule 

filing should also serve to fulfill the 

Congressional intent in adopting 

Section 6(b)(10) of the Act. 

The Commission also finds good 

cause, pursuant to Section 19(b)(2) of 

the Act,16 for approving the proposed 

rule change prior to the 30th day after 

the date of publication of notice in the 

Federal Register. As noted above, 

Section 6(b)(10) of the Act, enacted 

under Section 957 of the Dodd-Frank 

Act, does not provide for a transition 

phase, and requires rules of national 

securities exchanges to prohibit, among 

other things, broker voting on executive 

compensation. The Commission 

believes that good cause exists to grant 

accelerated approval to the Exchange’s 

proposal, because it will conform 

Article 8, Rule 14 to the requirements of 

Section 6(b)(10) of the Act. Moreover, 

the Commission notes that the proposed 

changes are based on NYSE Rule 452.17

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,18 that the 

proposed rule change (SR–CHX–2011– 

01) be, and it hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7458 Filed 3–29–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64122; File No. SR–Phlx– 

2011–03] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Order Granting Accelerated 

Approval of a Proposed Rule 

Amendment to Rule 862 Relating to 

Discretionary Proxy Voting on 

Executive Compensation Matters 

March 24, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 16, 

2011, NASDAQ OMX PHLX LLC (‘‘Phlx’’ 

or ‘‘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 Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons and is 

approving the proposed rule change on 

an accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange, pursuant to Section 

19(b)(1) of the Act 3 and Rule 19b–4 

thereunder,4 proposes to amend Phlx 

Rule 862 (Proxies at Direction of Owner) 

to prohibit member organizations from 

voting on matters related to executive 

compensation, or any other significant 

matter, as determined by the Securities 

and Exchange Commission 

(‘‘Commission’’) by rule unless 

instructed by the beneficial owner of the 

shares. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nasdaqtrader.com/ 

micro.aspx?id=PHLXRulefilings, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

Federal Register / Vol. 76, No. 61 / Wednesday, March 30, 2011 / Notices 17731 

5 15 U.S.C. 78f(b)(10). 

6See Securities Exchange Act Release No. 62775 

(August 26, 2010), 75 FR 53725 (September 1, 

2010)(SR–Phlx–2010–115). 

7See NYSE Rule 452, Securities Exchange Act 

Release No. 34–62874 (September 9, 2010), 75 FR 

56152 (September 15, 2010) (SR–NYSE–2010–59); 

and NASDAQ Rule 2251, Securities Exchange Act 

Release No. 34–62992 (September 24, 2010), 75 FR 

60844 (October 1, 2010) (SR–NASDAQ–2010–114). 

8 15 U.S.C. 78f(b)(10). 

9 15 U.S.C. 78f. 

10 15 U.S.C. 78f(b)(10). 

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 III 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 

Exchange Rule 862 provides 

instructions on how the proxies are 

voted. A member organization may give 

a proxy to vote stock provided that: 

(1) It has transmitted proxy-soliciting 

material to the beneficial owner of 

stock; 

(2) It has not received voting 

instructions from the beneficial owner 

by the date specified in the statement 

accompanying such material; and 

(3) Provided such action is adequately 

disclosed to stockholders and does not 

include authorization for a merger, 

consolidation or any matter which may 

substantially affect the rights or 

privileges of such stock. 

The purpose of the proposed rule 

change is to amend Exchange Rule 

862(2)(b) to prohibit member 

organizations from voting on matters 

related to executive compensation, or 

any other significant matter, as 

determined by the Commission, unless 

instructed by the beneficial owner of the 

shares. On July 21, 2010, the President 

signed the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(the ‘‘Dodd-Frank Act’’). Section 957 of 

the Dodd-Frank Act adopted new 

Section 6(b)(10) of the Act.5 This new 

provision requires all national securities 

exchanges to adopt rules that prohibit 

their members from voting on the 

election of a member of the board of 

directors of an issuer (except for a vote 

with respect to the uncontested election 

of a member of the board of directors of 

any investment company registered 

under the Investment Company Act of 

1940), executive compensation, or any 

other significant matter, as determined 

by the Commission, unless the member 

receives voting instructions from the 

beneficial owner of the shares. 

On August 18, 2010, the Exchange 

filed amendments to Rule 862 to, in 

part, eliminate broker discretionary 

voting for all elections of directors at 

shareholder meetings, whether 

contested or not, except for companies 

registered under the Investment 

Company Act of 1940 (the ‘‘1940 Act’’), 

provided that it is not the subject of 

counter solicitation.6

To further assure compliance with the 

newly adopted Section 6(b)(10), the 

Exchange proposes to add a new Item 21 

and accompanying commentary to 

Exchange Rule 862(2)(b) to provide that 

in no event could a member 

organization vote shares on matters 

regarding executive compensation, or 

any other significant matter, as 

determined by the Commission, unless 

instructed by the beneficial owner of the 

shares. The proposed commentary to 

Item 21 would clarify that a matter 

relating to executive compensation 

would include, among other things, the 

items referred to in Section 14A of the 

Exchange Act (added by Section 951 of 

the Dodd-Frank Act), including (i) an 

advisory vote to approve the 

compensation of executives, (ii) a vote 

on whether to hold such an advisory 

vote every one, two or three years, and 

(iii) an advisory vote to approve any 

type of compensation (whether present, 

deferred, or contingent) that is based on 

or otherwise relates to an acquisition, 

merger, consolidation, sale, or other 

disposition of all or substantially all of 

the assets of an issuer and the aggregate 

total of all such compensation that may 

(and the conditions upon which it may) 

be paid or become payable to or on 

behalf of the executive officer. In 

addition, a member organization may 

not give or authorize a proxy to vote 

without instructions on a matter relating 

to executive compensation, even if such 

matter would otherwise qualify for an 

exception from the requirements of Item 

12, Item 13 or any other Item under 

Exchange Rule 862(2)(b). Any vote on 

these or similar executive 

compensation-related matters would be 

subject to the requirements of Exchange 

Rule 862. 

The Exchange’s proposal also 

includes commentaries to Items 12 and 

13 to provide guidance that a member 

organization may not give or authorize 

a proxy to vote without instructions on 

a matter relating to executive 

compensation, even if such matter 

would otherwise qualify for an 

exception from the requirements of Item 

12, Item 13 or any other Item under Rule 

862, and further provides a reference to 

Item 21. 

The Exchange is proposing to add the 

words ‘‘or authorize’’ in the following 

places to clarify that the rule includes 

not only the giving of a proxy but the 

authorization of such proxy: 

1. Exchange Rule 862(2)(b); and 

2. Exchange Rule 862(2)(b)(20). 

The Exchange also made necessary 

clerical changes in the following 

manner: 

1. Item 19 deletes the colon and the 

word ‘‘or’’ at the end of the paragraph, 

and adds a semi-colon; and 

2. Item 20 deletes a period at the end 

of the paragraph, and adds a semi-colon 

and the word ‘‘or’’. 

Similar changes have already been 

made at the New York Stock Exchange, 

Inc. (‘‘NYSE’’) and The Nasdaq Stock 

Market LLC (‘‘NASDAQ’’).7 Amending 

Exchange Rule 862 similarly continues 

to provide consistency among the 

exchanges to eliminate disparities 

regarding proxy voting, as well as 

complies with Section 6(b)(10) of the 

Act.8

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,9

in general and with Section 6(b)(10) of 

the Act,10 in particular. Section 6(b)(10) 

requires that a national securities 

exchange’s rules must prohibit any 

member that is not the beneficial owner 

of a security registered under Section 12 

from granting a proxy to vote the 

security in connection with a 

shareholder vote on, among other 

things, executive compensation matters, 

or any other significant matter, as 

determined by the Commission. The 

proposed rule change will adopt the 

prohibition required by Section 6(b)(10). 

Section 6(b)(5) requires that the rules 

of a national securities exchange be 

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, 

and to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

17732 Federal Register / Vol. 76, No. 61 / Wednesday, March 30, 2011 / Notices 

11 In approving this rule change, the Commission 

notes that it has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

12 15 U.S.C. 78f(b)(10). 

13 15 U.S.C. 78f(b)(5). 

14See S. Rep. No. 111–176, at 136 (2010). 

15As noted above, Section 6(b)(10) also prohibits 

broker voting for director elections, except for 

uncontested director elections of registered 

investment companies. PHLX already prohibits 

broker voting in director elections except for 

uncontested director elections for registered 

investment companies. See Phlx Rule 862(2)(b)(19) 

and note 6 supra; see also note 16 infra. As to other 

matters, the Commission has not, to date, adopted 

rules concerning other significant matters where 

uninstructed broker votes should be prohibited, 

although it may do so in the future. Should the 

Commission adopt such rules, we would expect 

PHLX to adopt coordinating rules promptly to 

comply with the statute. 

16As the Commission stated in approving NYSE 

rules prohibiting broker voting in the election of 

directors, having those with an economic interest in 

the company vote the shares, rather than the broker 

who has no such economic interest, furthers the 

goal of enfranchising shareholders. See Securities 

Exchange Act Release No. 60215 (July 1, 2009), 74 

FR 33293 (July 10, 2009) (SR–NYSE–2006–92). 

system, and, in general, to protect 

investors and the public interest. The 

proposed rule change is consistent with 

this requirement in that it will protect 

investors and the public interest by 

adopting the requirements of Section 

957 of the Dodd-Frank Act. 

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 not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. 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 rulecomments@sec.gov. Please include File 

Number SR–Phlx–2011–03 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2011–03. 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 filing 

also will be available for inspection and 

copying at the principal office of Phlx. 

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 publicly available. All 

submissions should refer to File 

Number SR–Phlx–2011–03 and should 

be submitted on or before April 20, 

2011. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

In its filing, the Exchange requested 

that the Commission approve the 

proposal on an accelerated basis. The 

Exchange stated that it believed good 

cause existed to grant accelerated 

approval because Section 957 of the 

Dodd-Frank Act does not provide for a 

transition period. 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange.11 The 

Commission believes that the proposal 

is consistent with Section 6(b)(10) 12 of 

the Act, which requires that national 

securities exchanges adopt rules 

prohibiting members that are not 

beneficial holders of a security from 

voting uninstructed proxies with respect 

to the election of a member of the board 

of directors of an issuer (except for 

uncontested elections of directors for 

companies registered under the 

Investment Company Act), executive 

compensation, or any other significant 

matter, as determined by the 

Commission, by rule. The Commission 

also believes that the proposal is 

consistent with Section 6(b)(5) 13 of the 

Act, which provides, among other 

things, that the rules of the Exchange 

must be designed to promote just and 

equitable principles of trade, 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, and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Commission believes that the 

proposal is consistent with Section 

6(b)(10) of the Act because it adopts 

revisions that comply with that section. 

As noted in the accompanying Senate 

Report, Section 957, which adopts 

Section 6(b)(10), reflects the principle 

that ‘‘final vote tallies should reflect the 

wishes of the beneficial owners of the 

stock and not be affected by the wishes 

of the broker that holds the shares.’’ 14

The proposed rule change will make 

Phlx rules compliant with the new 

requirements of Section 6(b)(10) by 

prohibiting broker-dealers, who are not 

beneficial owners of a security, from 

voting uninstructed shares with respect 

to any matter on executive 

compensation or any other significant 

matter, as determined by the 

Commission by rule.15

The Commission believes that the 

proposal is consistent with Section 

6(b)(5) of the Act because the proposal 

will further investor protection and the 

public interest by assuring that 

shareholder votes on executive 

compensation matters are made by those 

with an economic interest in the 

company, rather than by a broker that 

has no such economic interest, which 

should enhance corporate governance 

and accountability to shareholders.16

The Commission notes that Phlx’s 

new rule prohibiting uninstructed 

broker votes on executive compensation 

covers the specific items identified in 

Section 951 of the Dodd-Frank Act, as 

well as any other matter concerning 

executive compensation, and has been 

drafted broadly to reflect the 

requirements of Section 6(b)(10) of the 

Act. The proposed rule language also 

specifically states that a broker vote on 

any executive compensation matter 

would not be permitted even it would 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

Federal Register / Vol. 76, No. 61 / Wednesday, March 30, 2011 / Notices 17733 

17 15 U.S.C. 78s(b)(2). 

18See supra note 7 

19 15 U.S.C. 78s(b)(2). 

20 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4As noted other options exchanges have similar 

rules, see e.g. CBOE Rule 9.11. 

5 Id. at Rule 9.18. 

otherwise qualify for an exception from 

any item under Rule 862. The 

Commission believes this provision will 

make clear that any past practice or 

interpretation that may have permitted 

a broker vote on an executive 

compensation matter, under existing 

rules, will no longer be applicable and 

is superseded by the newly adopted 

provisions. 

Finally, the Commission notes that 

the change to reflect that Phlx rules 

prohibit not only the giving of a proxy, 

but also the authorization of the proxy, 

should help to clarify the intent of Phlx 

proxy rules and is consistent with the 

requirements of Section 6 of the Act. 

Based on the above, the Commission 

believes that the Phlx’s proposal will 

further the purposes of Sections 6(b)(5) 

and 6(b)(10) of the Act by ensuring that 

brokers, holding shares on behalf of 

beneficial owners, are not voting 

uninstructed shares on matters relating 

to executive compensation, which 

should enhance corporate 

accountability to shareholders. The rule 

filing should also serve to fulfill the 

Congressional intent in adopting 

Section 6(b)(10) of the Act. 

The Commission also finds good 

cause, pursuant to Section 19(b)(2) of 

the Act,17 for approving the proposed 

rule change prior to the 30th day after 

the date of publication of notice in the 

Federal Register. As noted above, 

Section 6(b)(10) of the Act, enacted 

under Section 957 of the Dodd-Frank 

Act, does not provide for a transition 

phase, and requires rules of national 

securities exchanges to prohibit, among 

other things, broker voting on executive 

compensation. The Commission 

believes that good cause exists to grant 

accelerated approval to the Exchange’s 

proposal, because it will conform Phlx 

Rule 862 to the requirements of Section 

6(b)(10) of the Act. Moreover, the 

Commission notes that the proposed 

changes are based on NYSE Rule 452.18

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,19 that the 

proposed rule change (SR–Phlx–2011– 

03) be, and it hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7415 Filed 3–29–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64120; File No. SR–BX– 

2011–015] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend 

Chapter XI of the BOX Trading Rules 

To Harmonize Them With Rules of the 

Financial Industry Regulatory 

Authority, Inc. and Other Options 

Exchanges 

March 24, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 11, 

2011, NASDAQ OMX BX, Inc. (‘‘SelfRegulatory Organization’’ or ‘‘SRO’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been substantially prepared by the 

SRO. The SRO has designated the 

proposed rule change as constituting a 

‘‘non-controversial’’ rule change under 

paragraph (f)(6) of Rule 19b–4 under the 

Act,3 which renders the proposal 

effective upon receipt of the filing. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The SRO proposes to amend Chapter 

XI of the Boston Options Exchange 

Group, LLC (‘‘BOX’’) Trading Rules to 

harmonize them with Rules of the 

Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) and other 

options exchanges. The text of the 

proposed rule change is available from 

the principal office of the SRO, at the 

Commission’s Public Reference Room 

and also on the SRO’s Internet Web site 

at http:// 

nasdaqomxbx.cchwallstreet.com/ 

NASDAQOMXBX/Filings/. 

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 

SRO 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 SRO 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 

Pursuant to Rule 17d–2 under the Act, 

the Exchange, BATS Exchange, Inc., 

Chicago Board Options Exchange, Inc. 

(‘‘CBOE’’), C2 Options Exchange, 

Incorporated, the International 

Securities Exchange, LLC, FINRA, New 

York Stock Exchange LLC, NYSE Amex 

LLC, NYSE Arca, Inc., The NASDAQ 

Stock Market LLC, and NASDAQ OMX 

PHLX, Inc. (collectively the ‘‘Options 

Self Regulatory Council’’), entered into 

an agreement, dated February 9, 2010, 

(the ‘‘17d–2 Agreement’’) to allocate 

regulatory responsibility for common 

rules. By this proposal, the SRO seeks 

to standardize certain rules with 

FINRA’s rules pursuant to the terms of 

the 17d–2 Agreement. 

First, the SRO proposes to amend its 

confirmation rule, BOX Rule Chapter XI, 

Section 13, to add a requirement that 

confirmations disclose whether the 

transaction was an opening or closing 

transaction to harmonize the rule with 

FINRA Rule 2360(b)(12) and the rule of 

other options exchanges.4

Second, in order to maintain 

substantial similarity with FINRA rules, 

the SRO proposes to amend BOX Rule 

Chapter XI, Section 20 to clarify that the 

prohibition against guarantees also 

applies to persons associated with a 

Participant and to delete the language of 

BOX Rule Chapter XI, Section 21 related 

to profit sharing of a customer account, 

and replace it with the language of 

FINRA Rule 2150(c),5 Sharing in 

Accounts; Extent Permissible. FINRA 

Rule 2150(c) contains the same 

prohibition against sharing in accounts 

as BOX Rule Chapter XI, Section 21, but 

with additional limited exceptions. The 

general prohibition contained in BOX 

Rule Chapter XI, Section 21 against 

sharing in the profits or losses of a 

customer account is currently covered 

by the 17d–2 Agreement. However, the 

limited exceptions of FINRA Rule 

2150(c) are not covered by the 17d–2 

Agreement. The Exchange proposes to 

add those limited exceptions to BOX 

Rule Chapter XI, Section 21 to 

harmonize its rule with the FINRA rule 

and add those limited exceptions 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES