Federal Register / Vol. 76, No. 72 / Thursday, April 14, 2011 / Notices 21085 

6 15 U.S.C. 78s(b)(2)(A)(ii)(I). 

7 17 CFR 200.30–3(a)(31). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 63925 

(February 17, 2011), 76 FR 10418 (February 24, 

2011) (‘‘Notice’’). 

4See Securities Exchange Act Release No. 62783 

(August 27, 2010), 75 FR 54204 (September 3, 2010) 

(SR–Phlx–2010–104). 

5See Securities Exchange Act Release No. 61876 

(April 8, 2010), 75 FR 19436 (April 14, 2010) (SR– 

NASDAQ–2010–025). 6See Berlin v. Emerald Partners, 552 A.2d 482 

494 (Del Supr. 1988). 7 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 8 15 U.S.C. 78f. 

9 15 U.S.C. 78f(b)(1). 

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

The Commission is hereby extending 

the 45-day period for Commission 

action on the proposed rule change. The 

Commission finds that it is appropriate 

to designate a longer period within 

which to take action on the proposed 

rule change. The extension of time will 

ensure that the Commission has 

sufficient time to consider and take 

action on the Exchange’s proposal. 

Accordingly, pursuant to Section 

19(b)(2)(A)(ii)(I) of the Act 6 and for the 

reasons stated above, the Commission 

designates June 19, 2011, as the date by 

which the Commission should either 

approve or disapprove, or institute 

proceedings to determine whether to 

disapprove, the proposed rule change 

File No. SR–FINRA–2011–012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–9048 Filed 4–13–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64285; File No. SR– 

NASDAQ–2011–025] 

Self-Regulatory Organizations; 

NASDAQ Stock Market, LLC; Order 

Approving Proposed Rule Change To 

Amend The NASDAQ OMX Group, Inc. 

By-Laws 

April 8, 2011. 

I. Introduction 

On February 8, 2011, The NASDAQ 

Stock Market LLC (‘‘NASDAQ’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend the By-Laws of its parent 

corporation, The NASDAQ OMX Group, 

Inc. (‘‘NASDAQ OMX’’). The proposed 

rule change was published for comment 

in the Federal Register on February 24, 

2011.3 The Commission received no 

comments on the proposal. This order 

approves the proposed rule change. 

II. Description of the Proposal 

NASDAQ proposes amending the ByLaws of NASDAQ OMX to: (i) Amend 

the name of the Nominating Committee 

to the Nominating & Governance 

Committee; (ii) amend the NASDAQ 

OMX PHLX, Inc. reference to reflect a 

recent conversion to a limited liability 

company; and (iii) clarify By-Law 

Article IV, Section 4.4 that broker 

nonvotes are not counted as a vote cast 

either ‘‘for’’ or ‘‘against’’ a Director. 

Currently, NASDAQ OMX By-Laws 

provide for a Nominating Committee 

that is appointed pursuant to the ByLaws. In addition to the responsibilities 

listed in By-Law Article IV, Section 

4.13(h), NASDAQ states that the 

Nominating Committee also conducts 

certain governance functions such as 

consulting with the 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, the Exchange proposes 

to rename and change all references to 

the ‘‘Nominating Committee’’ in the ByLaws, 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. 

NASDAQ’s proposal to rename the 

Nominating Committee would not 

change the function of the committee, 

but is intended to clarify the current 

functions and its governance role with 

respect to the Board selection process. 

Additionally, NASDAQ proposes to 

amend 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 

NASDAQ OMX PHLX, Inc. from a 

Delaware corporation to a Delaware 

limited liability company.4

Finally, NASDAQ proposes to add 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 a vote 

cast either ‘‘for’’ or ‘‘against’’ that 

director’s election. In its filing, 

NASDAQ 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. 

Accordingly, this change would clarify 

this practice by codifying it into the ByLaws. 

NASDAQ also stated that 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.5 A plurality 

standard would still remain in a 

contested election. In its filing, 

NASDAQ noted that, the practice of not 

counting a broker nonvote as a vote cast 

either for or against a director’s election 

will remain unchanged by the 

amendment to a majority vote standard. 

In support of this change, in its filing 

NASDAQ states that under Delaware 

case law, broker nonvotes are not 

considered as votes cast for or against a 

proposal or director nominee.6

III. Discussion and Commission’s 

Findings 

After carefully reviewing the 

proposed rule change, 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.7 In particular, the 

Commission finds that the proposal is 

consistent with Section 6(b) of the Act,8

in general, and furthers the objectives of 

Sections 6(b)(1) 9 of the Act, in 

particular, in that it is designed to 

enable the Exchange to be so organized 

as to have the capacity to be able to 

carry out the purposes of the Act. In 

addition, the Commission finds that the 

proposal is consistent with Section 

6(b)(5) 10 of the Act 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 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. 

The Commission believes that the 

proposed amendments to NASDAQ 

OMX’s By-Laws by changing the name 

of the Nominating Committee to the 

Nominating and Governance 

Committee, and amending references to 

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21086 Federal Register / Vol. 76, No. 72 / Thursday, April 14, 2011 / Notices 

11As noted by NASDAQ in its filing, the other 

Boards of Directors of the regulatory subsidiaries of 

NASDAQ OMX have approved the changes to 

NASDAQ OMX’s By-Laws. The Commission 

expects such regulatory subsidiaries to file these 

changes shortly pursuant to Section 19(b) of the 

Act. 

12 15 U.S.C. 78s(b)(2). 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See NYSE Rule 1401 and Securities Exchange 

Act Release No. 54766 (November 16, 2006), 71 FR 

67657 (November 22, 2006). Under the exemptive 

order, among other things, the issuer of the debt 

security must have at least one class of common or 

preferred equity security listed on the Exchange. 

Further, for purposes of NYSE Rule 1400(2), the 

term Debt Securities includes only securities that, 

if they were to be listed on the NYSE, would be 

listed under Sections 102.03 or 103.05 of the 

NYSE’s Listed Company Manual, except that such 

securities do not include any security that is 

defined as an ‘‘equity security’’ under Section 

3(a)(11) of the Act. The term Debt Securities also 

does not include a security that, if listed on the 

NYSE, would have been listed under Sections 

703.19 or 703.21 of the NYSE’s Listed Company 

Manual. See NYSE Rule 1400. 

4Examples of debt securities issuances in the $5– 

10 million range include GE 4.85 8/15/14 CUSIP 

36966RHE9, DOW 5.35 6/15/2013 CUSIP 

26054LEG4; GS 5.50 5/15/2019 CUSIP 38141E6C8; 

CAT 5.85 2/15/2028 CUSIP 14912HJP6. 

an exchange name to reflect a corporate 

change to a limited liability company, 

are both clarifying in nature. The 

Nominating Committee name change 

will ensure that the committee’s title 

accurately reflects its functions, which, 

according to NASDAQ, includes 

governance through its general review of 

the overall effectiveness of the Board 

and other similar duties. Similarly, the 

change in NASDAQ OMX’s By-Laws to 

reflect a previously approved change of 

NASDAQ OMX PHLX, Inc. to a 

Delaware limited liability company will 

ensure that the By-Laws are accurate 

and properly reflect an exchange entity 

name. 

Finally, as to the part of the proposal 

that will specifically set forth in 

NASDAQ OMX’s By-Laws that broker 

nonvotes will not be counted as a vote 

cast either for or against in director 

elections, the Commission believes that 

this change should help to provide 

transparency to the election of directors 

process, especially in light of NASDAQ 

OMX’s recent change to a majority vote 

standard in the uncontested election of 

directors. While in its filing NASDAQ 

notes that it has always been NASDAQ 

OMX’s practice to not count broker 

nonvotes for or against in director 

elections, the impact of the broker 

nonvotes and how such votes are 

counted will take on added significance 

under NASDAQ OMX’s newly adopted 

majority vote standard for director 

elections. Accordingly, the Commission 

believes it is important that the 

NASDAQ OMX By-Laws provide clarity 

on this issue, even though, according to 

NASDAQ, Delaware case law would 

dictate the same result. 

Based on the above, the Commission 

believes that the changes being 

proposed by NASDAQ to amend the ByLaws of its parent corporation, 

NASDAQ OMX, is consistent with 

investor protection and the public 

interest pursuant to Section 6(b)(5) of 

the Act since the changes will ensure 

the accuracy of the NASDAQ OMX ByLaws, as well as clarify for shareholders 

how broker nonvotes will be counted in 

director elections.11

IV. Conclusion 

It is therefore ordered, that pursuant 

to Section 19(b)(2) of the Act,12 that the 

proposed rule change (SR–NASDAQ– 

2011–025), be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–9049 Filed 4–13–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64287; File No. SR–NYSE– 

2011–15] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change to 

NYSE Rule 1401 To Modify the Initial 

Trading Market Value for Debt 

Securities 

April 8, 2011. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that, on April 1, 

2011, the New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (the ‘‘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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

NYSE Rule 1401 to modify the initial 

trading market value requirements for 

Debt Securities from $10,000,000 to 

$5,000,000. The text of the proposed 

rule change is available at the Exchange, 

the Commission’s Public Reference 

Room, and http://www.nyse.com, and 

on the Commission’s Web site at 

http://www.sec.gov. 

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 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The NYSE proposes to amend NYSE 

Rule 1401 to modify the initial trading 

market value requirements for Debt 

Securities from $10,000,000 to 

$5,000,000. 

NYSE Rule 1400 and 1401 set forth 

requirements for trading Debt Securities. 

The term ‘‘Debt Securities’’ includes any 

unlisted note, bond, debenture or 

evidence of indebtedness that is: (1) 

Statutorily exempt from the registration 

requirements of Section 12(b) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’), or (2) eligible to be traded under 

a Commission exemptive order.3

Currently, NYSE Rule 1401 requires that 

Debt Securities traded on the NYSE 

must have an outstanding aggregate 

market value or principal amount of no 

less than $10,000,000 on the date that 

trading commences. 

The Exchange proposes to reduce the 

required initial outstanding aggregate 

market value to $5,000,000. There are 

numerous corporate retail note 

programs offered by well-known issuers 

whose equity securities are listed on the 

Exchange, such as General Electric, 

DOW Chemical, Goldman Sachs and 

Caterpillar, that involve issuances of 

$5,000,000 or more but less than 

$10,000,000 in principal.4 However, 

such issuances may not be traded on the 

NYSE under current NYSE Rule 1401. 

The Exchange believes that setting the 

minimum initial aggregate market value 

at $5,000,000 would expand the number 

of Debt Securities that could be traded 

on the Exchange’s platform, thereby 

mstockstill on DSKH9S0YB1PROD with NOTICES