9982 Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 

No. 61483 (Feb. 3, 2010), 75 FR 6753 (Feb. 10, 

2010). 

4Securities Exchange Act Release Nos. 57895 

(May 30, 2008), 73 FR 32066 (June 5, 2008) and 

59054 (Dec. 4, 2008), 73 FR 75159 (Dec. 10, 2008). 

5 15 U.S.C. 78q–1(b)(3)(F). 

6 15 U.S.C. 78q–1. 

7 15 U.S.C. 78s(b)(2). 

8 In approving the proposed rule change, the 

Commission considered the proposal’s impact on 

efficiency, competition and capital formation. 15 

U.S.C. 78c(f). 

9 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). 

‘‘derivatives clearing organization’’ 

registered with the Commodities 

Futures Trading Commission (‘‘CFTC’’), 

OCC also filed this proposed rule 

change with the CFTC for prior approval 

by the CFTC pursuant to provisions of 

the Commodity Exchange Act (‘‘CEA’’) 

in order to foreclose any potential 

liability under the CEA based on an 

argument that OCC’s clearing of such 

options as securities options or the 

clearing of such futures as security 

futures constitutes a violation of the 

CEA. 

The products that are affected by this 

approval order are essentially the same 

as the options and security futures on 

SPDR Gold Shares, iShares COMEX 

Gold Shares, and iShares Silver Shares 

that OCC currently clears pursuant to 

rule changes approved by the 

Commission last year.4

III. Discussion 

Section 17A(b)(3)(F) of the Act 

requires, among other things, that the 

rules of a clearing agency be designed to 

promote the prompt and accurate 

clearance and settlement of securities 

transactions and derivative 

transactions.5 By amending its By-Laws 

to help clarify that options and security 

futures on ETFS Physical Swiss Gold 

Shares and ETFS Physical Silver Shares 

will be treated and cleared as securities 

options or security futures, OCC’s 

proposed rule change should help 

clarify the jurisdictional status of such 

contracts and accordingly should help 

to promote the prompt and accurate 

clearance and settlement of securities 

transactions and of derivative 

transactions. In accordance with the 

Memorandum of Understanding entered 

into between the CFTC and the 

Commission on March 11, 2008, and in 

particular the addendum thereto 

concerning Principles Governing the 

Review of Novel Derivative Products, 

the Commission believes that novel 

derivative products that implicate areas 

of overlapping regulatory concern 

should be permitted to trade in either a 

CFTC- or Commission-regulated 

environment or both in a manner 

consistent with laws and regulations 

(including the appropriate use of all 

available exemptive and interpretive 

authority). 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and in 

particular Section 17A of the Act 6 and 

the rules and regulations thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,7 that the 

proposed rule change (File No. SR– 

OCC–2009–20) be and hereby is 

approved.8

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–4517 Filed 3–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61594; File No. SR– 

NASDAQ–2010–024] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Adopt a 

Round Lot Holder Initial Listing 

Requirement for Listing of Warrants on 

the Nasdaq Global and Capital Markets 

Except for Initial Firm Commitment 

Underwritten Public Offering 

February 25, 2010. 

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 February 

19, 2010, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been substantially prepared by 

NASDAQ. NASDAQ has designated the 

proposed rule change as constituting a 

non-controversial rule change under 

Rule 19b–4(f)(6) under the Act,3 which 

renders the proposal effective upon 

filing with the Commission. 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 the Substance 

of the Proposed Rule Change 

NASDAQ is filing this proposed rule 

change to adopt a round lot holder 

requirement for listing on the Global 

and Capital markets, and to make a 

technical correction to a cross 

referenced rule. 

The text of the proposed rule change 

is below. Proposed new language is in 

italics and proposed deletions are in 

[brackets]. 

5410. Initial Listing Requirements for 

Rights and Warrants 

For initial listing, the rights or 

warrants must meet all the requirements 

below: 

(a) No change. 

(b) The underlying security must be 

listed on the Global Market or be a 

Covered Security; [and] 

(c) There must be at least three 

registered and active Market Makers[.] ; 

and 

(d) In the case of warrants, there must 

be at least 400 Round Lot Holders 

(except that this requirement will not 

apply to the listing of warrants in 

connection with the initial firm 

commitment underwritten public 

offering of such warrants). 

* * * * * 

5515. Initial Listing Requirements for 

Rights, Warrants, and Convertible Debt 

The following requirements apply to 

a Company listing convertible debt, 

rights or warrants on The Nasdaq 

Capital Market. 

(a) For initial listing, rights, warrants 

and put warrants (that is, instruments 

that grant the holder the right to sell to 

the issuing company a specified number 

of shares of the Company’s common 

stock, at a specified price until a 

specified period of time) must meet the 

following requirements: 

(1) No change. 

(2) The underlying security must be 

listed on Nasdaq or be a Covered 

Security; [and] 

(3) At least three registered and active 

Market Makers[.] ; and 

(4) In the case of warrants, at least 

400 Round Lot Holders (except that this 

requirement will not apply to the listing 

of rights or warrants in connection with 

the initial firm commitment 

underwritten public offering of such 

warrants). 

(b)–(c) No change. 

* * * * * 

5730. Listing Requirements for 

Securities Not Specified Above (Other 

Securities) 

(a) Initial Listing Requirements 

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Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 9983 

4The Commission notes that the proposed 

changes to the Global Market warrant holder 

requirement would apply to the Global Select 

Market under Nasdaq Rule 5320, which provides 

that ‘‘[i]f the Primary Equity Security of a Company 

is included in the Global Select Market, any other 

security of that same Company, such as other 

classes of common or preferred stock, warrants and 

units, that qualify for listing on the Global Market 

shall also be included in the Global Select Market.’’ 

5Rule 5005(a)(9) defines a Covered Security as a 

security described in Section 18(b) of the Securities 

Act of 1933. 

6Rule 5515(a). 

7Securities Exchange Act Release No. 59663 

(March 31, 2009), 74 FR 15552 (April 6, 2009)(SR– 

NASDAQ–2009–018). 

8Former Rule 4420(d)(1) required warrants to 

substantially meet the requirements of the Global 

Market listing rules, which included a minimum of 

400 round lot shareholders under all three entry 

standards. 

9See SR–NYSE–2009–115 (December 2, 2009), 74 

FR 64781 (December 8, 2009) (amending Section 

703.12 of the NYSE Listed Company Manual to 

exempt from the 400 holders requirement any series 

of warrants listed in connection with the initial firm 

commitment underwritten public offering of such 

warrants). 

10This is also consistent with the NYSE’s 

treatment of rights. See Section 703.03(N) of the 

NYSE Listed Company Manual. 

(1) Nasdaq will consider listing on the 

Global Market any security not 

otherwise covered by the criteria in the 

Rule 5400 or 5700 Series, provided the 

instrument is otherwise suited to trade 

through the facilities of Nasdaq. Such 

securities will be evaluated for listing 

against the following criteria: 

(A) The Company shall have assets in 

excess of $100 million and stockholders’ 

equity of at least $10 million. In the case 

of a Company which is unable to satisfy 

the income criteria set forth in Rule 

5405(b)(1)(A)[paragraph (a)(1)], Nasdaq 

generally will require the Company to 

have the following: 

(i)–(ii) No change. 

(B)–(D) No change. 

(2)–(3) No change. 

(b) No change. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NASDAQ 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. 

NASDAQ 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 

NASDAQ is proposing to adopt a 

round lot holder requirement for the 

initial listing of warrants on the Global 

and Capital Markets, with a limited 

exemption for companies listing 

warrants pursuant to a firm commitment 

underwritten initial public offering.4

Currently, Listing Rule 5410 provides 

that to list a warrant on the Global 

Market a Company must have at least 

450,000 warrants issued, the underlying 

security must be listed on the Global 

Market or be a Covered Security 5, and 

there must be at least three registered 

and active Market Makers. To list a 

warrant on the Capital Market, a 

Company must have at least 400,000 

warrants issued, the underlying security 

must be listed on NASDAQ or be a 

Covered Security, and there must be at 

least three registered and active Market 

Makers.6

On March 12, 2009, NASDAQ filed a 

proposed rule change to revise the rules 

relating to the qualification, listing, and 

delisting of companies listed on, or 

applying to list on, NASDAQ to improve 

the organization of the rules, eliminate 

redundancies and simplify the rule 

language.7 These rules (the ‘‘Listing 

Rules’’) were operative April 13, 2009. 

In adopting the new Listing Rules, 

NASDAQ inadvertently omitted the 

requirement in the prior rules that a 

warrant have at least 400 round lot 

holders for initial listing 8 on the Global 

Market. NASDAQ is proposing to 

modify Rule 5410 to add the round lot 

holder requirement back to the rule. 

NASDAQ is also proposing to adopt 

an identical 400 round lot holder 

requirement for the initial listing of 

warrants on the Capital Market. 

NASDAQ does not currently have a 

holder requirement for listing warrants 

on the Capital Market; however, 

NASDAQ believes that adopting such a 

requirement will help ensure that 

warrants listed on the Capital Market 

will have adequate distribution and a 

liquid trading market. 

NASDAQ is proposing to adopt an 

exemption from the proposed round lot 

holder requirements of both the Global 

and Capital Markets for warrants listed 

pursuant to a firm commitment 

underwritten initial public offering. 

NASDAQ believes that a primary 

purpose of distribution requirements in 

listing standards is to ensure a liquid 

trading market, promoting price 

discovery and the establishment of an 

appropriate market price for the listed 

securities. In the case of warrants, 

NASDAQ believes that this liquidity 

concern is partially addressed by the 

fact that the market price for a warrant 

is in large part determined by the 

trading price of the underlying common 

stock. Warrant values are primarily 

determined using valuation models that 

factor in the trading price of the 

underlying stock, the warrant exercise 

price and the expiration date of the right 

or warrant. NASDAQ believes that the 

sale of warrants in an underwritten 

public offering provides an additional 

basis for believing that a liquid trading 

market will likely develop for such 

warrants after listing, since the offering 

process is designed to promote 

appropriate price discovery. Moreover, 

the underwriters in a firm commitment 

underwritten public offering will also 

generally make a market in the 

securities for a period of time after the 

offering, assisting in the creation of a 

liquid trading market. For the foregoing 

reasons, NASDAQ believes that it is 

consistent with the protection of 

investors and the public interest to 

exempt from the proposed holder 

requirements of Rules 5410 and 5515(a) 

any series of warrants that is listed in 

connection with its initial firm 

commitment underwritten public 

offering. This proposed exemption is 

also consistent with a recent change to 

the listing requirements of the New 

York Stock Exchange (‘‘NYSE’’).9

NASDAQ is not proposing to require 

a minimum number of holders for the 

initial listing of rights, because rights 

are generally distributed to the holders 

of an existing security and becomes a 

part of the realizable value of that 

security. As such, because the existing 

security must meet liquidity 

requirements, including a continued 

listing holders requirement, there is not 

a need to require a separate minimum 

number of holders of the rights to help 

ensure the liquidity of the rights.10

NASDAQ is also making a technical 

correction to a cross-reference contained 

in the Listing Rules. Rule 5730(a)(1)(A) 

was derived from old Rule 4420(d), 

which contained a cross reference to the 

Global Market income criteria found 

under old Rule 4420(a)(1). Rule 

4420(a)(1) was moved to new Listing 

Rule 5405(b)(1)(A), yet the cross 

reference in Rule 5730(a)(1)(A) was not 

updated to reflect this new location. 

Accordingly, NASDAQ proposes to 

correct the reference in Rule 

5730(a)(1)(A). 

2. Statutory Basis 

NASDAQ believes that the proposed 

rule change is consistent with the 

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9984 Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 

11 15 U.S.C. 78f. 

12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). 

15 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b–4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change, along with a brief 

description and text of 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. The Exchange 

has satisfied the pre-filing requirement. 

16 17 CFR 240.19b–4(f)(6)(iii). 

17See note 9 supra. 

18As noted by Nasdaq, the price of such warrants 

would be established by the firm commitment 

underwritten offering process, in addition to the 

price of the underlying security, the exercise price 

of the warrants, and the expiration of the warrants. 

19For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 20 15 U.S.C. 78s(b)(3)(C). 

provisions of Section 6 of the Act,11 in 

general and with Section 6(b)(5) of the 

Act,12 in particular in that it is designed 

to prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, 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 proposed rule 

change, which imposes a round lot 

holder requirement applicable to the 

initial listing of warrants, subject to a 

limited exception for warrants listed 

pursuant to firm commitment initial 

public offerings, will protect investors 

and the public interest and remove 

impediments to and perfect the 

mechanism of a free and open market by 

helping to assure adequate liquidity, 

and correcting inadvertent errors in the 

adoption of the New Listing Rules. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NASDAQ does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 13 and Rule 19b–4(f)(6) 14

thereunder because the proposal does 

not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) by its 

terms, become operative for 30 days 

from the date on which it was filed, or 

such shorter time as the Commission 

may designate if consistent with the 

protection of investors and the public 

interest.15

A proposed rule change filed under 

Rule 19b–4(f)(6) normally may not 

become operative prior to 30 days after 

the date of filing. However, Rule 19b– 

4(f)(6)(iii) 16 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay period. 

The Commission believes that waiver 

of the 30-day operative delay period is 

consistent with the protection of 

investors and the public interest. For the 

Global Market, Nasdaq would require 

the same 400 round lot warrant holders 

requirement that was contained in the 

rules for warrants prior to the 

reorganization of its Listing Rules. For 

the Capital Market, Nasdaq is proposing 

an identical 400 round lot warrant 

holders requirement as the Global 

Market. The Commission believes that 

waiver of the 30-day operative delay 

period is consistent with the protection 

of investors and the public interest as 

the proposed changes should help to 

enhance liquidity and price discovery 

for warrants. Further, for both the 

Global Market and the Capital Market, 

Nasdaq’s proposed exemption from the 

holder requirement for initial firm 

commitment underwritten public 

offerings is identical to the rules of the 

NYSE, which were published for notice 

and comment in the Federal Register.17

The Commission did not receive any 

comments during the public comment 

period. The Commission further notes 

that waiving the 30-day operative delay 

for this provision is consistent with the 

protection of investors and the public 

interest as market making by the 

underwriters in an initial firm 

commitment public offering of warrants 

for a period of time after the offering 

should help alleviate short term 

liquidity concerns.18 Finally, Nasdaq 

proposes to correct inaccurate cross 

references in the Listing Rules. Based on 

the above, the Commission believes it is 

consistent with the protection of 

investors and the public interest to 

waive the 30-day operative delay and 

therefore deems the proposal effective 

upon filing.19

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

such proposed 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.20

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as amended, 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–NASDAQ–2010–024 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–NASDAQ–2010–024. 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 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 offices of the NASDAQ. 

All comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

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Federal Register / Vol. 75, No. 42 / Thursday, March 4, 2010 / Notices 9985 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Section 216 of the General Corporation Law of 

the State of Delaware provides that in the absence 

of the specification in the certificate of 

incorporation or bylaws of a Delaware corporation, 

directors of the Delaware corporation shall be 

elected by a plurality of the shares present in 

person or represented by proxy at the meeting and 

entitled to vote on the election of directors. Since 

the Certificate of Incorporation and By-Laws of 

NASDAQ OMX do not specify the voting standard 

for the election of NASDAQ OMX’s directors, the 

Section 216 default standard applies to NASDAQ 

OMX and, therefore, elections of NASDAQ OMX’s 

directors are currently governed by a plurality vote 

standard. 

4See NASDAQ OMX By-Law Article IV, Section 

4.5. 

should submit only information that 

you wish to make available publicly. 

All submissions should refer to File 

Number SR–NASDAQ–2010–024, and 

should be submitted on or before March 

25, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–4411 Filed 3–3–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61582; File No. SR– 

NASDAQ–2010–025] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing of Proposed Rule Change To 

Amend the By-Laws of The NASDAQ 

OMX Group, Inc. 

February 25, 2010. 

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 February 

24, 2010, The NASDAQ Stock Market 

LLC (the ‘‘Exchange’’ or ‘‘NASDAQ’’) 

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 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 NASDAQ Exchange is filing this 

proposed rule change relating to the ByLaws of its parent corporation, The 

NASDAQ OMX Group, Inc. (‘‘NASDAQ 

OMX’’). The text of the proposed rule 

change is available at http:// 

nasdaqomx.cchwallstreet.com, at the 

Exchange’s principal office, on the 

Commission’s Web site at http:// 

www.sec.gov, and at the Commission’s 

Public Reference Room. 

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 

NASDAQ 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 IV below. The 

NASDAQ 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 

NASDAQ OMX is proposing to make 

certain amendments to its By-Laws to 

make improvements in its governance. 

Currently, NASDAQ OMX By-Laws 

provide that each director receiving a 

plurality of the votes at any election of 

directors at which a quorum is present 

is duly elected to the Board.3 Under 

Corporate Governance Guidelines 

adopted by the Board, however, any 

director in an uncontested election who 

receives a greater number of votes 

‘‘withheld’’ from his or her election than 

votes ‘‘for’’ such election is required to 

tender his or her resignation promptly 

following receipt of the certification of 

the stockholder vote. The NASDAQ 

OMX Nominating & Governance 

Committee then considers the 

resignation offer and recommends to the 

Board whether to accept it. Within 90 

days after the certification of the 

election results, the Board will decide 

whether to accept or reject the 

resignation. Promptly thereafter, the 

Board will announce its decision by 

means of a press release. In a contested 

election (i.e., where the number of 

nominees exceeds the number of 

directors to be elected), the unqualified 

plurality standard controls. 

Uncontested Election 

NASDAQ OMX proposes the adoption 

of a majority voting standard by 

amending Article IV, Section 4.4 of the 

By-Laws 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. Under the majority voting 

standard, a nominee who fails to receive 

the requisite vote would not be duly 

elected to the Board; however, because 

a director holds office until his or her 

successor is duly elected and qualified, 

any incumbent director-nominee who 

fails to receive the requisite vote does 

not automatically cease to be a director. 

Instead, such director continues as a 

‘‘holdover director’’ until such director’s 

death, resignation or removal, or until 

his or her successor is duly elected and 

qualified. For this reason, the majority 

voting standard under consideration 

requires that any incumbent nominee, 

as a condition to his or her nomination 

for election, 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. 

The resignation would be considered by 

the Nominating & Governance 

Committee and acted upon by the Board 

in the same manner as a resignation 

tendered under current rules.4

Acceptance of that resignation by the 

Board shall be in accordance with the 

policies and procedures adopted by the 

Board for such purpose. NASDAQ OMX 

specifies its policies and procedures 

pertaining to the election of its directors 

in its By-Laws. Specifically, the policies 

and procedures for the acceptance of the 

resignation of a director, by the Board, 

are proposed to be specified in By-Law 

Article IV, Section 4.4. There are no 

additional policies and procedures other 

than what is indicated in the By-Laws. 

In the event that NASDAQ OMX 

proposes to further amend its By-Laws 

with respect to the election of directors, 

including the adoption of any policies 

and procedure with respect to such 

election, NASDAQ OMX shall file a 

proposed rule change with the 

Commission to seek approval of those 

amendments. 

Contested Election 

The Exchange is codifying its process 

for a contested election. The directors 

shall 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 

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