11152 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices 

7 In the event that there is any change to the status 

of the Monthly MAP Volume Bonus and/or the 

MAP Marketing Subsidy, or if the Exchange 

negotiates any MAP Agreement extension, the 

Exchange will file a proposed rule change pursuant 

to Section 19(b)(3)(A)(ii) of the Act and Rule 19b– 

4(f)(2) thereunder. 

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

9 15 U.S.C. 78f(b)(4). 

10 15 U.S.C. 78s(b)(3)(A)(ii). 

11 17 CFR 240.19b–4(f)(2). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

place. In that way, the parties can 

evaluate their current business situation 

and negotiate an extension, if any, that 

is reasonable and appropriate under 

then-existing conditions existing within 

each party, and under then-existing 

market and economic situations as a 

whole.7

Monthly MAP Volume Bonus 

The Exchange pays each Eligible MAP 

$50,000 per month (the ‘‘Volume 

Bonus’’) for each month in which the 

Eligible Contracts of such Eligible MAP 

in the immediately preceding calendar 

month exceed the higher of: (1) 

1,500,000; or (2) three times the 

Baseline Order Flow of such Eligible 

MAP. The Volume Bonus is in addition 

to the amount for any Subsidy that is 

payable. 

The Exchange proposes to delete the 

monthly MAP Volume Bonus from the 

Market Access Provider Subsidy section 

of its fee schedule in order to be in a 

better position to manage its allocation 

of costs. 

Marketing Subsidy 

Currently, the Exchange pays a MAP 

Marketing Subsidy of $25,000.00 per 

month, for a maximum of three months 

(totaling $75,000.00) to Eligible MAPs, 

in addition to the per-contract Subsidy. 

The MAP Marketing Subsidy is 

intended to be used by the Eligible MAP 

to: (i) Promote the Subsidy program; (ii) 

provide technical assistance and 

information to its customers on the 

equity options order routing 

functionality that pertains to the 

Subsidy program; and (iii) analyze the 

volume based usage of such order 

routing functionality by the Eligible 

MAP and its customers, in each case 

with a view towards the successful 

launch of the Eligible MAP’s 

participation in the Subsidy for Eligible 

MAPs. 

The Exchange proposes to delete the 

Marketing Subsidy from the Market 

Access Provider Subsidy section of its 

fee schedule. The Exchange intends to 

attract new participants into the MAP 

program using more of a variable cost 

rather than a fixed cost. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 8 in general, and furthers the 

objectives of Sections 6(b)(4) of the Act 9

in particular, in that it is designed to 

provide for the equitable allocation of 

reasonable dues, fees and other charges 

among Exchange members by deleting 

standardized volume bonuses and 

marketing subsidies, thus enabling the 

Exchange to manage its costs relating to 

MAPs. 

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. 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)(ii) of the Act 10 and 

paragraph (f)(2) of Rule 19b–4 11

thereunder. At any time within 60 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. 

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 rulecomments@sec.gov. Please include File 

Number SR–Phlx–2009–19 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–Phlx–2009–19. 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 inspection and copying 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 

office of the Exchange. 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–Phlx– 

2009–19 and should be submitted on or 

before April 6, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–5564 Filed 3–13–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59538; File No. SR–Phlx– 

2009–17] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing of a Proposed Rule Change 

Relating to the Nomination and 

Election of Candidates for Governor 

and Independent Governor 

March 9, 2009. 

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 

23, 2009, NASDAQ OMX PHLX, Inc. 

(‘‘Phlx’’ or the ‘‘Exchange’’) filed with 

Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices 11153 

3The NASDAQ Stock Market LLC is a subsidiary 

of NASDAQ OMX GROUP, Inc., the parent 

company of NASDAQ OMX PHLX, Inc. On July 24, 

2008, The NASDAQ OMX GROUP, Inc. acquired 

the Philadelphia Stock Exchange, Inc. See 

Securities Exchange Act Release No. 58098 (July 17, 

2008), 73 FR 42850 (July 23, 2008) (SR–NASDAQ– 

2008–035) [sic]. Currently, the process for selection 

of Governors differs between NASDAQ OMX PHLX, 

Inc. and The NASDAQ Stock Market LLC. See 

Securities Exchange Act Release No. 57757 (May 1, 

2008), 73 FR 26159 (May 8, 2008) (SR–BSE–2008– 

23) (Pursuant to a merger with The NASDAQ OMX 

Group, Inc., the Boston Stock Exchange, Inc. 

proposed to adopt By-Laws similar in all material 

respects to the By-Laws of The NASDAQ Stock 

Market LLC so that the exchanges could be operated 

with similar governance structures.) 

4Pursuant to By-Law Article I, Section 1–1(w), 

the term ‘‘Member Organization Representative’’ 

means the officer (or person in a similar position) 

of a Member Organization designated by such 

Member Organization as such Member 

Organization’s Member Organization 

Representative, who shall have the sole authority, 

with respect to the selection or removal of 

Designated Nominees as defined in Section 3–2(a) 

to exercise any and all rights and to take any and 

all actions on behalf of such Member Organization 

and each Member who has designated such Member 

Organization as his primary affiliation. 

5By-Law Article I, Section 1–1(p) defines an 

Independent Governor as ‘‘* * * a Governor who 

must satisfy the definition of Independent as set 

forth herein and is duly elected to fill one of the 

vacancies on the Board of Governors allocated to 

the Independent Governors.’’ By-Law Article I, 

Section 1–1(o) defines Independent as ‘‘The term 

‘‘Independent’’ when used in the context of 

Governors or committee members, shall mean 

persons affirmatively determined by the Board as 

having no Material Relationship with the Exchange 

or any affiliate of the Exchange, any Member of the 

Exchange or any affiliate of such Member, or any 

issuer of securities that are listed or traded on the 

Exchange or a facility of the Exchange.’’ 

6By-Law Article I, Section 1–1(f) defines a 

Designated Independent Governor as, ‘‘* * * those 

* * * who are elected by the holder of the Series 

A Preferred Stock in accordance with Article SIXTH 

of the Certificate of Incorporation.’’ 

7By-Law Article I, Section 1–1(u) defines a 

Member Governor as, ‘‘* * * a Governor who is a 

Member or a general partner or an executive officer 

(vice-president and above) of a Member 

Organization and is duly elected to fill the one (1) 

vacancy on the Board of Governors allocated to the 

Member Governor.’’ 

8See By-Law Article III, Section 3–6. 

9See By-Law Article III, Section 3–6. 

10See By-Law Article III, Section 3–7. 

11See By-Law Article III, Section 3–7. Further, 

‘‘[a] Member Organization Representative shall not 

endorse more than one (1) nominee per vacancy; 

provided, however, that the Member Organization 

Representatives representing not less than seventyfive (75) votes may, by petition, propose an entire 

ticket, or any portion thereof, for the vacancies of 

Designated Governors on the Board of Governors to 

be filled at the ensuing election.’’ 

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 Phlx. 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 its 

By-Laws to: (i) Replace the current 

‘‘Nominating, Elections and Governance 

Committee’’ with a newly named 

‘‘Nominating Committee’’ and a 

‘‘Member Nominating Committee’’; (ii) 

modify the processes for nominating 

candidates for Governor and Designated 

Independent Governor; (iii) modify the 

procedures for Member Organization 

Representatives to vote for Designated 

Governor nominees and the procedures 

for meetings of Members and Member 

Organizations; (iv) modify the 

procedures for filling vacancies on the 

Board of Governors; (v) modify the 

definitions of ‘‘Independent Governor’’, 

‘‘Trust Agreement’’ and add the 

following definitions: ‘‘Industry 

Member’’, ‘‘Non-Industry Member’’, 

‘‘Public Member’’, ‘‘Member 

Representative member’’, ‘‘Contested 

Vote’’, ‘‘List of Candidates’’, ‘‘Member 

Voting Record Date’’ and ‘‘Voting Date’’; 

and (vi) amend the Certificate of 

Incorporation and By-Laws to eliminate 

the Vice Chair and PBOT Governor 

positions from the Board of Governors. 

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. 

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 IV 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 

The purpose of the proposed rule 

change is to streamline the processes 

related to the nomination and election 

of candidates for Governor and 

Designated Independent Governor 

positions and to conform the NASDAQ 

OMX PHLX, Inc. governance structure 

to that of The NASDAQ Stock Market 

LLC.3 To that end, the proposal 

establishes independent Nominating 

and Member Nominating Committees, 

modifies the process for nominating 

candidates for Governor and Designated 

Independent Governor and the 

procedures for Member Organization 

Representatives 4 to vote for Designated 

Governor nominees and eliminates the 

Vice Chair and PBOT Governor 

positions on the Board similar to The 

NASDAQ Stock Market LLC, structure. 

Nominating and Election of Governors 

Current Nominating Process 

Currently, the Nominating, Elections 

and Governance Committee is 

comprised of five members including 

four Independent Governors 5 (one of 

whom must be a Designated 

Independent Governor 6) and one 

Member Governor 7. The Nominating, 

Elections and Governance Committee 

submits nominations for the positions of 

Designated Governors from candidates 

selected in accordance with Exchange 

By-Law Article III, Section 3–4 and 3– 

6 concerning qualifications and 

recommendations received at open 

meetings and in writing by the Secretary 

of the Exchange. The Nominating, 

Elections and Governance Committee 

holds at least two (2) open meetings to 

receive recommendations for the 

positions of Designated Independent 

Governors or Member Governor.8

Recommendations may be made by any 

Member, participant or Member 

Organization Representative or by any 

Member of the Nominating, Elections or 

Governance Committee then in office 

and may be submitted in writing or in 

person.9 Independent nominations for 

the positions of Designated Governors 

may be made by a written petition by 

Member Organization Representatives 

and filed with the Secretary of the 

Exchange in a sealed envelope within 

two (2) weeks after the posting of the 

report of the Nominating, Elections and 

Governance Committee to the Member 

Organization Representatives.10

Nominations are valid only when signed 

by Member Organization 

Representatives representing not less 

than fifty (50) votes.11

At the annual meeting of Members 

and Member Organizations, Member 

Organization representatives elect the 

Designated Governors, who are then 

elected at the annual Stockholders 

meeting by the holder of the Series A 

11154 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices 

12See Phlx By-Laws, Article III, Section 3–2(a) 

and Article XXVIII, Section 28–2. On February 22, 

2007, the Philadelphia Stock Exchange, Inc. (now 

NASDAQ OMX PHLX, Inc.) entered into a Third 

Amended and Restated Trust Agreement with 

Wilmington Trust Company. The Exchange issued 

to the Trust one share of Series A Preferred Stock, 

which share has the exclusive right to elect and 

remove Designated Governors. Wilmington Trust is 

the Trustee of the Trust pursuant to the agreement. 13See By-Law Article XXVIII, Section 28–3. 14See similar provision in The NASDAQ Stock 

Market LLC By-Laws at Article II, Section 1. 

Currently, Governors are elected for terms of one 

year. 

15A Member Voting Record Date definition is 

proposed herein under the section titled 

Definitions. 

16A Voting Date definition is proposed herein 

under the section titled Definitions. 

17See similar provision in The NASDAQ Stock 

Market LLC By-Laws at Article II, Section 1. 

18This provision is similar to Exchange By-Law 

Article III, Section 3–2 in that the Series A Preferred 

Stock Holder would continue to be the mechanism 

to elect the Member nominees. Moreover, it is 

similar to The NASDAQ Stock Market LLC By-Law 

Article II, Section 1, in that the Member Nominating 

Committee creates the List of Candidates. 

19A List of Candidates definition is proposed 

herein under the section titled Definitions. 

20A Contested Vote definition is proposed herein 

under the section titled Definitions. 

21See similar provision in The NASDAQ Stock 

Market LLC By-Laws at Article II, Section 1. 

22See similar provision in The NASDAQ Stock 

Market LLC By-Laws at Article II, Section 1. 

23See similar provision in The NASDAQ Stock 

Market LLC By-Laws at Article II, Section 1. 

24See similar provisions in The NASDAQ Stock 

Market LLC By-Laws at Article II, Section 1, which 

relates to the nomination of alternate candidates. 

25See similar provisions in The NASDAQ Stock 

Market LLC By-Laws at Article II, Section 1. 

Preferred Stock.12 At the annual meeting 

of stockholders, the Holder of Common 

Stock presents for nomination to the 

Nominating, Elections and Governance 

Committee the candidates for Vice 

Chair, Stockholder Governor and 

Independent Governors for placement 

on the ballot for election by the Holder 

of Common Stock.13

Proposed Nominating Process 

Under the proposed rule change, ByLaw Article III, Sections 3–4, 3–6, 3–7 

and 3–16, Article X, Sections 10–1 and 

10–19, Article XI, Section 11–1 and 

Article XXVIII, Sections 28–3, 28–8 and 

28–12 would be amended to replace the 

current ‘‘Nominating, Elections and 

Governance Committee’’ with a newly 

named ‘‘Nominating Committee’’ and a 

‘‘Member Nominating Committee’’ as 

well as modify the processes for 

nominating candidates for Governor and 

Designated Independent Governor. 

Further, By-Law Article III, Sections 3– 

2, 3–3, 3–4, 3–6, 3–7, 3–8, 3–11, 3–12, 

3–13 and 3–14, and Article XXVIII, 

Section 28–2 would be amended to 

modify the procedures for Member 

Organization Representatives to vote for 

Designated Governor nominees and the 

procedures for meetings of Members 

and Member Organizations. These 

proposed amendments would conform 

the NASDAQ OMX PHLX, Inc. By-Laws 

to those of The NASDAQ Stock Market 

LLC. 

The proposed rule change amends ByLaw Article III, Sections 3–2 and 3–7 so 

that Designated Governors would be 

elected to the Board of Governors on an 

annual basis.14 For each annual 

election, the Board of Governors would 

select a Member Voting Record Date 15

and a Voting Date.16 The Member 

Voting Record Date would be at least 10 

days but not more than 60 days prior to 

the Voting Date.17 The Member 

Nominating Committee would create a 

list of one or more candidates for each 

Designated Governor position on the 

Board to be elected by the Series A 

Preferred Stock Holders at the annual 

meeting of Stockholders or a special 

meeting in lieu thereof.18 Promptly after 

selection of the Voting Date, in a notice 

transmitted to Member Organization 

Representatives and in a prominent 

location on a publicly accessible Web 

site, the Exchange (i) shall announce the 

Voting Date and the List of 

Candidates,19 and (ii) shall describe the 

procedures for Member Organization 

Representatives to nominate candidates 

for election at the next annual meeting 

of Stockholders. In the event of a 

Contested Vote,20 the Exchange shall 

also send Member Organization 

Representatives formal notice, which 

notice shall be sent by the Exchange at 

least 10 days but no more than 60 days 

prior to the Voting Date to the Member 

Organization Representatives of persons 

that were Member Organizations on the 

Member Voting Record Date, by any 

means, including electronic 

transmission, as determined by the 

Board of Governors or committee 

thereof.21 The notice shall indicate by 

appropriate designation whether each 

person on the List of Candidates is a 

Member or a foreign currency options 

participant of the Exchange or is a nonmember or non-foreign currency options 

participant of the Exchange who is a 

general partner or executive officer 

(vice-president or above) of a Member 

Organization or participant organization 

of the Exchange or is nominated to be 

a Designated Independent Governor. 

An additional candidate may be 

added to the List of Candidates by a 

Member Organization Representative 

that submits a timely and duly executed 

written nomination to the Secretary of 

the Exchange. To be timely, a Member 

Organization Representative’s notice 

would be delivered to the Secretary at 

the principal executive offices of the 

Exchange not later than the close of 

business on the 90th day nor earlier 

than the close of business on the 120th 

day prior to the first anniversary of the 

preceding year’s Voting Date, provided 

however that in the event that the 

Voting Date is more than 30 days before 

or more than 70 days after such 

anniversary date, notice by the Member 

Organization Representative must be so 

delivered not earlier than the close of 

business on the 120th day prior to such 

Voting Date and not later than the close 

of business on the later of the 90th day 

prior to such Voting Date or the tenth 

day following the day on which public 

announcement of such Voting Date is 

first made by the Exchange.22 Such 

Member Organization Representative’s 

notice shall set forth: (i) As to the 

person whom the Member Organization 

Representative proposes to nominate for 

election as a Designated Governor, all 

information relating to that person that 

is required to be disclosed in 

solicitations of proxies for election of 

directors in an election contest, or is 

otherwise required, in each case 

pursuant to Regulation 14A under the 

Exchange Act and the rules thereunder 

(and such person’s written consent to be 

named in the List of Candidates as a 

nominee and to serving as a Governor if 

elected); (ii) a petition in support of the 

nomination duly executed by the 

Member Organization Representatives of 

10% or more of all Member 

Organizations; and (iii) the name and 

address of the Member Organization 

Representative making the 

nomination.23 The Exchange may 

require any proposed nominee to 

furnish such other information as it may 

reasonably require to determine the 

eligibility of such proposed nominee to 

serve as a Designated Governor.24

If by the date on which a Member 

Organization Representative may no 

longer submit a timely nomination, 

there is only one candidate for each 

Designated Governor position to be 

voted on the Voting Date, the candidates 

on the List of Candidates shall be the 

‘‘Designated Nominees,’’ which the 

holder of the Series A Preferred Stock 

shall be required to elect as Designated 

Governors in accordance with the 

Certificate of Incorporation at Article 

Six as well as the Trust Agreement. In 

the event of a Contested Vote, the 

Exchange would conduct a vote to 

determine the Designated Nominees in 

accordance with proposed Article III, 

Section 3–7.25

If there is a Contested Vote, the 

Designated Nominees would be selected 

through a balloting process but without 

a formal meeting of the Members and 

Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices 11155 

26See similar provisions in The NASDAQ Stock 

Market LLC By-Laws at Article II, Section 1. 

27See similar provision in The NASDAQ Stock 

Market LLC By-Laws at Article II, Section 1 [sic]. 

28The provisions related to the Nominating 

Committee are similar to the provisions in The 

NASDAQ Stock Market LLC By-Laws at Article III, 

Section 6. 

29The provisions related to the Member 

Nominating Committee are similar to the provisions 

in The NASDAQ Stock Market LLC By-Laws at 

Article III, Section 6. 

Member Organizations. A formal notice 

of the Voting Date and the List of 

Candidates would be sent by the 

Exchange at least 10 days but no more 

than 60 days prior to the Voting Date to 

the Member Organization 

Representatives of persons that were 

Member Organizations on the Member 

Voting Record Date, by any means, 

including electronic transmission, as 

determined by the Board of Governors 

or committee thereof.26 The notice 

would indicate whether each person on 

the List of Candidates was a Member or 

foreign currency options participant of 

the Exchange or a non-member or nonforeign currency options participant of 

the Exchange who is a general partner 

or executive officer of a Member 

Organization or participant organization 

of the Exchange or is nominated to be 

a Designated Independent Governor. 

Votes would be cast by written ballot, 

electronic submission, or any other 

means as set forth in a notice to the 

Member Organization Representatives 

sent by the Exchange prior to the Voting 

Date. Only votes received prior to 11:59 

p.m. Eastern Time on the Voting Date 

would count for the election of a 

Designated Nominee.27 The vote would 

not be valid unless a majority of the 

Member Organization Representatives 

entitled to vote cast a vote; if a quorum 

is lacking, the Board of Governors 

would declare a subsequent Voting Date 

and Member Voting Record Date for the 

purpose of selecting Designated 

Nominees and would again follow the 

procedures for conducting a Contested 

Election. These voting provisions 

replace the current secret written ballot 

provisions in Article III, Section 3–12. 

Minor technical amendments were 

made to Exchange By-Law Article III, 

Section 3–13 related to quorums for 

meetings of Members and Member 

Organizations. 

The persons on the List of Candidates 

receiving the highest number of votes 

for the category of Governor for which 

they were nominated would be declared 

the Designated Nominees for their 

respective positions as Designated 

Governors. In the case of a tie, the 

names of the proposed Designated 

Governors involved in such tie would 

be referred to the Member Nominating 

Committee, which would make the 

selection as to who among such tying 

proposed Designated Governors would 

be nominated as the Designated 

Nominees for election at the Annual 

Meeting of Stockholders. 

Except as provided in these By-Laws, 

the Exchange shall not be required to 

hold meetings of Members, Member 

Organizations, or Member Organization 

Representatives. If such a meeting is 

held, however, the By-Laws currently 

state that any notice of the meeting shall 

be in writing and state the place, date, 

hour and purpose of such meeting and 

shall not be given less than ten days 

before the date of the meeting nor more 

than fifty days before the date of the 

meeting. Exchange By-Law Article III, 

Section 3–11 is proposed to be amended 

to provide that the notice shall not be 

given less than ten days before the date 

of the meeting nor more than sixty days 

before the date of the meeting. Also, 

language is proposed to be added to that 

By-Law to state that notice may be sent 

via mail or electronic transmission and 

if notice is sent via electronic 

transmission, notice is given when sent 

to the e-mail address of the Member 

Organization Representative as it 

appears on the books and records of the 

Exchange. 

Composition of Nominating Committee 

This proposed rule change would 

amend Exchange By-Law Article X, 

Section 10–19 to create a Nominating 

Committee which would nominate 

candidates for all other vacant or new 

Governor positions on the Board of 

Governors that are not nominated by the 

Member Nominating Committee. The 

Nominating Committee would consist of 

no fewer than six (6) and no more than 

nine (9) members and the number of 

Non-Industry members would equal or 

exceed the number of Industry members 

on the Committee. If the Nominating 

Committee consists of six (6) members, 

at least two (2) shall be Public Members. 

If the Nominating Committee consists of 

seven (7) or more members, at least 

three shall be Public members. Also, no 

officer or employee of the Company 

shall serve as a member of the 

Nominating Committee in any voting or 

non-voting capacity. No more than three 

of the Nominating Committee members 

and no more than two of the Industry 

members shall be current Governors. 

Finally, a Nominating Committee 

member may not simultaneously serve 

on the Nominating Committee and the 

Board of Governors unless such member 

is in his or her final year of service on 

the Board of Governors and following 

that year, that member may not stand for 

election to the Board of Governors until 

such time as he or she is no longer a 

member of the Nominating Committee. 

Members of this Committee would be 

appointed annually and may be 

removed by a majority vote of the Board 

of Governors.28 The Exchange’s 

proposed amendments to the 

Nominating Committee’s composition 

and number of members attempts to 

fairly represent the various interests of 

the membership and trading 

community, including investors. Also 

the public governors should bring 

diverse experience to the nominating 

process. 

Composition of Member Nominating 

Committee 

The proposal would amend Exchange 

By-Law Article X, Section 10–19 to 

create a Member Nominating Committee 

which would nominate candidates for 

each Designated Governor position on 

the Board of Governors and also 

nominate candidates for appointment by 

the Board for each vacant or new 

position on any committee that is to be 

filled with a Member Representative 

member. The Member Nominating 

Committee would consist of no fewer 

than three (3) and no more than six (6) 

members. All members of the Member 

Nominating Committee would be a 

current associated person of a current 

Member Organization. The Board of 

Governors would appoint such 

individuals after consultation with 

Member Organization Representatives. 

Members of this Committee would be 

appointed annually and may be 

removed by a majority vote of the Board 

of Governors.29

By-Law Article X, Section 10–19 

proposes to add language that the 

Secretary shall collect from each 

nominee for Governor such information 

as is reasonably necessary to serve as 

the basis for a determination of the 

nominee’s classification as a Member 

Governor, Stockholder Governor, or 

Independent Governor, or Designated 

Governor, if applicable, and the 

Secretary shall certify to the Nominating 

Committee or the Member Nominating 

Committee each nominee’s 

classification, if applicable. Governors 

would update the information 

submitted under this subsection at least 

annually and upon request of the 

Secretary, and shall report immediately 

to the Secretary. 

Board of Governor Vacancies and 

Resignations 

Under the proposed rule change, ByLaw Article III, Section 3–8, Article IV, 

11156 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices 

30See By-Law Article IV, Section 4–7. 

31See similar provisions in The NASDAQ Stock 

Market LLC By-Laws at Article II, Section 3. 

32See By-Law Article IV, Section 4–6. 

33See footnote 5 for current Independent 

Governor and Independent definitions. 

34The term ‘‘Trust Agreement’’ is currently 

defined as the Third Amended and Restated Trust 

Agreement, dated as of February 22, 2007, between 

the Exchange and the trustee under such Trust 

Agreement. 

35This definition is substantially similar to the 

same term found in The NASDAQ Stock Market 

LLC By-Laws at Article I. 

36This definition is substantially similar to the 

same term in The NASDAQ Stock Market LLC ByLaws at Article I. 

37This definition is substantially similar to the 

same term found in The NASDAQ Stock Market 

LLC By-Laws at Article I. 

Sections 4–6 and 4–7 and Article 

XXVIII, Section 28–4 would be 

amended to modify the procedures for 

filling vacancies on the Board of 

Governors. Currently, vacancies are 

filled by the Nominating, Elections and 

Governance Committee, subject to the 

approval by a majority of the Governors 

then in office, although less than a 

quorum, or by a sole remaining 

Governor.30 The proposed rule change 

would provide that in the event of a 

vacancy on the Board occurring between 

annual meetings, the appropriate 

nominating committee would nominate, 

and the Board would appoint, a 

replacement Governor to fill the 

vacancy.31

Amendments are also proposed to 

Exchange By-Law Article IV, Section 4– 

6 to modify the timeframes associated 

with submitting Board resignations. 

Currently a Board member may resign at 

any time by submitting a written 

resignation to the Exchange which shall 

take effect at the time of its receipt by 

the Exchange unless another time is 

fixed in the resignation.32 In the event 

of a merger, consolidation or other 

acquisition, the Board member is 

currently required to notify the Chair of 

the Board of Governors of their 

resignation by the first day of the 

January preceding the next annual 

meeting of Stockholders. This proposal 

seeks to revise the timeframe in the 

event of a merger, consolidation or other 

acquisition to state that a Board member 

is required to notify the Chair of the 

Board of Governors of their resignation 

by the first day of the following month 

of their resignation. Similarly, in the 

event of a change in occupational 

category or Member Organization or 

participant organization, such Governor 

is currently required to notify the Chair 

of the Board of Governors of his 

resignation by the first day of the 

January preceding the next annual 

election. This proposal seeks to amend 

this language to similarly state that the 

Board member shall notify the Chair in 

the event of an occupational category or 

Member Organization or participant 

organization by the first day of the 

following month. Additionally, Article 

IV, Section 4–6 indicates that as related 

to resignations in the event of a merger, 

consolidation, or other acquisition or 

because of a change in occupational 

category, the resignations shall become 

effective no later than the expiration of 

the term of the outgoing class of 

Governors. This language is being 

deleted as it is no longer applicable. By 

providing a shorter time period to 

provide notification, the Exchange is 

ensuring that the Board members will 

continue to be qualified to serve on the 

Board in their respective positions as 

opposed to a longer notification period. 

Definitions 

The Exchange proposes to amend the 

definitions of ‘‘Independent Governor’’, 

and ‘‘Trust Agreement’’ and add the 

definitions for ‘‘Industry Member’’, 

‘‘Non-Industry Member’’ and ‘‘Public 

Member.’’ The proposed rule change 

would amend the definition of 

Independent Governor as follows: The 

term ‘‘Independent Governor’’ shall 

mean a Governor who has no material 

relationship with the Exchange or any 

affiliate of the Exchange, any Member of 

the Exchange or any affiliate of such 

Member, or any issuer of securities that 

are listed or traded on the Exchange or 

a facility of the Exchange and is duly 

elected to fill one of the vacancies on 

the Board of Governors allocated to the 

Independent Governors. The term 

‘‘material relationship’’ will be defined 

as a relationship, whether compensatory 

or otherwise, that reasonably could 

affect the independent judgment or 

decision-making of the Governor.33

Also, the Exchange proposes to amend 

By-Law Article I, Section 1–1–(dd) to 

modify the definition of Trust 

Agreement to include language that 

indicates that such agreement may be 

amended from time to time.34

The Exchange proposes adding the 

following definition to Article I, Section 

1–1, ‘‘Industry Member’’, ‘‘Non-Industry 

Member’’ and ‘‘Public Member’’ as these 

amendments correspond to the 

proposed amendments to the election 

process of Designated Governors. The 

term ‘‘Industry Member’’ is proposed to 

be added to Article I, Section 1–1(pp) 

and shall mean a member of any 

committee appointed by the Board of 

Governors who (i) is or has served in the 

prior three years as an officer, director, 

or employee of a broker or dealer, 

excluding an outside director or a 

director not engaged in the day-to-day 

management of a broker or dealer; (ii) is 

an officer, director (excluding an 

outside director), or employee of an 

entity that owns more than ten percent 

of the equity of a broker or dealer, and 

the broker or dealer accounts for more 

than five percent of the gross revenues 

received by the consolidated entity; (iii) 

owns more than five percent of the 

equity securities of any broker or dealer, 

whose investments in brokers or dealers 

exceed ten percent of his or her net 

worth, or whose ownership interest 

otherwise permits him or her to be 

engaged in the day-to-day management 

of a broker or dealer; (iv) provides 

professional services to brokers or 

dealers, and such services constitute 20 

percent or more of the professional 

revenues received by the committee 

member or 20 percent or more of the 

gross revenues received by the 

committee member’s firm or 

partnership; (v) provides professional 

services to a director, officer, or 

employee of a broker, dealer, or 

corporation that owns 50 percent or 

more of the voting stock of a broker or 

dealer, and such services relate to the 

director’s, officer’s, or employee’s 

professional capacity and constitute 20 

percent or more of the professional 

revenues received by the committee 

member or 20 percent or more of the 

gross revenues received by the 

committee member’s firm or 

partnership; or (vi) has a consulting or 

employment relationship with or 

provides professional services to the 

Exchange or any affiliate thereof or to 

FINRA (or any predecessor) or has had 

any such relationship or provided any 

such services at any time within the 

prior three years.35

The term ‘‘Non-Industry Member’’ is 

proposed to be added at Article I, 

Section 1–1(rr) and shall mean a 

member of any committee appointed by 

the Board of Governors who is (i) a 

Public member; (ii) an officer, director, 

or employee of an issuer of securities 

listed on the Exchange; or (iii) any other 

individual who would not be an 

Industry member.36 The term ‘‘Public 

Member is proposed to be added at 

Article I, Section 1–1(ss) and shall mean 

a member of any committee appointed 

by the Board of Governors who has no 

material business relationship with a 

broker or dealer, the Exchange, or its 

affiliates.37

The term ‘‘Member Representative 

member’’ is proposed to be added at 

Article I, Section 1–1(qq) and shall 

mean a member of any committee 

appointed by the Board of Governors 

who has been elected or appointed after 

Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices 11157 

38This definition is substantially similar to the 

same term found in The NASDAQ Stock Market 

LLC By-Laws at Article I. 

39This definition is substantially similar to that 

of Contested Election found in The NASDAQ Stock 

Market LLC By-Laws at Article I. 

40This definition is substantially similar to the 

same term found in The NASDAQ Stock Market 

LLC By-Laws at Article I. 

41This definition is substantially similar to that 

of Record Date found in The NASDAQ Stock 

Market LLC By-Laws at Article I. 

42This definition is substantially similar to that 

of Election Date found in The NASDAQ Stock 

Market LLC By-Laws at Article I. 

43The Vice Chair is elected by the Holder of 

Common Stock and does not effect the fair 

representation requirement. 

44PBOT recently changed its corporate name to 

NASDAQ OMX Futures Exchange, Inc. 

45 15 U.S.C. 78f(b). 

46 15 U.S.C. 78(b)(1). [sic] 

47 15 U.S.C. 78(b)(3). [sic] 

48 15 U.S.C. 78f(b)(5). 

having been nominated by the Member 

Nominating Committee pursuant to 

these By-Laws.38 The term ‘‘Contested 

Vote’’ is proposed to be added at Article 

I, Section 1–1(mm) and shall mean a 

process for selection of one or more 

Designated Governors for which the 

number of candidates on the List of 

Candidates exceeds the number of 

positions to be elected by the holder of 

the Series A Preferred Stock.39 The term 

‘‘List of Candidates’’ is proposed to be 

added at Article I, Section 1–1(nn) and 

shall mean the list of candidates for 

Designated Governor positions to be 

voted upon by Member Organization 

Representatives on a Voting Date.40 The 

term ‘‘Member Voting Record Date’’ ‘‘ is 

proposed to be added at Article I, 

Section 1–1(oo) and shall mean a date 

selected by the Board of Governors for 

the purpose of determining the Member 

Organization Representatives entitled to 

vote for Designated Governors on a 

Voting Date in the event of a Contested 

Vote.41 Finally, the term ‘‘Voting Date’’ 

is proposed to be added at Article I, 

Section 1–1(tt) and shall mean a date 

selected by the Board of Governors for 

Member Organization Representatives to 

vote with respect to Designated 

Governors in the event of a Contested 

Vote.42

The amended and newly added 

definitions are necessary to effectuate 

the amendments proposed herein 

related to the nominating process to 

elect Designated Governors. 

Vice Chair and PBOT Governor 

Elimination 

The Exchange’s proposed rule change 

seeks to amend the Certificate of 

Incorporation and delete By-Law Article 

V, Section 5–3 to delete the Vice Chair 

position as well as amend By-Law 

Article 1, Section 1–1, Article III, 

Section 3–16, Article IV, Sections 4–1 

and 4–14, Article X, Sections 10–14 and 

10–15 and Article XXVIII, Sections 28– 

3 and 28–12 to eliminate references to 

the Vice Chair position.43

After integration and a period of time 

functioning under a global holding 

company structure, the Exchange has 

determined that eliminating this 

position would streamline the 

governance structure. The NASDAQ 

Stock Market does not have a Vice 

Chair. References to the Vice Chair are 

being deleted, including a description of 

who may serve as Vice Chair, which 

appears in the Certificate of 

Incorporation and By-laws, as well as 

the current function of the Vice Chair to 

preside over Board meetings in the 

absence of the Chair of the Board of 

Governors. 

The Exchange proposes to amend the 

Certificate of Incorporation and By-Law 

Article I, Sections 1–1(e) and 1–1(aa), 

Article IV, Section 4–1 and Article V, 

Section 5–3 [sic] to delete the position 

of PBOT Governor. Since the 

Philadelphia Board of Trade, Inc 

(‘‘PBOT’’) 44 now has the status of one 

of multiple subsidiaries within a global 

holding company structure, it is no 

longer appropriate to provide its 

members special representation on the 

Exchange board, which is likewise a 

NASDAQ OMX subsidiary. The PBOT 

Governor position would be replaced 

with a Designated Independent 

Governor. The Exchange’s proposed 

changes will continue to provide for a 

fair representation of its members on the 

Board of Governors. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 45 in general, and furthers the 

objectives of: (1) Section 6(b)(1) of the 

Act,46 which requires a national 

securities exchange to be so organized 

and have the capacity to carry out 

purposes of the Act and to enforce 

compliance by its members and persons 

associated with its members with the 

provisions of the Act; (2) Section 6(b)(3) 

of the Act,47 which requires that the 

rules of a national securities exchange 

assume the fair representation of its 

members in the selection of its directors 

and administration of its affairs, and 

provide that one or more directors shall 

be representative of issuers and 

investors and not be associated with a 

member of the exchange, broker or 

dealer (the ‘‘fair representation 

requirement’’); and Section 6(b)(5) of the 

Act,48 in that it is designed, among other 

things, 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. 

Specifically, Members will continue to 

be represented on the Board and on key 

standing committees, and will have a 

voice in the selection of Governors 

through the Member Nominating 

Committee and the ability to nominate 

alternate candidates and thereby cause a 

Contested Vote in which all Member 

Organization Representatives may vote. 

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. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission shall: (a) by order 

approve such proposed rule change, or 

(b) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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 rulecomments@sec.gov. Please include File 

Number SR–Phlx–2009–17 on the 

subject line. 

11158 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices 

49 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Firm Proprietary Options Transaction Charges 

for equity and sector index options, in the 

aggregate, for one billing month can not exceed 

$75,000 per month, per member organization, 

except for orders of joint back-office participants. 

4See Securities Exchange Act Release No. 59393 

(February 11, 2009), 74 FR 7721 (February 19, 2009) 

(SR–Phlx–2009–12) (increasing the Firm-Related 

Equity Option and Index Option Cap to $75,000 and 

exclude JBO participants). 

5See Securities Exchange Act Release No. 59402 

(February 13, 2009), 74 FR 8134 (February 23, 2009) 

(SR–Phlx–2009–08) (a proposal to create a more 

user-friendly fee schedule). 

6 Id. 

7See Securities Exchange Act Release No. 54941 

(December 14, 2006), 71 FR 77079 (December 22, 

2006) (SR–Phlx–2006–70) (adopting a tiered 

Examinations Fee). 

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–2009–17. 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 inspection and copying 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–2009–17 and should 

be submitted on or before April 6, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.49

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–5565 Filed 3–13–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59545; File No. SR–Phlx– 

2009–20] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NASDAQ 

OMX PHLX, Inc. Relating to Elimination 

of Sector Index Options From Monthly 

Firm Cap 

March 9, 2009. 

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 

25, 2009, NASDAQ OMX PHLX, Inc. 

(‘‘Phlx’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘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 Exchange proposes to eliminate 

the sector index options from the 

Monthly Firm Cap.3 Additionally, the 

Exchange proposes minor amendments 

to its fee schedule to clean up the 

formatting of its fee schedule and 

correct a typographical error. 

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. 

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 IV 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 

The purpose of the proposed rule 

change is to no longer include the 

options transaction charge associated 

with the sector index options in the 

$75,000 Firm-Related Equity Option and 

Index Option Cap calculation. The 

Exchange believes that it can continue 

to attract this business without offering 

the cap, which should also help to raise 

revenue. Specifically, ‘‘firm-related’’ 

charges include equity option firm 

proprietary transaction charges and 

index option firm proprietary 

transaction charges (‘‘Monthly Firm 

Cap’’). Currently, such firm-related 

charges for equity option and index 

options, in the aggregate for one billing 

month, would not exceed $75,000 per 

month per member organization. The 

Monthly Firm Cap excludes orders of 

joint back-office participants.4

Additionally, the Exchange proposes 

the following clean-up amendments to 

its Fee Schedule: (1) Removal of the 

date from the first page of the Fee 

Schedule; (2) removal of page numbers 

from the Table of Contents to be 

replaced by section numbers; and (3) 

removal of underlining from all section 

headers on each page of the Fee 

Schedule.5 The Exchange believes that 

these amendments will provide for ease 

of motion in amending the Fee 

Schedule. 

The Exchange also proposes to amend 

a typographical error related to its 

Examinations Fee. In filing SR–Phlx– 

2009–08 6, the Exchange inadvertently 

indicated that the Examinations Fee for 

the number of Off-Floor Traders, in the 

same Member Organization, that 

exceeded 200 in number is $12,000 per 

month.7 This fourth tier should have 

stated that the Examinations Fee for the 

number of Off-Floor Traders, in the 

same Member Organization, that 

exceeded 200 in number is $12,500 per 

month. The Exchange proposes to 

amend this tier of the Examinations Fee