18758 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 34– 

58444 (August 29, 2008), 73 FR 51872 (September 

5, 2008) (SR–NYSEArca–2008–96). 

4The Exchange initially proposed to end the pilot 

program on November 1, 2008. The Exchange has 

submitted three extensions of the end date for the 

pilot program on Forms 19b–4. (See Securities 

Exchange Act Release No. 34–58895 (October 31, 

2008), 73 FR 66956 (November 12, 2008) (File No. 

SR–NYSEArca–2008–122), Securities Exchange 

(sic) Release No. 34–59184 (December 30, 2008), 74 

FR 755 (January 7, 2009) (File No. SR–NYSEArca– 

2008–143) and Securities Exchange Act Release No. 

34–59662 (March 31, 2009), 74 FR 15571 (April 6, 

2009) (File No. SR–NYSEArca–2009–25)). The pilot 

program is currently scheduled to end on June 30, 

2009. 

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 self-regulatory 

organization consents, the Commission 

will: 

(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–NYSE–2009–42 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–NYSE–2009–42. 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 the 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–NYSE– 

2009–42 and should be submitted on or 

before May 15, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–9387 Filed 4–23–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59790; File No. SR– 

NYSEArca–2009–32] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Implementing the NYSE 

Arca Realtime Reference Prices 

Service on a Permanent Basis 

April 20, 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 April 15, 

2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

the ‘‘Exchange’’) 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 Exchange proposes to establish 

the NYSE Arca Realtime Reference 

Prices service and to establish a flat 

monthly fee for that service. The 

Exchange currently provides this service 

pursuant to a pilot program 3 and now 

proposes to make the service 

permanent. The service allows a vendor 

to redistribute on a real-time basis last 

sale prices of transactions that take 

place on the Exchange (‘‘NYSE Arca 

Realtime Reference Prices’’). The text of 

the proposed rule change is available at 

the Exchange, the Commission’s Public 

Reference Room, and http:// 

www.nyse.com. 

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 these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization 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 

a. The Service 

The Exchange currently conducts a 

pilot program that has tested the 

viability of NYSE Arca Realtime 

Reference Prices. In its filing, the 

Exchange stated that prior to the end of 

the pilot period, the Exchange would 

assess its experience with the service 

and either submit a proposed rule 

change that seeks to modify or eliminate 

the pilot program or to make it 

permanent.4

The Exchange has found that the pilot 

program provides a low-cost service that 

makes real-time prices widely available 

to casual investors, provides vendors 

with a useful real-time substitute for 

delayed prices; and relieves vendors of 

administrative burdens. The product 

responds to the requirements for 

distribution of real-time last sale prices 

over the internet for reference purposes, 

rather than as a basis for making trading 

decisions. For those reasons, the 

Exchange is now proposing to make it 

a permanent part of the Exchange’s 

market data offerings. 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18759 

5The Exchange notes that it will make the NYSE 

Arca Realtime Reference Prices available to vendors 

no earlier than it makes those prices available to the 

processor under the CTA and Nasdaq/UTP Plans. 

6See Release No. 34–59039 (December 2, 2008), 

73 FR 74770 (December 9, 2008) (SR–NYSEArca– 

2006–21) (the ‘‘ArcaBook Approval Order’’). 

7 Id. at 74771. 

The NYSE Arca Realtime Reference 

Prices service allows internet service 

providers, traditional market data 

vendors, and others (‘‘NYSE Arca-Only 

Vendors’’) to make available NYSE Arca 

Realtime Reference Prices on a real-time 

basis.5 The NYSE Arca Realtime 

Reference Price information includes 

last sale prices for all securities that 

trade on the Exchange. The product 

includes only prices; it does not include 

the size of each trade or bid/asked 

quotations. 

Under the pilot program, the 

Exchange does not permit NYSE ArcaOnly Vendors to provide NYSE Arca 

Realtime Reference Prices in a context 

in which a trading or order-routing 

decision can be implemented unless the 

NYSE Arca-Only Vendor also provides 

consolidated displays of Network A last 

sale prices available in an equivalent 

manner, as Rule 603(c)(1) of Regulation 

NMS requires. The Exchange proposes 

to keep this same prohibition in the 

permanent offering. 

As with the pilot program, the 

permanent service would eliminate 

some of the administrative burdens 

associated with the distribution of realtime CTA prices. The permanent service 

would feature the same flat, fixed 

monthly vendor fee, no user-based fees, 

no vendor reporting requirements, and 

no professional or non-professional 

subscriber agreements. 

b. The Fee 

During the pilot program, the 

Exchange established a $30,000 monthly 

flat fee that entitles an NYSE Arca-Only 

Vendor to receive access to the NYSE 

Arca Realtime Reference Prices 

datafeed. The Exchange proposes to 

retain that fee for the permanent service. 

For that fee, the NYSE Arca-Only 

Vendor may provide unlimited NYSE 

Arca Realtime Reference Prices to an 

unlimited number of the NYSE ArcaOnly Vendor’s subscribers and 

customers. The pilot program does not 

impose any device or end-user fee for 

the NYSE Arca-Only Vendors’ 

distribution of NYSE Arca Realtime 

Reference Prices and the Exchange is 

not proposing to add any new fees for 

the permanent service. 

As with the pilot program, the 

Exchange proposes to require the NYSE 

Arca-Only Vendor to identify the NYSE 

Arca trade price by placing the text 

‘‘NYSE Arca Data’’ in close proximity to 

the display of each NYSE Arca Realtime 

Reference Price or series of NYSE Arca 

Realtime Reference Prices, or by 

complying with such other 

identification requirement as to which 

NYSE may agree. 

The NYSE Arca-Only Vendor may 

make NYSE Arca Realtime Reference 

Prices available without having to 

differentiate between professional 

subscribers and nonprofessional 

subscribers, without having to account 

for the extent of access to the data, and 

without having to report the number of 

users. 

The flat fee enables internet service 

providers and traditional vendors that 

have large numbers of casual investors 

as subscribers and customers to 

contribute to the Exchange’s operating 

costs in a manner that is appropriate for 

their means of distribution. 

In setting the level of the NYSE Arca 

Realtime Reference Prices fee, the 

Exchange took into consideration 

several factors, including: 

(1) The fees that Nasdaq and NYSE 

are charging for similar services; 

(2) Consultation with some of the 

entities that the Exchange anticipates 

will be the most likely to take advantage 

of the proposed service; 

(3) The contribution of market data 

revenues that the Exchange believes is 

appropriate for entities that provide 

market data to large numbers of 

investors, which are the entities most 

likely to take advantage of the proposed 

service; 

(4) The contribution that revenues 

accruing from the proposed fee will 

make to meet the overall costs of the 

Exchange’s operations; 

(5) The savings in administrative and 

reporting costs that the NYSE Arca 

Realtime Reference Prices service will 

provide to NYSE Arca-Only Vendors; 

and 

(6) The fact that the proposed fee 

provides an alternative to existing fees 

under the CTA and Nasdaq/UTP Plans, 

an alternative that vendors will 

purchase only if they determine that the 

perceived benefits outweigh the cost. 

The Exchange believes that the level 

of the fee is consistent with the 

approach set forth in the order by which 

the Commission approved NYSE Arca’s 

ArcaBook fees.6 In the ArcaBook 

Approval Order, the Commission stated 

that ‘‘when possible, reliance on 

competitive forces is the most 

appropriate and effective means to 

assess whether the terms for the 

distribution of non-core data are 

equitable, fair and reasonable, and not 

unreasonably discriminatory.’’ 7 It noted 

that if significant competitive forces 

apply to a proposal, the Commission 

will approve it unless a substantial 

countervailing basis exists. 

NYSE Arca Realtime Reference Prices 

constitute ‘‘non-core data.’’ The 

Exchange does not require a central 

processor to consolidate and distribute 

the product to the public pursuant to 

joint-SRO plans. Rather, the Exchange 

distributes the product voluntarily. 

In the case of NYSE Arca Realtime 

Reference Prices, both of the two types 

of competitive forces that the 

Commission described in the ArcaBook 

Approval Order are present: The 

Exchange has a compelling need to 

attract order flow and the product 

competes with a number of alternative 

products. 

The Exchange must compete 

vigorously for order flow to maintain its 

share of trading volume. This requires 

the Exchange to act reasonably in setting 

market data fees for non-core products 

such as NYSE Arca Realtime Reference 

Prices. The Exchange hopes that NYSE 

Arca Realtime Reference Prices will 

enable vendors to distribute NYSE Arca 

last sale price data widely among 

investors, and thereby provide a means 

for promoting the Exchange’s visibility 

in the marketplace. 

In addition to the need to attract order 

flow, the availability of alternatives to 

NYSE Arca Realtime Reference Prices 

significantly constrains the prices at 

which the Exchange can market NYSE 

Arca Realtime Reference Prices. All 

national securities exchanges, the 

several Trade Reporting Facilities of 

FINRA, and ECNs that produce 

proprietary data, as well as the core data 

feed, are all sources of competition for 

NYSE Arca Realtime Reference Prices. 

Currently, NYSE and Nasdaq offer 

similar services. (The Exchange 

anticipates that NYSE will soon file for 

permanent approval of the fee for its 

counterpart product.) 

The information available in NYSE 

Arca Realtime Reference Prices is 

included in the CTA and Nasdaq UTP 

core data feeds, which also include the 

size of trades, as well as last sale 

information from other markets. Even 

though NYSE Arca Realtime Reference 

Prices omits size and provides prices 

that are not consolidated with those of 

other markets, investors may select it as 

a less expensive alternative to the CTA 

and Nasdaq/UTP Plans’ consolidated 

last sale price services for certain 

purposes. (Rule 603(c) of Regulation 

NMS requires vendors to make the core 

data feeds available to customers when 

trading and order-routing decisions can 

be implemented.) 

mstockstill on PROD1PC66 with NOTICES

18760 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 

8See Securities Exchange Act Release Nos. 28407 

(September 6, 1990), 55 FR 37276 (September 10, 

1990) (File No. 4–281); 49185 (February 4, 2004), 

69 FR 6704 (February 11, 2004) (SR–CTA/CQ– 

2003–01). 

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

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

c. Contracts 

As with the pilot program, NYSE Arca 

proposes to allow NYSE Arca-Only 

Vendors to provide NYSE Arca Realtime 

Reference Prices without requiring the 

end-users to enter into contracts for the 

benefit of the Exchange. 

Instead, the Exchange proposes to 

require NYSE Arca-Only Vendors to 

provide a readily visible hyperlink that 

will send the end-user to a warning 

notice about the end-user’s receipt and 

use of market data. The notice would be 

similar to the notice that vendors 

provide today when providing CTA 

delayed data services. 

The Exchange will require NYSE 

Arca-Only Vendors to enter into the 

form of ‘‘vendor’’ agreement into which 

the CTA and CQ Plans require 

recipients of the Network A datafeeds to 

enter (the ‘‘Network A Vendor Form’’). 

The Network A Vendor Form will 

authorize the NYSE Arca-Only Vendor 

to provide the NYSE Arca Realtime 

Reference Prices service to its 

subscribers and customers. 

The Network A Participants drafted 

the Network A Vendor Form as a onesize-fits-all form to capture most 

categories of market data dissemination. 

It is sufficiently generic to accommodate 

NYSE Arca Realtime Reference Prices. 

The Commission has approved the 

Network A Vendor Form.8

The Exchange will supplement the 

Network A Vendor Form with an 

Exhibit C that will provide abovedescribed terms and conditions that are 

unique to the NYSE Arca Realtime 

Reference Prices service. The proposed 

Exhibit C is substantially similar to the 

Exhibit C that NYSE Arca uses for the 

pilot program (except for provisions 

related to the conduct of the pilot 

program) and is attached to this 

proposed rule change as Exhibit 5, 

marked to show changes from the 

version used for the pilot program. The 

supplemental Exhibit C terms and 

conditions would govern: 

• The restriction against providing 

the service in the context of a trading or 

order-routing service; 

• The replacement of end-user 

agreements with a hyperlink to a notice; 

• The substance of the notice; and 

• The ‘‘NYSE Arca Data’’ labeling 

requirement. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(4) 9 that an exchange 

have rules that provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its members and 

other persons using its facilities and the 

requirements under Section 6(b)(5) 10

that the rules of an exchange be 

designed to promote just and equitable 

principles of trade and not to permit 

unfair discrimination between 

customers, issuers, brokers or dealers. 

The proposed rule change would 

benefit investors by facilitating their 

prompt access to widespread, free, realtime pricing information contained in 

the NYSE Arca Realtime Reference 

Prices service. In addition, the Exchange 

believes that the proposed fee would 

allow entities that provide market data 

to large numbers of investors, which are 

the entities most likely to take 

advantage of the proposed service, to 

make an appropriate contribution 

towards meeting the overall costs of the 

Exchange’s operations. 

The Exchange notes that its proposed 

fee compares favorably with the fees 

that Nasdaq and NYSE are charging for 

similar services. Because the proposed 

fee is substantially lower than those of 

Nasdaq and NYSE, it offers any vendor 

that wishes to provide its customers 

with a single market’s data (as opposed 

to a more expensive consolidated data 

service) a less expensive alternative to 

Nasdaq and NYSE. In addition, for that 

lower fee, vendors receive Exchange 

prices for securities of Networks A, B 

and C, something that differentiates the 

Exchange’s product from the NYSE 

product. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NYSE Arca Realtime Reference Prices 

proposes to provide an alternative to 

existing fees and does not alter or 

rescind any existing fees. In addition, it 

amounts to a competitive response to 

the products that Nasdaq and NYSE 

have commenced to make available. For 

those reasons, the Exchange does not 

believe that this proposed rule change 

will result in any burden on 

competition that is 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 

The Exchange has discussed the 

proposed rules change with those 

entities that the Exchange believes 

would be the most likely to take 

advantage of the proposed NYSE Arca 

Realtime Reference Prices service by 

becoming NYSE Arca-Only Vendors. 

While those entities have not submitted 

formal, written comments on the 

proposal, the Exchange has incorporated 

some of their ideas into the proposal 

and this proposed rule change reflects 

their input. The Exchange has not 

received any unsolicited written 

comments from members or other 

interested parties. 

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 self-regulatory 

organization consents, the Commission 

will: 

(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–NYSEArca–2009–32 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–NYSEArca–2009–32. 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 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Notices 18761 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 59538 

(March 9, 2009), 74 FR 11152 (‘‘Notice’’). 

4Both the Exchange and Nasdaq are subsidiaries 

of The NASDAQ OMX GROUP, Inc. See Securities 

Exchange Act Release No. 58179 (July 17, 2008), 73 

FR 42874 (July 23, 2008) (SR–Phlx–2008–31) (order 

approving changes to the Exchange’s governing 

documents in connection with its acquisition by 

The NASDAQ OMX Group, Inc.). 

5 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). 

6 15 U.S.C. 78f(b)(1). 

7 15 U.S.C. 78f(b)(3). 

8 15 U.S.C. 78f(b)(5). 

9The term ‘‘Designated Governor,’’ which 

includes the Member Governor and a number of 

Designated Independent Governors, refers to a 

Governor who is selected through a process that is 

subject to the input of the Exchange’s Member 

Organization Representatives. See Proposed Phlx 

By-Law Article I, Section 1–1(e) (defining 

‘‘Designated Governor’’ as proposed to be amended 

by Phlx to exclude the PBOT Governor position). 

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 the 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– 

NYSEArca–2009–32 and should be 

submitted on or before May 15, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–9402 Filed 4–23–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59794; File No. SR–Phlx– 

2009–17] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc., Order 

Approving Proposed Rule Change 

Relating to the Nomination and 

Election of Candidates for Governor 

and Independent Governor 

April 20, 2009. 

On February 23, 2009, NASDAQ OMX 

PHLX, Inc. (‘‘Phlx’’ or the ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to amend its Certificate of 

Incorporation and By-Laws to modify its 

processes relating to the nomination and 

election of candidates for the Board of 

Governors (‘‘Board’’). The proposed rule 

change was published for comment in 

the Federal Register on March 16, 

2009.3 The Commission received no 

comments regarding the proposal. This 

order approves the proposed rule 

change. 

In its filing, the Exchange sought to 

conform its governance structure, 

including its process for the nomination 

and election of candidates for Governor 

and Designated Independent Governor 

positions, to more closely resemble that 

of its corporate sibling, The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’).4 In 

particular, the Exchange proposed 

several changes to its governance 

structure, including (i) bifurcating the 

‘‘Nominating, Elections and Governance 

Committee’’ into a separate 

‘‘Nominating Committee’’ and a 

‘‘Member Nominating Committee’’; (ii) 

modifying the processes for nominating 

candidates for Governor and Designated 

Independent Governor; (iii) modifying 

the procedures for Member Organization 

Representatives to vote for Designated 

Governor nominees and the procedures 

for meetings of Members and Member 

Organizations; (iv) changing the 

procedures for filling vacancies on the 

Board, and the timeframe for submitting 

Board resignations; and (v) adding 

several new definitions, including 

‘‘Industry Member,’’ ‘‘Non-Industry 

Member,’’ and ‘‘Member Representative 

member.’’ The Exchange also proposed 

to amend its Certificate of Incorporation 

and its By-Laws to delete the positions 

of Vice Chair and PBOT Governor. 

The Commission has carefully 

reviewed the proposed rule change and 

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 5 including, in 

particular, Section 6(b)(1) of the Act,6

which requires a national securities 

exchange to be so organized and have 

the capacity to carry out the purposes of 

the Act and to enforce compliance by its 

members and persons associated with 

its members with the provisions of the 

Act; Section 6(b)(3) of the Act,7 which 

requires that the rules of a national 

securities exchange assure a fair 

representation of its members in the 

selection of its directors and 

administration of its affairs, and 

provided 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; and Section 6(b)(5) of the Act,8

which requires that an exchange have 

rules 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, protect 

investors and the public interest. 

Among other things, the Exchange 

proposed to bifurcate its Nominating, 

Elections and Governance Committee 

into (1) a Member Nominating 

Committee that would be responsible 

for nominating candidates for each 

vacant Designated Governor 9 position 

and would 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, and (2) 

a Nominating Committee that would 

nominate candidates for all other vacant 

Governor positions that are not 

nominated by the Member Nominating 

Committee. All members of the Member 

Nominating Committee would be a 

current associated person of a current 

member organization and would be 

appointed annually by the Board 

following consultations with Member 

Organization Representatives. The 

Nominating Committee would consist of 

a number of non-industry members that 

equal or exceed the number of industry 

members. In addition, a number of 

Public Members would be represented 

on the Nominating Committee, and no 

officer or employee of the Exchange 

could serve in any voting or non-voting 

capacity on the committee. 

Further, the Exchange proposed to 

modify its nominating process, 

including the procedures for Member 

Organization Representatives to vote for 

Designated Governor nominees and the 

procedures for meetings of Members 

and Member Organizations, to more 

closely align them with Nasdaq’s 

process and procedures. Among other 

things, the proposed procedures would 

continue to afford Member Organization 

Representatives the ability to nominate 

candidates for Designated Governor 

positions subject to certain conditions. 

In addition, in the event of a contested 

mstockstill on PROD1PC66 with NOTICES