Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices 23831 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61876 

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

NASDAQ–2010–025). 

4NASDAQ OMX also amended its Corporate 

Governance Guidelines to reflect the majority vote 

standard for uncontested director elections. 

5See NASDAQ OMX By-Law Article IV, Section 

4.5. 

6See NASDAQ OMX Certificate of Incorporation 

at Article IV, C.1(a). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61992; File No. SR– 

NASDAQ–2010–048] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by The 

NASDAQ Stock Market, LLC To Amend 

the By-Laws of The NASDAQ OMX 

Group, Inc. 

April 27, 2010. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on April 9, 

2010, The NASDAQ Stock Market LLC 

(the ‘‘NASDAQ Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I and II below, which Items 

have been prepared by the NASDAQ 

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 with 

the Securities and Exchange 

Commission (‘‘Commission’’) a proposed 

rule change relating to the By-Laws of 

its parent corporation, The NASDAQ 

OMX Group, Inc. (‘‘NASDAQ OMX’’). 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http:// 

www.nasdaq.cchwallstreet.com, at the 

principal office of the NASDAQ 

Exchange, 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 has proposed making 

certain amendments to its By-Laws to 

make improvements in its governance. 

In SR–NASDAQ–2010–025, The 

NASDAQ Stock Market LLC (‘‘NASDAQ 

Exchange’’) sought Commission 

approval to adopt these By-Laws 

changes as part of the rules of NASDAQ 

Exchange, and the Commission granted 

approval to these changes in an order 

dated April 8, 2010.3 The NASDAQ 

Exchange is now submitting this filing 

on an immediately effective basis to 

adopt the same By-Law changes as rules 

of the Exchange. 

The NASDAQ OMX By-Laws 

previously provided 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. 

Under Corporate Governance Guidelines 

adopted by the Board, however, any 

director in an uncontested election who 

received a greater number of votes 

‘‘withheld’’ from his or her election than 

votes ‘‘for’’ such election was required to 

tender his or her resignation promptly 

following receipt of the certification of 

the stockholder vote. The NASDAQ 

OMX Nominating & Governance 

Committee then considered the 

resignation offer and recommended to 

the Board whether to accept it. Within 

90 days after the certification of the 

election results, the Board determined 

whether to accept or reject the 

resignation. Promptly thereafter, the 

Board announced 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 recently amended its 

By-Laws to adopt a majority vote 

standard, specifically By-Law Article IV, 

Section 4.4 of the By-Laws was 

amended 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.4 Under the majority voting 

standard, a nominee who fails to receive 

the requisite vote will not be duly 

elected to the Board. The By-Laws 

require 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 will be considered by 

the Nominating & Governance 

Committee and acted upon by the Board 

in the same manner described above.5

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 

NASDAQ OMX codified its process 

for a contested election. The directors 

will 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 apply in 

contested elections where stockholders 

are offered a choice among competing 

candidates. Directors are elected by a 

plurality of votes present in person or 

represented by proxy at a meeting. The 

directors who receive the greatest 

number of votes cast for election of 

directors at the meeting will be elected. 

General Election Requirements 

The following applies to elections of 

directors and were not amended. Each 

share of common stock has one vote,6

subject to the voting limitation in 

mstockstill on DSKH9S0YB1PROD with NOTICES

23832 Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices 

7See NASDAQ OMX Certificate of Incorporation 

at Article IV, C.1(b)2. 

8 15 U.S.C. 78f. 

9 15 U.S.C. 78f(b)(2)[sic], (5). 

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

11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

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 NASDAQ Exchange has satisfied 

this requirement. 

12See Securities Exchange Act Release No. 61876 

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

NASDAQ–2010–025). 

13 Id. 

14For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

NASDAQ OMX’s certificate of 

incorporation that generally prohibits a 

holder from voting in excess of 5% of 

the total voting power of NASDAQ 

OMX.7 In addition, each note holder is 

entitled to the number of votes equal to 

the number of shares of common stock 

into which such note could be 

converted on the record date, subject to 

the 5% voting limitation contained in 

the certificate of incorporation. 

The presence of owners of a majority 

(greater than 50%) of the votes entitled 

to be cast by holder of NASDAQ OMX 

voting securities constitutes a quorum. 

Presence may be in person or by proxy. 

Any securities not voted, by abstention, 

will not impact the vote. 

2. Statutory Basis 

The NASDAQ Exchange believes that 

the proposed rule change is consistent 

with the provisions of Section 6 of the 

Act,8 in general, and with Sections 

6(b)(1) and (b)(5) of the Act,9 in 

particular, in that the proposal enables 

the NASDAQ Exchange to be so 

organized as to have the capacity to be 

able to carry out the purposes of the Act 

and to comply with and enforce 

compliance by members and persons 

associated with members with 

provisions of the Act, the rules and 

regulations thereunder, and selfregulatory organization rules, and is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. The proposed 

amendments adopting a majority vote 

standard would enable the directors to 

be elected in a manner reflective of the 

desires of shareholders and provide a 

mechanism to protect against the 

election of directors by less than a 

majority vote of the shareholders. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The NASDAQ 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 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days after the date of 

the filing, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, it has 

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

of the Act 10 and Rule 19b–4(f)(6) 11

thereunder. 

The NASDAQ Exchange has noted 

that the proposed rule change is 

identical to a proposed rule change 

recently approved by the Commission 

with respect to the NASDAQ 

Exchange 12 and has requested that the 

Commission waive the 30-day operative 

delay to ensure that NASDAQ OMX is 

able to implement the proposed rule 

change without undue delay. The 

Commission has determined that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because such waiver will enable 

NASDAQ OMX to implement the 

proposed rule change without undue 

delay in a manner consistent with a 

proposed rule change previously 

approved by the Commission.13

Therefore, the Commission designates 

the proposal operative upon filing.14

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–NASDAQ–2010–048 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–2010–048. 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 the filing also will be 

available for inspection and copying at 

the principal office of the NASDAQ 

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– 

NASDAQ–2010–048 and should be 

submitted on or before May 25, 2010. 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices 23833 

15 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 Nos. 58985 

(November 10 [sic], 2008), 73 FR 72538 (November 

28, 2008) (approving SR–ISE–2008–86); 58204 (July 

22, 2008), 73 FR 43807 (July 28, 2008) (approving 

SR–CBOE–2008–64); 58203 (July 22, 2008), 73 FR 

43812 (July 28, 2008) (approving SR–NYSEArca2008–57). 

4OCC previously received Commission approval 

to clear options based on Index-Linked Securities. 

See Securities Exchange Act Release No. 60872 

(October 23, 2009), 74 FR 55878 (October 29, 2009) 

(SR–OCC–2009–14). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–10301 Filed 5–3–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61959; File No. SR–ISE– 

2010–33] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Establish Strike Price 

Intervals and Trading Hours for 

Options on Index-Linked Securities 

April 22, 2010. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on April 16, 

2010, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or the 

‘‘ISE’’) 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 selfregulatory organization. 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 

strike price intervals and trading hours 

for options on index-linked securities. 

The text of the proposed rule change is 

as follows (deletions are in [brackets]; 

additions are in italics): 

* * * 

Rule 504. Series of Options Contracts 

Open for Trading 

(a)–(h) No change. 

Supplementary Material to Rule 504 

.01–.05 No change. 

.06 Notwithstanding Supplementary 

Material .01 above, the interval between 

strike prices of series of options on 

Index-Linked Securities, as defined in 

Rule 502(k)(1), will be $1 or greater 

when the strike price is $200 or less and 

$5 or greater when the strike price is 

greater than $200. 

* * * 

Rule 700. Days and Hours of Business 

No change. 

(a)–(c) No change. 

(d) Options on Index-Linked 

Securities, as defined in Rule 502(k)(1), 

may be traded on the Exchange until 

4:15 p.m. each business day. 

[(d)](e) The Exchange shall not be 

open for business on the following 

holidays: New Year’s Day, Martin 

Luther King, Jr. Day, Presidents’ Day, 

Good Friday, Memorial Day, 

Independence Day, Labor Day, 

Thanksgiving Day or Christmas Day. 

When any holiday observed by the 

Exchange falls on a Saturday, the 

Exchange will not be open for business 

on the preceding Friday. When any 

holiday observed by the Exchange falls 

on a Sunday, the Exchange will not be 

open for business on the following 

Monday, unless unusual business 

conditions exist at the time. 

* * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of 

and basis for the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Prior to the commencement of trading 

options on Index-Linked Securities, the 

Exchange is proposing to establish strike 

price intervals and trading hours for 

these new products. 

The Securities and Exchange 

Commission (the ‘‘Commission’’) has 

approved ISE’s and other option 

exchanges’ proposals to enable the 

listing and trading of options on IndexLinked Securities.3 Options trading has 

not commenced to date and is 

contingent upon the Commission’s 

approval of The Options Clearing 

Corporation’s (‘‘OCC’’) proposed 

supplement to the Options Disclosure 

Document (‘‘ODD’’) that will provide 

disclosure regarding options on IndexLinked Securities.4

$1 Strikes for Options on Index-Linked 

Securities 

Prior to the commencement of trading 

options on Index-Linked Securities, the 

Exchange is proposing to establish that 

strike price intervals of $1 will be 

permitted where the strike price is less 

than $200. Where the strike price is 

greater than $200, $5 strikes will be 

permitted. These proposed changes are 

reflected by the proposed addition of 

new .06 of the Supplementary Material 

to Rule 504. 

Without discounting the differences 

between exchange-traded funds (‘‘ETFs’’) 

and Index-Linked Securities, the 

Exchange seeks to extend the trading 

conventions applicable to options on 

ETFs to options on Index-Linked 

Securities. ISE contends that the 

proposed strike price intervals for 

options on Index-Linked Securities are 

consistent with the strike price intervals 

currently permitted for options on ETFs. 

The Exchange believes that $1 strike 

price intervals for options on IndexLinked Securities will provide investors 

with greater flexibility by allowed [sic] 

them to establish positions that are 

better tailored to meet their investment 

objectives. ISE has analyzed its capacity 

and represents that it and the Options 

Price Reporting Authority have the 

necessary systems capacity to handle 

the additional traffic associated with the 

listing and trading of an expanded 

number of series as proposed by this 

filing. 

Trading Hours for Options on IndexLinked Securities 

Similar to the trading hours for ETF 

options, the Exchange proposes to 

amend Rule 700 by renumbering the 

current subparagraph (d) to (e) and 

adding a new subparagraph (d) to 

provide that options on Index-Linked 

Securities, as defined under .06 of the 

Supplementary Material to Rule 504, 

may be traded on the Exchange until 

4:15 p.m. each business day. 

2. Statutory Basis 

The basis under the Securities 

Exchange Act of 1934 (the ‘‘Act’’) for this 

proposed rule change is the requirement 

under Section 6(b)(5) that an exchange 

have rules that are designed to promote 

mstockstill on DSKH9S0YB1PROD with NOTICES