Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices 48413 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 58029 

(June 26, 2008), 73 FR 38016. 

4 15 U.S.C. 78f(b)(5). In approving this proposed 

rule change, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

5 17 CFR 229.404 and 17 CFR 228.404. 

6See Securities Exchange Act Release No. 

54302A (August 29, 2006), 71 FR 53158 (September 

8, 2006). 

7See Nasdaq Rule 4200(a)(15) and IM–4200. 

8 15 U.S.C. 78s(b)(2). 

9 17 CFR 200.30–3(a)(12). 

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

2Securities Exchange Act Release No. 57391 

(February 27, 2008), 71 FR 76414. 

3The Depository Trust Company (‘‘DTC’’) filed 

and the Commission has granted approval of a 

similar proposed rule change that would permit 

DTC to adopt a similar policy statement with 

respect to the admission of foreign entities as 

participants. Securities Exchange Act Release No. 

58345 (August 12, 2008) (File No. SR–DTC–2007–

16). 

4Time zone differences could complicate 

communications between the foreign member and 

its U.S. Settling Bank with respect to the timely 

payment of the member’s net debit to NSCC, 

including intraday demands for payment. These 

differences could also delay NSCC’s receipt of 

information available in the member’s home 

country to others (including its other creditors) 

about the member’s financial condition on the basis 

of which NSCC would have taken steps to protect 

the interests of NSCC and its members. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19133 Filed 8–18–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58335; File No. SR–

NASDAQ–2008–053] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Granting Approval of Proposed Rule 

Change To Modify the Definition of 

‘‘Independent Director’’

August 8, 2008. 

On June 6, 2008, The NASDAQ Stock 

Market LLC (‘‘Nasdaq’’) 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 

modify Nasdaq’s definition of 

‘‘independent director.’’ The proposed 

rule change was published for comment 

in the Federal Register on July 2, 2008.3

The Commission received no comments 

on the proposal. 

Currently, Nasdaq Rule 4200(a)(15)(B) 

provides that a director of a listed 

company who accepted, or has a family 

member who accepted, any 

compensation from the company in 

excess of $100,000 during any period of 

twelve months within the preceding 

three years cannot be deemed an 

independent director (with certain 

exceptions). The proposed rule change 

would change this threshold amount to 

$120,000. 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange, and in particular with Section 

6(b)(5) of the Act.4 The Commission 

notes that Regulation S–K, Item 404, 

under the Act,5 which requires public 

companies to disclose certain material 

information regarding the independence 

of directors (among other ‘‘related 

persons’’ associated with the company), 

establishes $120,000 as the amount 

above which financial transactions and 

relationships involving a company and 

its directors must be disclosed.6 The 

Commission believes that it is 

appropriate for Nasdaq to use this same 

threshold amount with regard to its 

definition of ‘‘independent director’’ in 

Nasdaq Rule 4200(a)(15) as a ‘‘bright 

line’’ test to determine whether a 

director of a listed company would be 

precluded from being considered 

independent. The Commission further 

notes that even if a director (or a family 

member) received less than $120,000 in 

compensation from the listed company, 

the company’s board still would have to 

make an affirmative determination that 

the director has no relationship with the 

listed company that, in the board’s 

opinion, would interfere with the 

exercise of his or her independent 

judgment in carrying out the 

responsibilities of a director.7

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,8 that the 

proposed rule change (SR–NASDAQ–

2008–053) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19113 Filed 8–18–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58344; File No. SR–NSCC–

2007–15] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Order Granting Approval 

of a Proposed Rule Change Relating to 

the Admission of Foreign Entities 

August 12, 2008. 

I. Introduction 

On November 16, 2007, National 

Securities Clearing Corporation 

(‘‘NSCC’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

proposed rule change SR–NSCC–2006–

15 pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’).1 Notice of the proposal was 

published in the Federal Register on 

March 10, 2008.2 No comment letters 

were received. For the reasons 

discussed below, the Commission is 

granting approval of the proposed rule 

change. 

II. Description 

The proposed rule change establishes 

a policy statement regarding the 

admission of entities that are organized 

in a foreign country and are not subject 

to U.S. federal or state regulation 

(‘‘foreign entities’’) as members of 

NSCC.3 NSCC Rule 2 and Addendum B 

to NSCC’s Rules address the admission 

of applicants as NSCC members. NSCC’s 

Rules provide that admission as a 

member is subject to an applicant’s 

demonstration that it meets NSCC’s 

standards of financial responsibility, 

operational capability, and character. 

Additionally, each member must 

continue to be in a position to 

demonstrate to NSCC that it meets these 

standards. The purpose of the proposed 

rule change is to establish admission 

criteria that will permit well-qualified 

foreign entities to become NSCC 

members and thereby obtain direct 

access to NSCC’s services while 

assuring that the unique risks associated 

with the admission of foreign entities 

are adequately addressed. 

The admission of foreign entities as 

members raises a number of unique 

risks and issues, including that (1) the 

entity is not subject to U.S. federal or 

state regulation, (2) the operation of the 

laws of the entity’s home country and 

time zone differences 4 may impede the 

successful exercise of NSCC’s rights and 

remedies particularly in the event of the 

entity’s failure to settle, and (3) financial 

information about the foreign entity 

made available to NSCC for monitoring 

purposes may be less adequate than 

information about U.S.-based entities. 


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