Federal Register / Vol. 75, No. 169 / Wednesday, September 1, 2010 / Notices 53725 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5 15 U.S.C. 78s(b)(1). 

6 17 CFR 240.19b–4. 

7The Commission notes that the exception for 

companies registered under the 1940 Act only 

apply to uncontested director elections, i.e., when 

there is no counter solicitation. See proposed Phlx 

Rule 862(b)(2). 

8See NYSE Approval Order, 74 FR at 33298, 

Commission Release No. 34–60215 (July 1, 2009), 

note 69. 

concerning Proposed collection. The 

document contained incorrect dates. 

DATES: Effective on September 1, 2010. 

FOR FURTHER INFORMATION CONTACT: U.S. 

Office of Personnel Management, 

Employment Services, USAJOBS, 1900 

E Street, NW., Washington, DC 20415, 

Attention: Patricia Stevens or send 

electronic mail to 

patricia.stevens@opm.gov. 

Correction 

In the Federal Register of Monday, 

August 2, 2010, at 75 FR 45173, in the 

third column, correct the DATES section 

to read: 

DATES: Effective on December 12, 2010. 

U.S. Office of Personnel Management. 

Angela Bailey, 

Deputy Associate Director for Recruitment 

and Diversity. 

[FR Doc. 2010–21799 Filed 8–31–10; 8:45 am] 

BILLING CODE 6325–39–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62775; File No. SR–PHLX– 

2010–115] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Amendment to Rule 

862 Relating to, Among Other Things, 

Eliminate Broker Discretionary Voting 

for All Elections of Directors, Except 

for Companies Registered Under the 

Investment Company Act of 1940 

August 26, 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 August 

18, 2010, NASDAQ OMX PHLX, Inc. 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II, 

below, which Items have been prepared 

by the Exchange. The Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 3 and 

Rule 19b–4(f)(6) thereunder.4 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, pursuant to Section 

19(b)(1) of the Act 5 and Rule 19b–4 

thereunder,6 proposes to amend PHLX 

Rule 862 (Proxies at Direction of Owner) 

to comport with the Chicago Board 

Options Exchange (‘‘CBOE’’) Rule 

31.85(b) and the New York Stock 

Exchange (‘‘NYSE’’) Rule 452 to 

eliminate broker discretionary voting for 

all elections of directors at shareholder 

meetings, whether contested or not, 

except for companies registered under 

the Investment Company Act of 1940 

(the ‘‘1940 Act’’),7 to amend PHLX Rule 

862 to preclude broker discretionary 

voting on a matter that materially 

amends an investment advisory contract 

with an investment company, and to 

define that a material amendment to an 

investment advisory contract would 

include any proposal to obtain 

shareholder approval of an investment 

company’s investment advisory contract 

with a new investment advisor. In 

addition, including the changes noted 

above, this proposal reorganizes the 

broker voting rules to specifically 

include 20 instances where member 

organizations may not vote without 

customer instructions, while retaining 

the prohibition that the member 

organization may not vote without 

instructions from the customer on 

matters that may substantially affect the 

rights and privileges of the stockholders. 

This proposal also clarifies proxy 

procedures and proxy record retention. 

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 

PHLX Rule 862 provides instructions 

on how the proxies are voted. The 

purpose of the proposed rule change is 

to amend PHLX Rule 862(2) to comport 

with CBOE Rule 31.85(b) and NYSE 

Rule 452 to eliminate broker 

discretionary voting for all elections of 

directors at shareholder meetings, 

whether contested or not, except for 

companies registered under the 

Investment Company Act of 1940 (the 

‘‘1940 Act’’), to amend PHLX Rule 862 

to preclude broker discretionary voting 

on a matter that materially amends an 

investment advisory contract with an 

investment company, and to define that 

a material amendment to an investment 

advisory contract would include any 

proposal to obtain shareholder approval 

of an investment company’s investment 

advisory contract with a new 

investment advisor. In addition, 

including the changes noted above, this 

proposal reorganizes the broker voting 

rules to specifically include 20 

instances where member organizations 

may not vote without customer 

instructions, while retaining the 

prohibition that the member 

organization may not vote without 

instructions from the customer on 

matters that may substantially affect the 

rights and privileges of the stockholders. 

This proposal also clarifies proxy 

procedures and proxy record retention. 

The proposed amendment does not 

materially change the proxy rules with 

the exception of the changes made in 

this filing. Amending PHLX Rule 862 to 

comport with CBOE Rule 31.85 (b) and 

NYSE Rule 452 provides consistency 

among the exchanges to eliminate 

disparities regarding proxy voting. The 

Exchange proposes this amendment in 

response to a request by the Securities 

and Exchange Commission (the 

‘‘Commission’’) that self-regulatory 

organizations have uniform proxy rules 

regarding broker discretionary voting.8

As a result, PHLX believes the broker 

discretionary voting amendments will 

have little impact on the market 

participants since the changes are in 

line with the rules of the other selfregulatory organizations as defined 

within the meaning of Section 3(a)(26) 


hsrobinson on DSK69SOYB1PROD with NOTICES
53726 Federal Register / Vol. 75, No. 169 / Wednesday, September 1, 2010 / Notices 

9 15 U.S.C. 78c(a)(26). 

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

11 15 U.S.C. 78f(b)(5). 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(6). 

14The Exchange has satisfied the five business 

day pre-filing requirement. 

15 17 CFR 240.19b–4(f)(6)(iii). 

16For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

17See supra note 8. 

18See id. 

19 15 U.S.C. 78s(b)(3)(C). 

of the Act 9 (otherwise known as 

‘‘SROs’’). PHLX members with 

customers are also members of one of 

the other SROs. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 10 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 11

in particular, in that it is designed 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, the Exchange believes that 

the proposed rule change will protect 

investors and the public interest by 

ensuring better corporate governance 

and transparency of the election process 

for directors and by promoting greater 

uniformity with the proxy rules of other 

SROs. In particular, for Exchange 

member organizations that are also 

member firms of other SROs, confusion 

might arise as to which SROs’ proxy 

voting rules are applicable to a company 

listed on the Exchange if there are 

disparities between the rules of the 

Exchange and the other SROs. 

The proposal should further the 

protection of investors and the public 

interest by assuring that voting on 

matters as critical as the election of 

directors can no longer be determined 

by member organizations without 

specific instructions from the beneficial 

owner, and thus should enhance 

corporate governance and accountability 

to shareholders. Additionally, other 

changes enhance the proxy rules by 

providing clarity to proxy handling and 

record retention matters which also 

improves the protection to the investors. 

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) 

of the Act 12 and Rule 19b–4(f)(6) 13

thereunder because the proposal does 

not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) by its 

terms, become operative for 30 days 

from the date on which it was filed, or 

such shorter time as the Commission 

may designate if consistent with the 

protection of investors and the public 

interest, provided that the Exchange has 

given the Commission notice of its 

intent to file the proposed rule change, 

along with a brief description and text 

of the proposed rule change, at least five 

business days prior to the date of filing 

of the proposed rule change, or such 

shorter time as designated by the 

Commission.14

A proposed rule change filed under 

Rule 19b–4(f)(6) normally may not 

become operative prior to 30 days after 

the date of filing. However, Rule 19b– 

4(f)(6)(iii) 15 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay period. In making this request, the 

Exchange noted that waiver of the 

30-day operative delay will conform to 

the Commission’s desire to eliminate 

any disparities with proxy voting. 

The Commission believes that the 

waiver of the 30-day operative delay 

period is consistent with the protection 

of investors and the public interest.16

The proposal would permit the 

Exchange to comply with the 

Commission’s stated goal that selfregulatory organizations who currently 

allow members to use discretionary 

voting for director elections conform 

their rules to the NYSE’s rules to 

eliminate any voting disparities 

depending on where the shares are 

held.17 In this regard, Phlx’s proposed 

changes to Rule 862 are substantively 

similar to NYSE Rule 452 and CBOE 

Rule 31.85. Further, the proposal would 

conform the Exchange’s rule to the 

NYSE’s rule with respect to voting on 

investment advisory contracts. 

Moreover, the Commission notes that 

the NYSE’s adopted rule changes were 

subject to full notice and comment, and 

considered and approved by the 

Commission.18 Finally, the Commission 

notes that the clarification of proxy 

procedures, record retention, and other 

changes to Phlx Rule 862 are based 

substantially on CBOE’s rules. Based on 

the above, the Commission finds that 

waiving the 30-day operative delay 

period is consistent with the protection 

of investors and the public interest, and 

the proposal is therefore deemed 

operative upon filing. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend 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.19

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–2010–115 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–2010–115. 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 


hsrobinson on DSK69SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 169 / Wednesday, September 1, 2010 / Notices 53727 

20 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. 62509 

(July 15, 2010), 75 FR 42804. 

4PSX will not be used for trading any securities 

other than NMS stocks. Existing rules would 

continue to govern registration of associated 

persons of member organizations that trade options, 

but not cash equities, through Phlx. The 

Commission understands that Phlx intends to 

amend its registration rules for its options members 

shortly. 

5See proposed Rule 604(g)(5)(A). 

6See proposed Rule 604(g)(5)(B). 

7Any person associated with a member 

organization as a registered representative whose 

duties are changed to require registration in any 

principal classification would be allowed a period 

of 90 calendar days following the change in his 

duties to pass the appropriate principal 

qualification examination. Upon elevation, the 

member organization shall submit to the Exchange 

through FINRA’s Central Registration Depository 

(‘‘Web CRD’’) an amended ‘‘Uniform Application for 

Securities Industry Registration or Transfer’’ (‘‘Form 

U4’’) and any applicable fees. No one may function 

as a principal beyond the initial 90 calendar day 

period following the change in his duties without 

having passed the appropriate qualification 

examination. See proposed Rule 604(g)(4). 

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, 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 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– 

2010–115 and should be submitted on 

or before September 22, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–21849 Filed 8–31–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62776; File No. SR–Phlx– 

2010–91] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Order 

Approving Proposed Rule Change, as 

Modified by Amendment No. 1 Thereto, 

To Amend Phlx Rule 604 Relating to 

Registration and Qualification 

Requirements for PSX 

August 26, 2010. 

I. Introduction 

On June 29, 2010, NASDAQ OMX 

PHLX, Inc. (‘‘Phlx’’ or ‘‘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 adopt provisions relating to 

the registration and qualification of 

members and persons associated with 

member organizations. On July 13, 2010, 

the Exchange submitted Amendment 

No. 1 to the proposed rule change. The 

proposed rule change was published for 

comment in the Federal Register on July 

22, 2010.3 The Commission received no 

comment letters on the proposal. This 

order approves the proposed rule 

change, as modified by Amendment No. 

1. 

II. Description of the Proposal 

Phlx proposes to amend Rule 604, 

‘‘Registration and Termination of 

Registered Persons,’’ to adopt new and 

modify existing provisions governing 

general and limited categories of 

principals and representatives. The 

proposal is meant to capture all persons 

associated with member organizations 

who trade on the Exchange’s new equity 

platform, NASDAQ OMX PSX (‘‘PSX’’). 

Specifically, the Exchange proposes to 

adopt Rule 604(g), ‘‘Principal 

Registration,’’ and Supplementary 

Material .01–.03 to set forth the 

categories of principal registration. The 

rule would require, among other things, 

that all associated persons who perform 

certain functions pass an appropriate 

examination and register as principals; 

every member organization to have at 

least two registered principals (unless 

an exception applies); and each member 

organization to have a Limited 

Principal—Financial/Operations. In 

addition, Phlx Rule 604(h) and 

Supplementary Material .04 would 

require that each representative be 

registered and pass the General 

Securities Representative Examination 

(‘‘Series 7’’). 

Phlx also proposes to adopt Phlx Rule 

604(i)(1) to delineate categories of 

persons that are exempt from 

registration, Rule 604(i)(2) to allow 

member organizations and persons 

associated with member organizations 

to pay to non-registered foreign persons 

transaction-related compensation based 

upon business of customers they direct 

to member organizations if certain 

conditions are met, and Phlx Rule 604(j) 

to allow for waiver of qualification 

examination requirements in 

exceptional circumstances. In 

connection with the above amendments, 

Phlx proposes to add several related 

terms to Rule 1, ‘‘Definitions.’’ Finally, 

Phlx proposes to amend Rule 640, 

‘‘Continuing Education for Registered 

Persons,’’ to delete an outdated 

reference. 

Applicability—Rule 604(f) 

Proposed Phlx Rule 604(f) would state 

that sub-paragraphs (g) and (h), 

discussed in greater detail below, apply 

to member organizations, and associated 

persons of member organizations, that 

are registered with the Exchange for the 

purpose of trading NMS stocks.4

Principal Registration—Rule 604(g) 

Proposed Phlx Rule 604(g) would 

provide that persons associated with a 

member organization who are actively 

engaged in the management of the 

member organization’s investment 

banking or securities business, 

including supervision, solicitation, 

conduct of business or training of 

persons associated with a member 

organization for any of these functions, 

shall be registered as principals. Such 

persons would include sole proprietors, 

officers, partners, managers of offices of 

supervisory jurisdiction, and directors 

of corporations. 

Every member organization, except a 

sole proprietorship, would be required 

to have at least two officers or partners 

who are registered as principals with 

respect to each aspect of the member 

organization’s investment banking and 

securities business; 5 provided, 

however, that a proprietary trading firm 

with 25 or fewer registered 

representatives would only be required 

to have one officer or partner registered 

as a principal. The proposed rule would 

allow Phlx to waive the two-principal 

requirement in situations that indicate 

conclusively that only one person 

should be required to register as a 

principal.6

All persons who are to function as 

principals 7 would be required to pass 

the General Securities Principal 

Qualification Examination (‘‘Series 24’’) 

and submit a Form U4 through WebCRD 

reflecting registration as such, unless a 

different category of principal 

registration applies. Each person 

seeking to register and qualify as a 

General Securities Principal would be 

required to, before or concurrent with 


hsrobinson on DSK69SOYB1PROD with NOTICES