57090 Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Notices 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(1). 

4 17 CFR 240.19b–4. 

5 In other words, the $1,000,000 requirement 

would be in addition to legal costs. 

6This requirement applies to the endorsement on 

the policy and would require coverage to be sought 

under the member’s policy prior to any Exchange 

policy. 

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

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

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62892; File No. SR–Phlx– 

2010–119] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

NASDAQ OMX PHLX, Inc. Relating to 

Limitation of Exchange Liability 

September 10, 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 

September 1, 2010 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 and II, 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, pursuant to Section 

19(b)(1) of the Act 3 and Rule 19b–4 

thereunder,4 proposes to amend 

Exchange Rule 652, titled Limitation of 

Exchange Liability and Reimbursement 

of Certain Expenses, to require member 

organizations on the Exchange’s trading 

floor to procure and maintain liability 

insurance. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.nasdaqtrader.com/ 

micro.aspx?id=PHLXRulefilings, at the 

principal office of the Exchange, on the 

Commission’s website 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 

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 amend Rule 652 titled 

Limitation of Exchange Liability and 

Reimbursement of Certain Expenses to 

require member organizations 

conducting business on the Exchange’s 

trading floor to procure and maintain 

liability insurance. The Exchange is 

proposing this amendment to limit the 

liability of the Exchange and obtain 

reimbursement for any action or 

proceeding brought against the 

Exchange. 

Legal proceedings can significantly 

divert staff resources away from the 

Exchange’s regulatory and business 

purposes. In addition, these proceedings 

often require the Exchange to secure 

outside counsel, a costly undertaking. 

The Exchange believes that establishing 

a rule that limits the Exchange’s liability 

may reduce non merit-based or 

vexatious legal proceedings against the 

Exchange by member litigants and help 

protect against the Exchange’s resources 

being unnecessarily diverted from 

regulatory and business objectives, thus 

strengthening the overall organization. 

Specifically, the Exchange is 

proposing to require that member 

organizations located on the Exchange’s 

trading floor procure and maintain 

liability insurance. The insurance 

would provide defense and indemnity 

coverage for the member organization, 

any person associated with the member 

organization and the Exchange for any 

action or proceeding brought, or claim 

made, to impose liability upon the 

member organization, associated person 

or the Exchange which results from the 

member organization’s or associated 

person’s conduct. 

The Exchange has a physical trading 

floor where certain Exchange member 

organizations physically conduct their 

trading activities. The Exchange does 

not intend this amendment to provide 

relief associated with financial loss 

related to buying and selling securities. 

The insurance coverage is intended to 

provide coverage to the Exchange for its 

sole, concurrent, or contributory 

negligence or other wrongdoing 

connected to a claim arising from the 

member organization’s or associated 

person’s conduct. 

The Exchange would require that the 

member organization name the 

Exchange as an additional insured on 

the insurance policy by endorsement. 

The Exchange would retain the same 

rights under the insurance coverage as 

the named insured. The Exchange 

would be entitled to the full policy 

limits. The member organization would 

be required to maintain insurance with 

a limit that is not less than $1,000,000 

without erosion by defense costs.5 The 

insurance would indicate that it is 

primary to any insurance maintained by 

the Exchange.6

Finally, each member organization 

located on the trading floor would be 

required to provide a certificate of 

insurance to be issued directly to the 

Exchange demonstrating the insurance 

was procured and is maintained. Each 

member organization would be required 

to furnish a copy of the insurance policy 

upon request as well. 

The Exchange incurs cost related to 

the conduct of Exchange member 

organizations utilizing the Exchange’s 

facilities on the trading floor to conduct 

business. The Exchange is seeking to 

shift the burden arising from actions or 

proceedings brought, or claims made, to 

impose liability on the Exchange back to 

the member organization. 

The Exchange also proposes to 

expand the language in Rule 652 to 

apply the rule to individuals of the 

Exchange, specifically officers, directors 

and employees. The Exchange believes 

that this language serves to clarify that 

individuals serving as officers, directors 

or employees are also the subject of Rule 

652. 

The Exchange proposes to require 

members to procure such insurance by 

December 31, 2010. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 7 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 8

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, by 

requiring member organizations 

physically located on the trading floor 

to procure and maintain insurance. The 

proposed amendment would assist the 

Exchange in limiting its resources [sic] 

which can be easily diverted to 

defending litigation claims. 

The Exchange believes that member 

organizations that are physically located 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Notices 57091 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

on the Exchange’s trading facilities are 

already subject to rules and procedures 

that are separate and apart from member 

organizations that are not located on the 

Exchange’s trading floor. While the 

Exchange does have rules which govern 

a member organization’s order and 

decorum while on the Exchange’s 

trading floor, the Exchange believes that 

requiring such member organizations to 

also obtain insurance coverage to 

protect the Exchange from claims 

resulting from their own conduct is not 

an undue burden. 

The Exchange’s trading floor 

environment must be free from conduct 

that could distract or interfere with 

market activity as well as conduct 

which could deplete the Exchange’s 

resources and divert staff when dealing 

with claims and litigation that results 

from the conduct of a member 

organization or associated person of that 

member organization. The Exchange 

believes that this proposal will conserve 

Exchange resources and provide 

additional coverage for member 

organizations as well because they are 

also subject to the coverage. 

The Exchange believes that amending 

Rule 652 to add officers, directors and 

employees in addition to the Exchange 

serves to further clarify Rule 652 by 

making clear that the word Exchange 

includes such individuals. 

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 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 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate 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 or disapprove 

the 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–2010–119 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–2010–119. 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 website (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 website 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 the filing will 

also be available for inspection and 

copying at the Exchange’s principal 

office. 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–2010–119 and should 

be submitted on or before October 8, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–23194 Filed 9–16–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62893; File No. SR– 

NASDAQ–2010–113] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Modify Fees 

for Members Using the NASDAQ 

Market Center 

September 10, 2010. 

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 

September 7, 2010, The NASDAQ Stock 

Market LLC (‘‘NASDAQ’’) 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 NASDAQ. 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 the Substance 

of the Proposed Rule Change 

NASDAQ proposes to modify pricing 

for NASDAQ members using the 

NASDAQ Market Center. NASDAQ will 

implement the proposed change on 

September 7, 2010. The text of the 

proposed rule change is available at 

http://nasdaq.cchwallstreet.com/, at 

NASDAQ’s principal office, 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, 

NASDAQ 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. 

NASDAQ has prepared summaries, set 

forth in Sections A, B, and C below, of 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1