67222 Federal Register / Vol. 79, No. 218 / Wednesday, November 12, 2014 / Notices 

16 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4Certain provisions of NASDAQ OMX’s Charter 

and By-Laws are rules of a self-regulatory 

organization if they are stated policies, practices, or 

interpretations, as defined in Rule 19b–4 under the 

Act, of the self-regulatory organization, and must be 

filed with the Commission pursuant to Section 

19(b) of the Act and Rule 19b–4 thereunder. See 

Securities Exchange Act Release Nos. 58183 (July 

17, 2008), 73 FR 42850 (July 23, 2008) (File No. SR– 

NASDAQ–2008–035); 58324 (August 7, 2008), 73 

FR 46936 (August 12, 2008) (File Nos. SR–BSE– 

2008–02; SR–BSE–2008–23; SR–BSE–2008–25; SR– 

BSECC–2008–01); and 58180 (July 17, 2008), 73 FR 

42890 (July 23, 2008) (File No. SR–SCCP–2008–01) 

(Order Approving a Proposed Rule Change, as 

Modified by Amendment No. 1, To Amend the ByLaws of the NASDAQ OMX Group, Inc. in 

Connection With the Acquisitions of Boston Stock 

Exchange, Incorporated and Philadelphia Stock 

Exchange, Inc.). Accordingly, the SROs have filed 

with the Commission proposed changes to the 

NASDAQ OMX Charter and By-Laws. 

5See Securities Exchange Act Release Nos. 73144 

(September 19, 2014), 79 FR 57624 (September 25, 

2014) (SR–BSECC–2014–001) and 73145 

(September 19, 2014), 79 FR 57648 (September 25, 

2014) (SR–SCCP–2014–01). 

6See Securities Exchange Act Release Nos. 73195 

(September 23, 2014), 79 FR 58397 (September 29, 

2014) (SR–BX–2014–045); 73193 (September 23, 

2014), 79 FR 58388 (September 29, 2014) (SR– 

NASDAQ–2014–093); and 73194 (September 23, 

2014), 79 FR 58393 (September 29, 2014) (SR–Phlx– 

2014–61). 

7Under Section 3(a)(26) of the Act, a ‘‘selfregulatory organization’’ is defined as ‘‘any national 

securities exchange, registered securities 

association, or registered clearing agency . . . .’’ 15 

U.S.C. 78c(a)(26). At present, this defined term 

would include NASDAQ, BX and Phlx, which are 

national securities exchanges, and BSECC and 

SCCP, which are registered clearing agencies that 

are currently dormant. 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing will also be available for Web site 

viewing and printing at the NYSE’s 

principal office and on its Internet Web 

site at www.nyse.com. 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– 

2014–58 and should be submitted on or 

before December 3, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26688 Filed 11–10–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73516; File Nos. SR– 

BSECC–2014–001; SR–BX–2014–045; SR– 

NASDAQ–2014–093; SR–Phlx–2014–61; SR– 

SCCP–2014–01] 

Self-Regulatory Organizations; Boston 

Stock Exchange Clearing Corporation; 

NASDAQ OMX BX, Inc.; the NASDAQ 

Stock Market LLC; NASDAQ OMX 

PHLX LLC; Stock Clearing Corporation 

of Philadelphia; Order Approving 

Proposed Rule Changes To Amend the 

Restated Certificate of Incorporation 

and By-Laws of the NASDAQ OMX 

Group, Inc. 

November 5, 2014. 

I. Introduction 

On September 10, 2014, Boston Stock 

Exchange Clearing Corporation 

(‘‘BSECC’’), NASDAQ OMX BX, Inc. 

(‘‘BX’’), the NASDAQ Stock Market LLC 

(‘‘NASDAQ’’), NASDAQ OMX PHLX 

LLC (‘‘Phlx’’), and the Stock Clearing 

Corporation of Philadelphia (‘‘SCCP’’ 

and, together with BSECC, BX, 

NASDAQ and Phlx, the ‘‘SROs’’ or 

‘‘Self-Regulatory Subsidiaries’’), filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’),2 and 

Rule 19b–4 thereunder,3 proposed rule 

changes with respect to amendments to 

the Amended and Restated Certificate of 

Incorporation (‘‘Charter’’) and By-Laws 

(‘‘By-Laws’’) of the NASDAQ OMX 

Group, Inc. (‘‘NASDAQ OMX’’), the 

parent company of the SROs.4 The 

proposed rule changes by BSECC and 

SCCP were published for comment in 

the Federal Register on September 25, 

2014 5 and the proposed rule changes by 

BX, NASDAQ and Phlx were published 

for comment in the Federal Register on 

September 29, 2014.6 The Commission 

received no comment letters on the 

proposals. 

II. Discussion 

A. Background 

Article Fourth, Paragraph C of 

NASDAQ OMX’s Charter includes a 

voting limitation that generally 

prohibits a stockholder from voting 

shares beneficially owned, directly or 

indirectly, by such stockholder in 

excess of 5% of the then-outstanding 

shares of capital stock of NASDAQ 

OMX entitled to vote as of the record 

date in respect of any matter. Pursuant 

to Article Fourth, Paragraph C(6) of the 

Charter, NASDAQ OMX’s Board may 

grant exemptions to this limitation prior 

to the time a stockholder beneficially 

owns more than 5% of the outstanding 

shares of stock entitled to vote on the 

election of a majority of directors at 

such time. Article Fourth, Paragraph 

C(6) of the Charter and Section 12.5 of 

the By-Laws limit the Board’s authority 

to grant the exemption. The SROs note 

that these provisions, which are 

intended to be substantively identical, 

currently contain some language 

differences. Therefore, the SROs 

propose that NASDAQ OMX adopt the 

amendments described below to the 

Charter and By-Laws to conform these 

provisions and remove any ambiguity 

that may exist. 

B. Proposed Amendments to the Charter 

First, the SROs propose to add a 

statement to Article Fourth, Paragraph 

C(6) of the Charter that for so long as 

NASDAQ OMX shall control, directly or 

indirectly, any Self-Regulatory 

Subsidiary, a resolution of the Board to 

approve an exemption for any person 

under Article Fourth, Paragraph C(6) of 

the Charter shall not be permitted to 

become effective until such resolution 

has been filed with and approved by the 

SEC under Section 19 of the Act. In 

addition, the SROs propose to define 

‘‘Self-Regulatory Subsidiary,’’ which is 

currently not a defined term in the 

Charter, as any subsidiary of NASDAQ 

OMX that is a ‘‘self-regulatory 

organization’’ as defined under Section 

3(a)(26) of the Act.7 These changes 

would conform the Charter to language 

currently in the By-Laws. 

Second, the SROs propose to add an 

additional language to the current 

provision in Article Fourth, Paragraph 

C(6) of the Charter that states the Board 

may not approve an exemption to the 

5% voting limitation for: (i) A registered 

broker or dealer or an affiliate thereof or 

(ii) an individual or entity that is subject 

to a statutory disqualification under 

Section 3(a)(39) of the Act. Specifically, 

the SROs propose to add a proviso to 

Article Fourth, Paragraph C(6) of the 

Charter stating that for these purposes, 

an ‘‘affiliate’’ shall not be deemed to 

include an entity that either owns 10% 

or less of the equity of a broker or 

dealer, or receives 1% or less of its 

consolidated gross revenues from a 

broker or dealer. This change would 

conform the Charter to language 

currently in the By-Laws. 

Third, the SROs propose to change a 

reference in Article Fourth, Paragraph 

C(6) of the Charter from The NASDAQ 

Stock Market LLC to ‘‘the SelfRegulatory Subsidiaries.’’ This change 

would conform the Charter to language 

currently in the By-laws and would also 

include the other Self-Regulatory 

Subsidiaries in addition to the NASDAQ 

Stock Market LLC. 

Fourth, the SROs propose to add a 

requirement to Article Fourth, 


TKELLEY on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 218 / Wednesday, November 12, 2014 / Notices 67223 

8See Securities Exchange Act Release No. 71353 

(January 17, 2014), 79 FR 4209 (January 24, 2014) 

(SR–BSECC–2013–001, SR–BX–2013–057, SR– 

NASDAQ–2013–148, SR–Phlx–2013–115, SR– 

SCCP–2013–01), at note 14. 

9 In approving the proposed rule changes, the 

Commission notes that it has considered the 

proposed rule changes’ impact on efficiency, 

competition, and capital formation. See 15 U.S.C. 

78c(f). 

10 15 U.S.C. 78f(b)(1). 

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

12 15 U.S.C. 78q–1(b)(3)(C). 

13 15 U.S.C. 78f(b)(2). 

14 17 CFR 200.30–3(a)(12). 

Paragraph C(6) of the Charter to state 

that, prior to granting an exemption 

from the 5% voting limitation, the 

Board must also determine that granting 

the exemption would promote the 

prompt and accurate clearance and 

settlement of securities transactions 

(and to the extent applicable, derivative 

agreements, contracts and transactions), 

assure the safeguarding of securities and 

funds in the custody or control of the 

self-regulatory subsidiaries that are 

clearing agencies or securities and funds 

for which they are responsible, foster 

cooperation and coordination with 

persons engaged in the clearance and 

settlement of securities transactions, 

and remove impediments to and perfect 

the mechanism of a national system for 

the prompt and accurate clearance and 

settlement of securities transactions. 

This change would confirm the Charter 

to language currently in the By-Laws. 

Finally, the SROs propose that Article 

Fourth, Paragraph C(6) of the Charter be 

amended to correct a cross-reference to 

subparagraph 6(b), which no longer 

exists. 

C. Proposed Amendments to the ByLaws 

The SROs propose to amend the 

definition of ‘‘Self-Regulatory 

Subsidiary’’ in Article I(s) of the ByLaws to refer to any subsidiary of 

NASDAQ OMX that is a self-regulatory 

organization as defined under Section 

3(a)(26) of the Act, rather than list 

specific subsidiaries that would fall 

within this category. The proposed 

definition is the same definition 

proposed for purposes of the Charter 

and would capture NASDAQ OMX’s 

current self-regulatory subsidiaries as 

well as any subsidiaries that in the 

future would meet the definition of 

‘‘self-regulatory organization’’ under the 

Act. 

The SROs also propose to correct a 

typographical error in Article I and 

make minor edits to Section 12.5 of the 

Bylaws to conform the language 

regarding the 5% voting limitation to 

the language in the analogous provision 

of the Charter.8

III. Commission Findings 

After careful review, the Commission 

finds that the proposed rule changes are 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange, in the case of the 

proposals by BX, NASDAQ and Phlx, 

and to a clearing agency, in the case of 

the proposals by BSECC and SCCP.9 In 

particular, the Commission finds that 

the proposed rule changes by BX, 

NASDAQ and Phlx are consistent with 

Section 6(b)(1) of the Act,10 which, 

among other things, requires a national 

securities exchange to be so organized 

and have the capacity to be able to carry 

out the purposes of the Act and to 

comply, and enforce compliance by its 

members and persons associated with 

its members, with the provisions of the 

Act, the rules and regulations 

thereunder and the rules of the 

exchange. In addition, the Commission 

finds that the proposed rule changes by 

BX, NASDAQ and Phlx are consistent 

with Section 6(b)(5) of the Act,11 which, 

among other things, requires that the 

rules of the exchange be 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 Commission also finds that the 

proposed rule changes by BSECC and 

SCCP are consistent with Section 

17A(b)(3)(C) of the Act,12 because the 

proposals assure a fair representation of 

shareholders and participants in the 

selection of directors and administration 

of their affairs. While the proposals 

relate to the organizational documents 

of NASDAQ OMX, rather than BSECC 

and SCCP, BSECC and SCCP are 

indirectly owned by NASDAQ OMX, 

and therefore, NASDAQ OMX’s 

stockholders have an indirect stake in 

BSECC and SCCP. In addition, the 

participants in BSECC and SCCP, to the 

extent any exist, could purchase stock 

in NASDAQ OMX in the open market, 

just like any other stockholder. The 

proposals ensure that NASDAQ OMX 

stockholders have clarity about the 

existing voting limitation in NASDAQ 

OMX’s Charter and By-Laws. As a 

result, the proposals assure a fair 

representation of NASDAQ OMX’s 

stockholders in the selection of directors 

and administration of NASDAQ OMX’s 

affairs, as well as the affairs of BSECC 

and SCCP. 

The SROs have proposed certain 

changes to conform the provisions in 

the Charter and the By-Laws relating to 

the procedures by which NASDAQ 

OMX’s Board may grant an exemption 

to the prohibition on any NASDAQ 

OMX stockholder voting shares in 

excess of 5% of the Company’s thenoutstanding shares of capital stock. The 

Commission believes that these 

proposed changes will eliminate 

confusion that may exist because of the 

current language differences between 

the two documents. In addition, the 

proposed definition of ‘‘Self-Regulatory 

Subsidiary’’ will ensure that any 

NASDAQ OMX subsidiary that meets 

the definition of ‘‘self-regulatory 

organization’’ under the Act will be 

subject to the Charter and By-Law 

provisions relating to Self-Regulatory 

Subsidiaries. Further, the remaining 

proposed non-substantive clarifying 

changes are clarifying in nature, and 

thus should help make the Charter and 

By-Laws clearer and easier to 

understand. 

IV. Conclusion 

For the foregoing reasons, the 

Commission finds that the proposed 

rule changes are consistent with the Act 

and the rules and regulations 

thereunder applicable to a national 

securities exchange, in the case of BX, 

NASDAQ and Phlx, and to a registered 

clearing agency, in the case of BSECC 

and SCCP. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act13 that the 

proposed rule changes (SR–BSECC– 

2014–001; SR–BX–2014–045; SR– 

NASDAQ–2014–093; SR–Phlx–2014–61; 

SR–SCCP–2014–01) are approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26686 Filed 11–10–14; 8:45 am] 

BILLING CODE 8011–01–P 


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