Document ID: SEC-2023-0875-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Stock Clearing Corp. of Philadelphia
Posted Date: 2023-08-15T04:00Z

[Federal Register Volume 88, Number 156 (Tuesday, August 15, 2023)]
[Notices]
[Pages 55485-55487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17443]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98095; File No. SR-SCCP-2023-01]

Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Regarding a Stockholders' Agreement by and Among Nasdaq, 
Inc., Adenza Parent, LP, and the Other Parties Thereto

August 9, 2023.
    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 July 28, 2023, Stock Clearing Corporation of Philadelphia (``SCCP'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by SCCP. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Clearing Agency's Statement of the Terms of the Proposed Rule Change

    SCCP is filing a proposed rule change regarding a stockholders' 
agreement by and among the Exchange's parent corporation, Nasdaq, Inc. 
(``Nasdaq''), Adenza Parent, LP, a Delaware limited partnership 
(``Seller''), and the other parties thereto (``Stockholders' 
Agreement''). The Stockholders' Agreement will be implemented upon 
closing under the Merger Agreement (as defined below).
    The text of the proposed rule change is available on the SCCP's 
website at https://listingcenter.nasdaq.com/rulebook/sccp/rules, at the 
principal office of SCCP, and at the Commission's Public Reference 
Room.

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, SCCP 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. SCCP has prepared summaries, set forth in Sections A, B, 
and C below, of the most significant aspects of such statements.

A. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
    On June 10, 2023, Nasdaq entered into an Agreement and Plan of 
Merger (the ``Merger Agreement'') by and among Nasdaq, Argus Merger Sub 
1, Inc., a Delaware corporation and a direct wholly owned subsidiary of 
Nasdaq, Argus Merger Sub 2, LLC, a Delaware limited liability company 
and a direct wholly owned subsidiary of Nasdaq, Adenza Holdings, Inc., 
a Delaware corporation (``Adenza''), and Seller. Pursuant to the Merger 
Agreement, and upon the terms and subject to the conditions therein, 
Nasdaq will acquire 100% of the stock of Adenza (the ``Transaction''). 
As a result of the Transaction, Seller is expected to hold, at closing, 
approximately 15% of the outstanding Nasdaq common stock based upon the 
outstanding shares of Nasdaq common stock as of June 9, 2023.\3\ The 
shares to be held by Seller will be subject to Article Fourth of 
Nasdaq's Amended and Restated Certificate of Incorporation, which 
provides that no person who beneficially owns shares of common stock or 
preferred stock of Nasdaq in excess of 5% of the then-outstanding 
securities generally entitled to vote may vote the shares in excess of 
5%. This limitation mitigates the potential for any Nasdaq shareholder 
to exercise undue control over the operations of Nasdaq's self-
regulatory subsidiaries (including SCCP), and facilitates the self-
regulatory subsidiaries' and the Commission's ability to carry out 
their regulatory obligations under the Act.
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    \3\ A copy of the Merger Agreement and a description of its 
terms were filed by Nasdaq on Form 8-K on June 12, 2023 and are 
available at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001120193/000119312523164839/d476077d8k.htm.
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    Adenza and Seller are affiliates of certain funds managed by Thoma 
Bravo, L.P., a Delaware limited partnership (``Thoma Bravo'').\4\ The 
Merger Agreement contemplates that, at the closing, Nasdaq, Seller and 
Thoma Bravo will enter into the Stockholders' Agreement. The 
Stockholders' Agreement provides that, among other things, Thoma Bravo 
will be entitled to propose one individual reasonably acceptable to 
Nasdaq's Nominating & Governance Committee for nomination as director 
for election to the Nasdaq Board (``Board Designee''), and such right 
will exist for so long as Thoma Bravo, together with its controlled 
affiliates (including Seller), continue to beneficially own at least 
10% of the shares of Nasdaq common stock outstanding as of the closing 
date. Nasdaq will: (i) include the Board Designee as a nominee to the 
Nasdaq Board on each slate of nominees for election to the Nasdaq Board 
proposed by management of Nasdaq, (ii) recommend the election of the 
Board Designee to the stockholders of Nasdaq and (iii) without limiting 
the foregoing, otherwise use its reasonable best efforts (which shall 
include the solicitation of proxies) to cause the Board Designee to be 
elected to the Nasdaq Board.
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    \4\ Seller owns all of the issued and outstanding capital stock 
of Adenza. Both Seller and Adenza are owned by Thoma Bravo.
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    The Stockholders' Agreement relates solely to the Nasdaq Board, and 
not to the boards of any of its subsidiaries, including the SCCP Board. 
Nevertheless, the provisions of the Stockholders' Agreement described 
above could be considered a proposed rule change of a subsidiary that 
is a self-regulatory organization (``SRO''), if the provisions were 
viewed as potentially impacting the governance of an SRO in its 
capacity as wholly-owned subsidiary of Nasdaq. Accordingly, the 
governing boards of directors of SCCP and its affiliated SROs have each 
reviewed the proposed change and determined that it should be filed 
with the Commission.\5\
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    \5\ SCCP, Nasdaq BX, Inc. (``BX''), Nasdaq GEMX, LLC (``GEMX''), 
Nasdaq ISE, LLC (``ISE''), Nasdaq MRX, LLC (``MRX''), The Nasdaq 
Stock Market LLC (``NSM''), Nasdaq PHLX LLC (``Phlx''), and Boston 
Stock Exchange Clearing Corporation (``BSECC'') are each submitting 
this filing pursuant to section 19(b)(3)(A) of the Act, 15 U.S.C. 
78s(b)(3)(A)(iii).

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[[Page 55486]]

    It is expected that the Board Designee, like the other directors of 
the Nasdaq Board, would be nominated by the Nominating & Governance 
Committee, the composition of which is subject to the independence 
requirements of the Nasdaq By-Laws and NSM Rule 5605.\6\ The Board 
Designee must then be elected by the stockholders of Nasdaq, like the 
other directors of the Nasdaq Board. The Nasdaq Board is currently 
composed of 11 directors and is expected to increase to 12 directors 
upon the closing of the Transaction. Thus, the Board Designee would 
represent a small percentage (approximately 8.3%) of the Nasdaq Board.
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    \6\ Section 4.13 of the Nasdaq By-Laws provide that the 
Nominating & Governance Committee shall be appointed annually by the 
Nasdaq Board and shall consist of two or more directors, each of 
whom shall be an independent director within the meaning of the 
rules of NSM. The number of Non-Industry Directors (i.e., directors 
without material ties to the securities industry) on the Nominating 
& Governance Committee shall equal or exceed the number of Industry 
Directors and at least two members of the committee shall be Public 
Directors (i.e., directors who have no material business 
relationship with a broker or dealer, Nasdaq or its affiliates, or 
FINRA). NSM Rule 5605, which governs Nasdaq as a company whose 
securities are listed on NSM, requires Nominating & Governance 
Committee members to satisfy the definition of ``independence'' in 
NSM Rule 5605 and IM-5605 and to otherwise be deemed independent by 
the Nasdaq Board.
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2. Statutory Basis
    SCCP believes that its proposal is consistent with section 
17A(b)(3)(A) of the Act,\7\ in that it enables SCCP to be so organized 
as to have the capacity to be able to facilitate the prompt and 
accurate clearance and settlement of securities transactions and 
derivative agreements, contracts, and transactions for which it is 
responsible, to safeguard securities and funds in its custody or 
control or for which it is responsible, to comply with the provisions 
of the Exchange Act and the rules and regulations thereunder, to 
enforce compliance by its participants with the rules of SCCP, and to 
carry out the purposes of the Exchange Act.
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    \7\ 15 U.S.C. 78q-1(b)(3)(A).
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    The proposal related to the Stockholders' Agreement would not 
impact SCCP's ability to be so organized as to have the capacity to be 
able to carry out the purposes of the Exchange Act. In particular, the 
proposed changes would not alter the limitations on voting and 
ownership set forth in Article Fourth of Nasdaq's Amended and Restated 
Certificate of Incorporation, and so the proposed changes would not 
enable a person to exercise undue control over the operations of 
Nasdaq's self-regulatory subsidiaries or to restrict the ability of the 
Commission or SCCP to effectively carry out their regulatory oversight 
responsibilities under the Act. Further, as discussed above, it is 
expected that the Board Designee, like the other directors of the 
Nasdaq Board, would be nominated by the Nominating & Governance 
Committee, whose members are subject to the independence requirements 
of the Nasdaq By-Laws and NSM Rule 5605. Further, the Board Designee 
must then be elected by the stockholders of Nasdaq, like the other 
directors of the Nasdaq Board. The Nasdaq Board is currently composed 
of 11 directors and is expected to increase to 12 directors upon the 
closing of the Transaction. Thus, the Board Designee would represent a 
small percentage (approximately 8.3%) of the Nasdaq Board.
    SCCP also notes that the proposed rule change is substantially 
similar to prior proposals by SCCP or its affiliated SROs related to 
Nasdaq stockholders' agreements that gave similar rights to recommend 
Nasdaq Board designees.\8\ As such, SCCP does not believe that its 
proposal raises any new or novel issues not already considered by the 
Commission.
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    \8\ See Securities Exchange Act Release No. 57099 (January 4, 
2008), 73 FR 1901 (January 10, 2008) (SR-NASDAQ-2008-002) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to Nasdaq Stockholders' Agreement Between the Nasdaq Stock Market, 
Inc. and Borse Dubai Limited). See also Securities Exchange Act 
Release No. 63830 (February 3, 2011), 76 FR 7236 (February 9, 2011) 
(SR-BSECC-2011-001; SR-SCCP-2011-001) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Changes Relating to a 
Stockholders' Agreement Between the NASDAQ OMX Group, Inc. and 
Investor AB).
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B. Clearing Agency's Statement on Burden on Competition

    Because the proposed rule change is related solely to Thoma Bravo's 
right to nominate the Board Designee to the Nasdaq Board pursuant to 
the Stockholders' Agreement and not to the operations of SCCP, SCCP 
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. Clearing Agency'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 from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to section 19(b)(3)(A)(iii) of the Act \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 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. 
SCCP has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ of the Act 
normally does not become operative prior to 30 days after the date of 
filing. However, Rule 19b-4(f)(6)(iii) \12\ 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 asked 
the Commission to waive the 30-day operative delay contained in Rule 
19b-4(f)(6)(iii).\13\ The Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest as the proposal raises no new or novel issues. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposal operative upon filing.\14\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule

[[Page 55487]]

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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-SCCP-2023-01 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-SCCP-2023-01. This file 
number should be included on the subject line if email 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 (https://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 also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-SCCP-2023-01 and should be 
submitted on or before September 4, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17443 Filed 8-14-23; 8:45 am]
BILLING CODE 8011-01-P