Document ID: SEC-2012-0377-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2012-03-07T05:00Z

[Federal Register Volume 77, Number 45 (Wednesday, March 7, 2012)]
[Notices]
[Pages 13676-13678]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5473]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66501; File No. SR-BX-2012-014]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule To Amend the BOX 
LLC Agreement

March 1, 2012.
    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 February 22, 2012, NASDAQ OMX BX, Inc. (the ``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 self-regulatory organization. The Exchange filed the 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and 
Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal effective 
upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the Sixth Amended and Restated 
Operating Agreement (``BOX LLC Agreement'') of the Boston Options 
Exchange Group LLC (``BOX LLC''), in connection with the proposed 
acquisition of TMX Group Inc., a company incorporated in Ontario, 
Canada (``TMX Group'') by Maple Group Acquisition Corporation, a 
company incorporated in Ontario, Canada (``Maple''). The text of the 
proposed rule change is available from the principal office of the 
Exchange, at the Commission's Public Reference Room and also on the 
Exchange's Internet Web site at http://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/.

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 self-regulatory organization 
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 self-regulatory organization 
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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On January 13, 2004, the Commission approved four Exchange 
proposals that together established, through an operating agreement 
among its owners, BOX LLC, a Delaware limited liability company, to 
operate BOX as an options trading facility of the Exchange.\5\
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    \5\ See Securities Exchange Act Release No. 49066 (January 13, 
2004), 69 FR 2773 (January 20, 2004) (establishing a fee schedule 
for the proposed BOX facility); Securities Exchange Act Release No. 
49065 (January 13, 2004), 69 FR 2768 (January 20, 2004) (creating 
Boston Options Exchange Regulation LLC to which the Exchange would 
delegate its self-regulatory functions with respect to the BOX 
facility); Securities Exchange Act Release No. 49068 (January 13, 
2004), 69 FR 2775 (January 20, 2004) (approving trading rules for 
the BOX facility); Securities Exchange Act Release No. 49067 
(January 13, 2004), 69 FR 2761 (January 20, 2004) (approving certain 
regulatory provisions of the operating agreement of BOX LLC).
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    Currently, the Montreal Exchange Inc., a company incorporated in 
Quebec, Canada (``MX''), is a direct subsidiary of TMX Group. MX US 2, 
Inc., a Delaware corporation and indirect, wholly owned subsidiary of 
MX (``MX US''), holds a 53.83% ownership interest in BOX LLC.
    The Exchange is submitting the proposed rule change to the 
Commission to amend the BOX LLC Agreement pursuant to the proposed 
Instrument of Accession in connection with the Acquisition (as defined 
below).
    Maple's investors comprise Alberta Investment Management 
Corporation, Caisse de d[eacute]p[ocirc]t et placement du 
Qu[eacute]bec, Canada Pension Plan Investment Board, CIBC World Markets 
Inc., Desjardins Financial Corporation, Dundee Capital Markets Inc., 
Fonds de solidarit[eacute] des travailleurs du Qu[eacute]bec (F.T.Q.), 
GMP Capital Inc., The Manufacturers Life Insurance Company, National 
Bank Financial & Co. Inc., Ontario Teachers' Pension Plan Board, Scotia 
Capital Inc. and TD Securities

[[Page 13677]]

Inc. (collectively, the ``Investors''). All of the Investors or their 
respective affiliates currently own common shares of Maple (the ``Maple 
Shares''). Each of the Investors currently owns less than 12% of Maple. 
The Maple Shares are currently privately held, not listed on any 
recognized exchange and not qualified for public distribution. However, 
after the completion of the second step of the Acquisition, the Maple 
Shares will be freely tradable (subject to 5-year contractual 
standstill arrangements to which some of the Investors have agreed to 
comply) and will be listed for trading on the Toronto Stock Exchange. 
Following the Acquisition, each of the Investors will own less than 9% 
of Maple and current shareholders of TMX Group will own at least 26% of 
Maple.
    The Acquisition will be effected in two steps--(1) an offer (the 
``Offer'') by Maple to the shareholders of TMX Group to exchange a 
minimum of 70% and a maximum of 80% of the outstanding common shares of 
TMX Group (``TMX Group Shares'') for cash, and (2) a subsequent 
transaction pursuant to a court-approved ``plan of arrangement'' \6\ 
whereby TMX Group shareholders whose TMX Shares have not been acquired 
under the Offer will receive Maple Shares in exchange for their TMX 
Group Shares (the ``Subsequent Arrangement'', and collectively with the 
Offer, the ``Acquisition''). The Offer is set to expire on February 29, 
2012, unless extended in accordance with the terms thereof, and subject 
to the terms and the conditions of the Offer, Maple will pay for TMX 
Group Shares validly deposited under the Offer and not properly 
withdrawn, ten days after the expiration of the Offer. If the Offer is 
successful, Maple will use its best efforts to complete the Subsequent 
Arrangement within 35 days after the expiration of the Offer.
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    \6\ A ``plan of arrangement'' is a statutory procedure available 
under the Business Corporations Act (Ontario) as well as under the 
Canada Business Corporations Act and provincial corporations 
statutes. Where a corporation wishes to combine (or to make any 
other ``fundamental change'') but cannot achieve the result it wants 
under another section of the statute, it can apply to the court for 
an order approving a proposed ``plan of arrangement''.
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    As a result of the Acquisition, if successful, TMX Group will 
become a direct, wholly owned subsidiary of Maple. Consequently, MX US 
(including MX US's 53.83% ownership interest in BOX LLC) will become an 
indirect, wholly owned subsidiary of Maple. The Offer is subject to 
several conditions, including certain regulatory approvals, including, 
but not limited to, certain approvals from the Ontario Securities 
Commission, Autorit[eacute] des march[eacute]s financiers 
(Qu[eacute]bec), Alberta Securities Commission, British Columbia 
Securities Commission, Competition Bureau (Canada) and the Commission.
    Maple has developed a preliminary business plan that it anticipates 
would be implemented upon completion of the Acquisition. The operations 
of each of MX and TMX Group will continue to be located in the same 
province in which it is currently located, and each will remain subject 
to its existing regulatory framework and oversight, including any 
changes to the recognition orders governing MX and TMX Group and 
additional undertakings that may be required by Canadian securities 
regulators as a condition of approving the Acquisition. MX US's 
management of its ownership interest in BOX will remain essentially 
unaffected by the Acquisition. Ownership of BOX through TMX Group, MX 
and MX US will not be affected by, and the ability of these entities to 
influence BOX will not change as a result of, the Acquisition.
    Pursuant to Section 8.4(g) of the BOX LLC Agreement, as previously 
approved by the Commission, BOX LLC is required to amend the BOX LLC 
Agreement to make a Controlling Person \7\ a party to the BOX LLC 
Agreement if such Controlling Person establishes a Controlling Interest 
\8\ in any member of BOX LLC that, alone or together with any Affiliate 
\9\ of such member of BOX LLC, holds a Percentage Interest \10\ in BOX 
equal to or greater than 20%.\11\ Therefore, since Maple is acquiring a 
Controlling Interest in TMX Group, whose wholly owned indirect 
subsidiary, MX US, owns a 53.83% ownership interest in BOX LLC, Maple, 
as a Controlling Person, is required to be, and will become, a party to 
the BOX LLC Agreement pursuant to the proposed Instrument of Accession. 
As a result, Maple will agree to abide by all the provisions of the BOX 
LLC Agreement, including those provisions requiring submission to the 
jurisdiction of the Commission.\12\ The Exchange proposes to make this 
proposal operative upon the successful completion of the Offer, which 
is currently scheduled to expire on February 29, 2012.
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    \7\ A ``Controlling Person'' is defined as ``a Person who, alone 
or together with any Affiliate of such Person, holds a controlling 
interest in a [BOX] Member.'' See Section 8.4(g)(v)(B), BOX LLC 
Agreement.
    \8\ A ``Controlling Interest'' is defined as ``the direct or 
indirect ownership of 25% or more of the total voting power of all 
equity securities of a Member (other than voting rights solely with 
respect to matters affecting the rights, preferences, or privileges 
of a particular class of equity securities), by any Person, alone or 
together with any Affiliate of such Person.'' See Section 
8.4(g)(v)(A), BOX LLC Agreement.
    \9\ An ``Affiliate'' is defined as ``, with respect to any 
Person, any other Person controlling, controlled by or under common 
control with, such Person. As used in this definition, the term 
``control'' means the possession, directly or indirectly, of the 
power to direct or cause the direction of the management and 
policies of a Person, whether through the ownership of voting 
securities, by contract or otherwise with respect to such Person. A 
Person is presumed to control any other Person, if that Person: (i) 
Is a director, general partner, or officer exercising executive 
responsibility (or having similar status or performing similar 
functions); (ii) directly or indirectly has the right to vote 25 
percent or more of a class of voting security or has the power to 
sell or direct the sale of 25 percent or more of a class of voting 
securities of the Person; or (iii) in the case of a partnership, has 
contributed, or has the right to receive upon dissolution, 25 
percent or more of the capital of the partnership.'' See Section 
1.1, BOX LLC Agreement.
    \10\ The ``Percentage Interest'' is defined as ``the ratio of 
the number of Units held by the Member to the total of all of the 
issued Units, expressed as a percentage and determined with respect 
to each class of Units, whenever applicable.'' See Section 1.1, BOX 
LLC Agreement.
    \11\ See Section 8.4(g), BOX LLC Agreement.
    \12\ The BOX LLC Agreement states, in part, that ``the Members, 
officers, directors, agents, and employees of Members irrevocably 
submit to the exclusive jurisdiction of the U.S. federal courts, 
U.S. Securities and Exchange Commission, and the Boston Stock 
Exchange, for the purposes of any suit, action or proceeding 
pursuant to U.S. federal securities laws, the rules or regulations 
thereunder, arising out of, or relating to, BOX activities or 
Article 19.6(a), (except that such jurisdictions shall also include 
Delaware for any such matter relating to the organization or 
internal affairs of BOX, provided that such matter is not related to 
trading on, or the regulation, of the BOX Market), and hereby waive, 
and agree not to assert by way of motion, as a defense or otherwise 
in any such suit, action or proceeding, any claims that they are not 
personally subject to the jurisdiction of the U.S. Securities and 
Exchange Commission, that the suit, action or proceeding is an 
inconvenient forum or that the venue of the suit, action or 
proceeding is improper, or that the subject matter hereof may not be 
enforced in or by such courts or agency.'' See BOX LLC Agreement, 
Section 19.6.
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    For the reasons stated above, the Exchange is submitting to the 
Commission the proposed Instrument of Accession to the BOX LLC 
Agreement as a rule change.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\13\ in general, and furthers 
the objectives of Section 6(b)(1),\14\ in particular, in that it 
enables the Exchange to be so organized so as to have the capacity to 
be able to carry out the purposes of the Act and to comply, and to 
enforce compliance by its exchange members and persons associated with 
its exchange members, with the provisions of the Act, the rules and 
regulations thereunder, and the

[[Page 13678]]

rules of the Exchange. The Exchange also believes that this filing 
furthers the objectives of Section 6(b)(5) of the Act \15\ in that it 
is designed to facilitate transactions in securities, 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.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5) [sic].
    \15\ 15 U.S.C. 78f(b)(5).
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    Additionally, the Exchange notes that the provisions of the BOX LLC 
Agreement, previously approved by the Commission, provide a framework 
for addressing the Acquisition. Accordingly, the Exchange believes the 
Acquisition does not present any novel issues that have not been 
anticipated and addressed by the BOX LLC Agreement.

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

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not 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) of the Act \16\ and Rule 19b-
4(f)(6) thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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. The 
Exchange has satisfied this requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest because the Acquisition does not present any novel issues that 
have not been anticipated and addressed by the BOX LLC Agreement. 
Therefore, the Commission designates the proposal operative upon 
filing.\18\
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    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule'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.

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 email to rule-comments@sec.gov. Please include 
File Number SR-BX-2012-014 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-BX-2012-014. 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 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 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 
publicly available. All submissions should refer to File Number SR-BX-
2012-014, and should be submitted on or before March 28, 2012.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-5473 Filed 3-6-12; 8:45 am]
BILLING CODE 8011-01-P