Document ID: SEC-2008-1033-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Stock Clearing Corporation of Philadelphia
Posted Date: 2008-07-23T04:00Z

[Federal Register: July 23, 2008 (Volume 73, Number 142)]
[Notices]               
[Page 42890-42891]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23jy08-90]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58180; File No. SR-SCCP-2008-01]

 
Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing of Amendment No. 1 and Order Granting 
Accelerated Approval to a Proposed Rule Change, as Modified by 
Amendment No. 1 Thereto, To Amend and Restate Its Articles of 
Incorporation

July 17, 2008.

I. Introduction

    On April 24, 2008, Stock Clearing Corporation of Philadelphia 
(``SCCP'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'').\1\ Notice of the 
proposal was published in the Federal Register on May 20, 2008.\2\ SCCP 
filed Amendment No. 1 to the proposed rule change on July 2, 2008.\3\ 
The Commission received no comments on the proposed rule change. This 
order provides notice of filing of Amendment No. 1 to the proposed rule 
change, and grants accelerated approval to the proposed rule change, as 
modified by Amendment No. 1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 57817 (May 14, 2008), 73 
FR 29171.
    \3\ In Amendment No. 1, SCCP filed the complete Certificate of 
Incorporation and amended By-Laws of The NASDAQ OMX Group, Inc. 
(``NASDAQ OMX'') in order to propose their adoption as rules of 
SCCP. The By-Laws contained minor amendments to terminology to apply 
to SCCP and SCCP's parent corporation, the Philadelphia Stock 
Exchange, Inc. (``Phlx''), all of the same provisions that are 
currently specifically applicable to The NASDAQ Stock Market LLC 
(``NASDAQ''). Such amendments are being made in connection with the 
NASDAQ OMX Merger, as defined in footnote 6 below. The amended By-
Laws were published for comment in a separate filing by NASDAQ. See 
Securities Exchange Act Release No. 57761 (May 1, 2008), 73 FR 26182 
(May 8, 2008) (notice of SR-NASDAQ-2008-035) (``NASDAQ Stock Market 
Proposal'').
---------------------------------------------------------------------------

II. Description

    SCCP is amending its current Articles of Incorporation 
(``Articles'') to more clearly state that all of the authorized shares 
of common stock of SCCP are issued and outstanding and are held by 
Phlx. In addition, SCCP is adding language to its Articles relating to 
transfers and assignments of SCCP shares of stock. SCCP is restating 
its Articles to consolidate previous amendments and make other 
technical amendments, which according to SCCP will modernize the 
existing language in the Articles.\4\
---------------------------------------------------------------------------

    \4\ The specific amendments proposed for SCCP's Articles can be 
viewed at http://www.phlx.com/SCCP/sccp_rules/SR-SCCP-2008-01.pdf.
---------------------------------------------------------------------------

    The purpose of the amendment and restatement of the Articles is to 
ensure that any future change in ownership of SCCP stock, whether 
transferred or assigned, in whole or in part, would be filed with the 
Commission under Section 19 of the Act and the rules promulgated 
thereunder. This language is consistent with language recently approved 
by the Commission in connection with the amending by Phlx of its 
Certificate of Incorporation and By-Laws \5\ as a result of the 
proposed acquisition of Phlx by NASDAQ OMX.\6\
---------------------------------------------------------------------------

    \5\ Securities Exchange Act Release No. 58179 (July 17, 2008) 
[File No. SR-Phlx-2008-31] (order approving proposed rule change 
relating to NASDAQ OMX's acquisition of Phlx).
    \6\ On November 7, 2007, NASDAQ OMX announced that it had 
entered into an agreement with Phlx pursuant to which NASDAQ OMX 
would acquire all of the outstanding capital stock of Phlx. In 
connection with this acquisition, Pinnacle Merger Corp., a Delaware 
corporation and wholly owned subsidiary of NASDAQ OMX, would be 
merged with and into Phlx with Phlx surviving the merger (``NASDAQ 
OMX Merger''). As a result of the NASDAQ OMX Merger, all of Phlx's 
common stock would be owned by NASDAQ OMX. Thereafter, NASDAQ OMX 
would operate Phlx as a wholly-owned subsidiary and SCCP as an 
indirect wholly-owned subsidiary. Phlx and SCCP would continue to be 
separate self-regulatory organizations.
---------------------------------------------------------------------------

III. Discussion

    The Commission finds that the rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder and 
particularly with the requirements of Section 17A(b)(3)(C) of the 
Act.\7\ The proposed rule change would amend SCCP's Articles to reflect 
the proposed NASDAQ OMX Merger. The Commission notes that the proposed 
rule change does not amend SCCP's rules or procedures with respect to 
the clearance and settlement of securities transactions or the 
safeguarding of securities and funds which are in SCCP's control or for 
which it is responsible. Section 17A(b)(3)(C) of the Act requires that 
a clearing agency's rules assure the fair representation of its 
shareholders and participants in the selection of its directors and 
administration of its affairs. SCCP

[[Page 42891]]

would remain a wholly-owned subsidiary of Phlx following the NASDAQ OMX 
Merger and the SCCP By-Laws relating to the selection, composition, 
powers, and duties of the SCCP board of directors, committees, and 
officers would remain unchanged. Accordingly, the Commission finds that 
SCCP's rules would continue to assure the fair representation of its 
shareholders and participants in the section of SCCP's directors and 
the administration of SCCP's affairs as required by Section 
17A(b)(3)(C).
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78q-1(b)(3)(C).
---------------------------------------------------------------------------

IV. Accelerated Approval

    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\8\ for approving the proposal, as modified by Amendment No. 1, 
prior to the thirtieth day after the date of publication of notice of 
filing of Amendment No. 1 in the Federal Register.\9\ In Amendment No. 
1, SCCP proposed to adopt as rules of SCCP the Certificate of 
Incorporation and By-Laws of NASDAQ OMX. The Certificate of 
Incorporation, as filed by the SCCP, was previously approved by the 
Commission as rules of the NASDAQ.\10\ The NASDAQ OMX By-Laws were 
similarly approved by the Commission.\11\ As filed by the SCCP, the 
NASDAQ OMX By-Laws include certain new terminology to reflect the 
acquisition of Phlx and SCCP by NASDAQ OMX. These changes were filed by 
NASDAQ Exchange as a proposed rule change, and were published for 
comment.\12\ The Commission received no comments on the proposed 
changes to the NASDAQ OMX By-Laws.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2).
    \9\ Pursuant to Section 19(b)(2) of the Act, 15 U.S.C. 
78s(b)(2), the Commission may not approve any proposed rule change, 
or amendment thereto, prior to the thirtieth day after the date of 
publication of the notice thereof, unless the Commission finds good 
cause for so doing.
    \10\ See Securities Exchange Act Release No. 51328 (January 13, 
2006), 71 FR 3550 (January 23, 2006) (order approving the 
application of NASDAQ for registration as a national securities 
exchange).
    \11\ See id.
    \12\ See Securities Exchange Act Release No. 57761, supra note 
3.
---------------------------------------------------------------------------

    As discussed more fully in the NASDAQ Stock Market Proposal, 
certain provisions of NASDAQ OMX's Certificate and By-Laws are designed 
to facilitate the ability of NASDAQ OMX's SRO subsidiaries, including 
SCCP, to maintain the independence of each of the SRO subsidiaries' 
self-regulatory function, enable each SRO subsidiary to operate in a 
manner that complies with the federal securities laws, and facilitate 
the ability of each SRO subsidiary and the Commission to fulfill their 
regulatory and oversight obligations under the Act.\13\ As stated 
above, the Commission finds that such provisions are consistent with 
the Act.\14\ Notably, the NASDAQ OMX Certificate of Incorporation and 
By-Laws are rules of NASDAQ that have been approved previously by the 
Commission, as noted above, and the changes to the NASDAQ OMX By-Laws 
were published for notice and comment, as noted above, and the 
Commission did not receive any comments thereon. Accordingly, the 
Commission finds good cause for approving SCCP's proposal, as modified 
by Amendment No. 1, on an accelerated basis, pursuant to Section 
19(b)(2) of the Act.
---------------------------------------------------------------------------

    \13\ In addition to the NASDAQ OMX Merger, NASDAQ OMX entered 
into an agreement with the Boston Stock Exchange (``BSE''), pursuant 
to which NASDAQ OMX would acquire all of the outstanding membership 
interests in BSE (``BSE Acquisition''). See Securities Exchange Act 
Release Nos. 57757 (May 1, 2008), 73 FR 26159 (SR-BSE-2008-23) 
(notice of proposed rule change related to BSE Acquisition) and 
57782 (May 6, 2008), 73 FR 27583 (May 13, 2008) (SR-BSECC-2008-01) 
(notice of proposal to amend the articles of organization and by-
laws of the Boston Stock Exchange Clearing Corporation to reflect 
its proposed acquisition by NASDAQ OMX).
    \14\ See supra note 7 and accompanying text.
---------------------------------------------------------------------------

V. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 1, including whether Amendment No. 1 
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 rule-comments@sec.gov. Please include 
File Number SR-SCCP-2008-01 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-2008-01. 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 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 inspection and 
copying 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 SCCP. 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-SCCP-2008-01 and should be 
submitted on or before August 13, 2008.

VI. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 17A of the Act and the rules and regulations 
thereunder.\15\
---------------------------------------------------------------------------

    \15\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f). See Securities Exchange Act 
Release No. 58179, supra note 5.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-SCCP-2008-01), as modified 
by Amendment No. 1 thereto, be and hereby is approved on an accelerated 
basis.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-16824 Filed 7-22-08; 8:45 am]

BILLING CODE 8010-01-P