Document ID: SEC-2011-0999-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2011-07-14T04:00Z

[Federal Register Volume 76, Number 135 (Thursday, July 14, 2011)]
[Notices]
[Pages 41549-41551]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-17691]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 64845; File No. SR-Phlx-2011-90]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by NASDAQ OMX PHLX LLC Relating to Board of Director 
Qualifications

July 8, 2011.
    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 June 30, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') 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 the Exchange. 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. 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 By-Law Article III, 
Section 3-2 regarding Board of Director qualifications.
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    \3\ 15 U.S.C. 78s(b)(1).
    \4\ 17 CFR 240.19b-4.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, 
at the principal office of the Exchange, 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.

[[Page 41550]]

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 Exchange By-Law 
Article III, Section 3-2 to expand the qualifications for a director 
position so that the Exchange's Board of Directors is comprised of 
representatives of various interests. Specifically, the Exchange 
proposes to amend the current provision of Section 3-2, regarding 
issuer representative(s), to require at least one Director 
representative of issuers and investors, along with the requisite 
Public Directors,\5\ Industry Directors \6\ and Member Representative 
Directors.\7\
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    \5\ See Exchange By-Law Article I(gg).
    \6\ See Exchange By-Law Article I(p).
    \7\ See Exchange By-Law Article I(w).
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    Currently, Article III, Section 3-2 provides: ``[T]he number of 
Non-Industry Directors, including at least one Public Director and at 
least one issuer representative (or if the Board consists of ten or 
more Directors, at least two issuer representatives), shall equal or 
exceed the sum of the number of Industry Directors and Member 
Representative Directors to be elected under the terms of the LLC 
Agreement.'' The Exchange recently adopted this provision to its By-
Laws.\8\
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    \8\ See Securities Exchange Act Release No. 64338 (April 25, 
2011), 76 FR 24069 (April 29, 2011) (SR-Phlx-2011-13) (A rule 
change, among other things, to conform the Exchange By-Laws to the 
By-Laws of the NASDAQ Stock Market LLC).
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    The Exchange is now seeking to expand the requirement to have a 
Director representative of issuers and investors instead of the 
requirement to have at least one issuer representative (or if the Board 
consists of ten or more Directors at least two issuer 
representatives.\9\ The Director representative of issuers and 
investors would be nominated by the Nominating Committee and elected by 
the sole shareholder, The NASDAQ OMX Group, Inc.\10\
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    \9\ The Exchange believes that this qualification is more 
appropriate for the Exchange which does not have the expansive 
listings of the NASDAQ Stock Market LLC.
    \10\ See By-Law Article V, Section 5-3 and Article II, Section 
2-1.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \12\ 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, because the composition of the Exchange's Board of Directors 
fosters the protection of investors by insuring [sic] that they are 
represented on the Board.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed Board composition satisfies 
Section 6(b)(3) of the Act,\13\ in that one Director representative 
represents issuers and investors. The Board composition continues to 
provide for fair representation on the Exchange's board as required by 
Section 6(b)(3) of the Act \14\ in that twenty percent of the Directors 
represent members and there is a process for selecting Member 
Representative Directors to the Board.\15\ Finally, the Public 
Directors continue to ensure that no single group of market 
participants has the ability to systematically disadvantage other 
market participants through the Exchange's governance process and also 
bring a unique, unbiased prospective to the Board. The Exchange 
believes that this amendment continues to maintain the necessary board 
requirements which serve to protect the public interest and provide for 
fair representation of members.
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    \13\ 15 U.S.C. 78f(b)(3).
    \14\ 15 U.S.C. 78f(b)(3).
    \15\ See By-Law Article II.
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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

    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 (i) As the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such 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 rule-comments@sec.gov. Please include 
File Number SR-Phlx-2011-90 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-2011-90. 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 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 the 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 available publicly. All 
submissions should refer to File Number SR-Phlx-2011-90 and should be 
submitted on or before August 4, 2011.

[[Page 41551]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-17691 Filed 7-13-11; 8:45 am]
BILLING CODE 8011-01-P