Document ID: SEC-2011-0626-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Boston Stock Exchange Clearing Corp.
Posted Date: 2011-05-04T04:00Z

[Federal Register Volume 76, Number 86 (Wednesday, May 4, 2011)]
[Notices]
[Pages 25396-25397]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10855]

[[Page 25396]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64356; File No. SR-BSECC-2011-002]

Self-Regulatory Organizations; The Boston Stock Exchange Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Amendments to the By-Laws of its Parent 
Corporation, the NASDAQ OMX Group, Inc.

April 27, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), \1\ notice is hereby given that on April 14, 2011, the 
Boston Stock Exchange Clearing Corporation (``BSECC'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change described in Items I, II, and III below, which Items have been 
prepared primarily by BSECC. BSECC filed the proposal pursuant to 
Section 19(b)(3)(A)(iii) of the Act \2\ and Rule 19b-4(f)(6) \3\ 
thereunder so that the proposal was effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change relate to amendments to the By-Laws of 
BSECC's parent corporation, The NASDAQ OMX Group, Inc. (``NASDAQ 
OMX'').

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, BSECC 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. BSECC has prepared summaries, set forth in sections (A), 
(B), and (C) below, of the most significant aspects of these 
statements.\4\
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    \4\ The Commission has modified the text of the summaries 
prepared by BSECC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    NASDAQ OMX recently made certain clarifying amendments to its By-
Laws.\5\ Specifically, the recently approved NASDAQ OMX rule change: 
(i) Amended the name of the Nominating Committee to the Nominating & 
Governance Committee; (ii) amended the NASDAQ OMX PHLX, Inc. reference 
to reflect a recent conversion to a limited liability company; and 
(iii) clarified By-Law Article IV, Section 4.4 that broker nonvotes are 
not counted as a vote cast either ``for'' or ``against'' a director in 
an uncontested election.\6\
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    \5\ Securities Exchange Act Release No. 34-64285 (April 8, 
2011), 76 FR 21085 (April 14, 2011) (File No. SR-NASDAQ-2011-025) 
(``Approval Order''). SR-NASDAQ-2011-025 was filed by NASDAQ Stock 
Market LLC on behalf of NASDAQ OMX to amend the By-Laws of its 
parent corporation.
    \6\ Id.
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    NASDAQ OMX By-Laws previously provided for a Nominating Committee, 
which is appointed pursuant to the By-Laws. In addition to the 
responsibilities listed in By-Law Article IV, Section 4.13(h), the 
Nominating Committee also conducts certain governance functions such as 
consulting with the Board of Directors (``Board'') and the management 
to determine the characteristics, skills, and experience desired for 
the Board as a whole and for its individual members, overseeing the 
annual director evaluation, and reviewing the overall effectiveness of 
the Board. Accordingly, NASDAQ OMX renamed and changed all references 
to the ``Nominating Committee'' in the By-Laws, to the ``Nominating & 
Governance Committee'' so that the title of the committee accurately 
reflects all of its current functions, including those that are deemed 
governance functions. The proposal to rename the Nominating Committee 
did not change the function of the committee but was intended to 
clarify the current functions and its governance role with respect to 
the Board selection process.
    Additionally, NASDAQ OMX amended Article 1, Section (o) of NASDAQ 
OMX's By-Laws to change the reference to ``NASDAQ OMX PHLX, Inc.'' to 
``NASDAQ OMX PHLX LLC'' to reflect a recently filed rule change to 
convert NASDAQ OMX PHLX from a Delaware corporation to a Delaware 
limited liability company.\7\
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    \7\ Securities Exchange Act Release No. 34-62783 (August 27, 
2010), 75 FR 54204 (September 3, 2010) (File No. SR-Phlx-2010-104).
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    Finally, NASDAQ OMX added the words ``and broker nonvotes'' to 
NASDAQ OMX's By-Law Article IV, Section 4.4 to make clear that broker 
nonvotes will not be counted as votes cast either ``for'' or 
``against'' that director's election. In its filing to amend NASDAQ 
OMX's By-Laws, NASDAQ Stock Market LLC noted that NASDAQ OMX's past 
practice has been to not count a broker nonvote as a vote cast either 
for or against a director's election.\8\ Accordingly, this change 
clarifies this practice by codifying it into the By-Laws, especially in 
light of NASDAQ OMX's recent change to a majority vote standard in the 
uncontested election of directors.
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    \8\ Securities Exchange Act Release No. 34-63925 (February 17, 
2011), 76 FR 10418 (February 24, 2011) (File No. SR-NASDAQ-2011-
025).
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    In 2010, NASDAQ OMX amended its By-Laws to state that in an 
uncontested election, a majority voting standard would apply to the 
election of its directors, requiring directors to be elected by the 
holders of a majority of the votes cast at any meeting for the election 
of directors at which a quorum is present in an uncontested 
election.\9\ A plurality standard would still remain in a contested 
election. While in its filing to amend NASDAQ OMX's By-Laws, NASDAQ 
Stock Market LLC noted that it has always been NASDAQ OMX's practice to 
not count broker nonvotes ``for'' or ``against'' in director elections, 
the Commission noted in its Approval Order that the impact of the 
broker nonvote and how such votes are counted will take on added 
significance under NASDAQ OMX's newly adopted majority vote standard 
for director elections. Although in its filing NASDAQ Stock Market LLC 
stated that under Delaware case law,\10\ broker nonvotes are not 
considered as votes cast for or against a proposal or director nominee, 
BSECC proposes the change for clarity and transparency purposes.
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    \9\ Securities Exchange Act Release 34-61786 (April 8, 2010), 75 
FR 19436 (April 14, 2010) (File No. SR-NASDAQ-2010-025).
    \10\ Berlin v. Emerald Partners, 552 A.2d 482 494 (Del Supr. 
1988).
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    BSECC believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\11\ in general, and with Sections 
6(b)(1) and 6(b)(5) of the Act,\12\ in particular, in that the proposal 
enables BSECC to be so organized as to have the capacity to be able to 
carry out the purposes of the Act, the rules and regulations 
thereunder, and self-regulatory organization rules, and is 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

[[Page 25397]]

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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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(1),(5).
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    BSECC believes that changing the name of the Nominating Committee 
to the Nominating and Governance Committee and amending references to 
an exchange name to reflect a corporate change to a limited liability 
company are both clarifying in nature. The changes will ensure that the 
committee's title accurately reflects its functions and will ensure 
that the By-Laws accurately and properly reflect an exchange entity 
name. As discussed above, the amendment that broker nonvotes will not 
be counted as a vote either ``for'' or ``against'' in director 
elections will codify NASDAQ OMX's past practice, providing clarity and 
transparency. Accordingly BSECC believes that the amendments are 
consistent with investor protection and the public interest.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    BSECC does not believe that the proposed rule change will have any 
impact or impose any burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants, or Others

    Written comments relating to the proposed rule change have not been 
solicited or received. BSECC will notify the Commission of any written 
comments received by BSECC.

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

    The foregoing proposed rule change has become effective upon filing 
pursuant to Section 19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-
4(f)(6) \14\ thereunder because the 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 after the date of the filing, or such 
shorter time as the Commission may designate. 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 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. 
NASDAQ OMX PHLX LLC has satisfied this requirement.
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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-BSECC-2011-002 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-BSECC-2011-002. 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 such filings also will be 
available for inspection and copying at the principal office of BSECC 
and on BSECC's Web site at http://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/pdf/bsecc-filings/2011/SR-BSECC-2011-002.pdf.
    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-BSECC-2011-002 
and should be submitted on or before May 25, 2011.

    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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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-10855 Filed 5-3-11; 8:45 am]
BILLING CODE 8011-01-P