Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing of a Proposed Rule Change Relating to the Nomination and Election of Candidates for Governor and Independent Governor, 11152-11158 [E9-5565]
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Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices
place. In that way, the parties can
evaluate their current business situation
and negotiate an extension, if any, that
is reasonable and appropriate under
then-existing conditions existing within
each party, and under then-existing
market and economic situations as a
whole.7
Monthly MAP Volume Bonus
The Exchange pays each Eligible MAP
$50,000 per month (the ‘‘Volume
Bonus’’) for each month in which the
Eligible Contracts of such Eligible MAP
in the immediately preceding calendar
month exceed the higher of: (1)
1,500,000; or (2) three times the
Baseline Order Flow of such Eligible
MAP. The Volume Bonus is in addition
to the amount for any Subsidy that is
payable.
The Exchange proposes to delete the
monthly MAP Volume Bonus from the
Market Access Provider Subsidy section
of its fee schedule in order to be in a
better position to manage its allocation
of costs.
Marketing Subsidy
Currently, the Exchange pays a MAP
Marketing Subsidy of $25,000.00 per
month, for a maximum of three months
(totaling $75,000.00) to Eligible MAPs,
in addition to the per-contract Subsidy.
The MAP Marketing Subsidy is
intended to be used by the Eligible MAP
to: (i) Promote the Subsidy program; (ii)
provide technical assistance and
information to its customers on the
equity options order routing
functionality that pertains to the
Subsidy program; and (iii) analyze the
volume based usage of such order
routing functionality by the Eligible
MAP and its customers, in each case
with a view towards the successful
launch of the Eligible MAP’s
participation in the Subsidy for Eligible
MAPs.
The Exchange proposes to delete the
Marketing Subsidy from the Market
Access Provider Subsidy section of its
fee schedule. The Exchange intends to
attract new participants into the MAP
program using more of a variable cost
rather than a fixed cost.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 8 in general, and furthers the
7 In the event that there is any change to the status
of the Monthly MAP Volume Bonus and/or the
MAP Marketing Subsidy, or if the Exchange
negotiates any MAP Agreement extension, the
Exchange will file a proposed rule change pursuant
to Section 19(b)(3)(A)(ii) of the Act and Rule 19b–
4(f)(2) thereunder.
8 15 U.S.C. 78f(b).
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objectives of Sections 6(b)(4) of the Act 9
in particular, in that it is designed to
provide for the equitable allocation of
reasonable dues, fees and other charges
among Exchange members by deleting
standardized volume bonuses and
marketing subsidies, thus enabling the
Exchange to manage its costs relating to
MAPs.
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
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act 10 and
paragraph (f)(2) of Rule 19b–4 11
thereunder. At any time within 60 days
of the filing of the proposed rule change,
the Commission may summarily
abrogate 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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2009–19 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.
U.S.C. 78f(b)(4).
U.S.C. 78s(b)(3)(A)(ii).
11 17 CFR 240.19b–4(f)(2).
All submissions should refer to File
Number SR–Phlx–2009–19. 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 (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 inspection and copying in
the Commission’s Public Reference
Room 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
available publicly. All submissions
should refer to File Number SR–Phlx–
2009–19 and should be submitted on or
before April 6, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–5564 Filed 3–13–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59538; File No. SR–Phlx–
2009–17]
Self-Regulatory Organizations;
NASDAQ OMX PHLX, Inc.; Notice of
Filing of a Proposed Rule Change
Relating to the Nomination and
Election of Candidates for Governor
and Independent Governor
March 9, 2009.
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
23, 2009, NASDAQ OMX PHLX, Inc.
(‘‘Phlx’’ or the ‘‘Exchange’’) filed with
9 15
12 17
10 15
1 15
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CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices
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 Phlx. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange, proposes to amend its
By-Laws to: (i) Replace the current
‘‘Nominating, Elections and Governance
Committee’’ with a newly named
‘‘Nominating Committee’’ and a
‘‘Member Nominating Committee’’; (ii)
modify the processes for nominating
candidates for Governor and Designated
Independent Governor; (iii) modify the
procedures for Member Organization
Representatives to vote for Designated
Governor nominees and the procedures
for meetings of Members and Member
Organizations; (iv) modify the
procedures for filling vacancies on the
Board of Governors; (v) modify the
definitions of ‘‘Independent Governor’’,
‘‘Trust Agreement’’ and add the
following definitions: ‘‘Industry
Member’’, ‘‘Non-Industry Member’’,
‘‘Public Member’’, ‘‘Member
Representative member’’, ‘‘Contested
Vote’’, ‘‘List of Candidates’’, ‘‘Member
Voting Record Date’’ and ‘‘Voting Date’’;
and (vi) amend the Certificate of
Incorporation and By-Laws to eliminate
the Vice Chair and PBOT Governor
positions from the Board of Governors.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://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.
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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 streamline the processes
related to the nomination and election
of candidates for Governor and
Designated Independent Governor
positions and to conform the NASDAQ
OMX PHLX, Inc. governance structure
to that of The NASDAQ Stock Market
LLC.3 To that end, the proposal
establishes independent Nominating
and Member Nominating Committees,
modifies the process for nominating
candidates for Governor and Designated
Independent Governor and the
procedures for Member Organization
Representatives 4 to vote for Designated
Governor nominees and eliminates the
Vice Chair and PBOT Governor
positions on the Board similar to The
NASDAQ Stock Market LLC, structure.
Nominating and Election of Governors
Current Nominating Process
Currently, the Nominating, Elections
and Governance Committee is
comprised of five members including
four Independent Governors 5 (one of
3 The NASDAQ Stock Market LLC is a subsidiary
of NASDAQ OMX GROUP, Inc., the parent
company of NASDAQ OMX PHLX, Inc. On July 24,
2008, The NASDAQ OMX GROUP, Inc. acquired
the Philadelphia Stock Exchange, Inc. See
Securities Exchange Act Release No. 58098 (July 17,
2008), 73 FR 42850 (July 23, 2008) (SR–NASDAQ–
2008–035) [sic]. Currently, the process for selection
of Governors differs between NASDAQ OMX PHLX,
Inc. and The NASDAQ Stock Market LLC. See
Securities Exchange Act Release No. 57757 (May 1,
2008), 73 FR 26159 (May 8, 2008) (SR–BSE–2008–
23) (Pursuant to a merger with The NASDAQ OMX
Group, Inc., the Boston Stock Exchange, Inc.
proposed to adopt By-Laws similar in all material
respects to the By-Laws of The NASDAQ Stock
Market LLC so that the exchanges could be operated
with similar governance structures.)
4 Pursuant to By-Law Article I, Section 1–1(w),
the term ‘‘Member Organization Representative’’
means the officer (or person in a similar position)
of a Member Organization designated by such
Member Organization as such Member
Organization’s Member Organization
Representative, who shall have the sole authority,
with respect to the selection or removal of
Designated Nominees as defined in Section 3–2(a)
to exercise any and all rights and to take any and
all actions on behalf of such Member Organization
and each Member who has designated such Member
Organization as his primary affiliation.
5 By-Law Article I, Section 1–1(p) defines an
Independent Governor as ‘‘* * * a Governor who
must satisfy the definition of Independent as set
forth herein and is duly elected to fill one of the
vacancies on the Board of Governors allocated to
the Independent Governors.’’ By-Law Article I,
Section 1–1(o) defines Independent as ‘‘The term
‘‘Independent’’ when used in the context of
Governors or committee members, shall mean
persons affirmatively determined by the Board as
having no Material Relationship with the Exchange
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whom must be a Designated
Independent Governor 6) and one
Member Governor 7. The Nominating,
Elections and Governance Committee
submits nominations for the positions of
Designated Governors from candidates
selected in accordance with Exchange
By-Law Article III, Section 3–4 and 3–
6 concerning qualifications and
recommendations received at open
meetings and in writing by the Secretary
of the Exchange. The Nominating,
Elections and Governance Committee
holds at least two (2) open meetings to
receive recommendations for the
positions of Designated Independent
Governors or Member Governor.8
Recommendations may be made by any
Member, participant or Member
Organization Representative or by any
Member of the Nominating, Elections or
Governance Committee then in office
and may be submitted in writing or in
person.9 Independent nominations for
the positions of Designated Governors
may be made by a written petition by
Member Organization Representatives
and filed with the Secretary of the
Exchange in a sealed envelope within
two (2) weeks after the posting of the
report of the Nominating, Elections and
Governance Committee to the Member
Organization Representatives.10
Nominations are valid only when signed
by Member Organization
Representatives representing not less
than fifty (50) votes.11
At the annual meeting of Members
and Member Organizations, Member
Organization representatives elect the
Designated Governors, who are then
elected at the annual Stockholders
meeting by the holder of the Series A
or any affiliate of the Exchange, any Member of the
Exchange or any affiliate of such Member, or any
issuer of securities that are listed or traded on the
Exchange or a facility of the Exchange.’’
6 By-Law Article I, Section 1–1(f) defines a
Designated Independent Governor as, ‘‘* * * those
* * * who are elected by the holder of the Series
A Preferred Stock in accordance with Article SIXTH
of the Certificate of Incorporation.’’
7 By-Law Article I, Section 1–1(u) defines a
Member Governor as, ‘‘* * * a Governor who is a
Member or a general partner or an executive officer
(vice-president and above) of a Member
Organization and is duly elected to fill the one (1)
vacancy on the Board of Governors allocated to the
Member Governor.’’
8 See By-Law Article III, Section 3–6.
9 See By-Law Article III, Section 3–6.
10 See By-Law Article III, Section 3–7.
11 See By-Law Article III, Section 3–7. Further,
‘‘[a] Member Organization Representative shall not
endorse more than one (1) nominee per vacancy;
provided, however, that the Member Organization
Representatives representing not less than seventyfive (75) votes may, by petition, propose an entire
ticket, or any portion thereof, for the vacancies of
Designated Governors on the Board of Governors to
be filled at the ensuing election.’’
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Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices
Preferred Stock.12 At the annual meeting
of stockholders, the Holder of Common
Stock presents for nomination to the
Nominating, Elections and Governance
Committee the candidates for Vice
Chair, Stockholder Governor and
Independent Governors for placement
on the ballot for election by the Holder
of Common Stock.13
Proposed Nominating Process
Under the proposed rule change, ByLaw Article III, Sections 3–4, 3–6, 3–7
and 3–16, Article X, Sections 10–1 and
10–19, Article XI, Section 11–1 and
Article XXVIII, Sections 28–3, 28–8 and
28–12 would be amended to replace the
current ‘‘Nominating, Elections and
Governance Committee’’ with a newly
named ‘‘Nominating Committee’’ and a
‘‘Member Nominating Committee’’ as
well as modify the processes for
nominating candidates for Governor and
Designated Independent Governor.
Further, By-Law Article III, Sections 3–
2, 3–3, 3–4, 3–6, 3–7, 3–8, 3–11, 3–12,
3–13 and 3–14, and Article XXVIII,
Section 28–2 would be amended to
modify the procedures for Member
Organization Representatives to vote for
Designated Governor nominees and the
procedures for meetings of Members
and Member Organizations. These
proposed amendments would conform
the NASDAQ OMX PHLX, Inc. By-Laws
to those of The NASDAQ Stock Market
LLC.
The proposed rule change amends ByLaw Article III, Sections 3–2 and 3–7 so
that Designated Governors would be
elected to the Board of Governors on an
annual basis.14 For each annual
election, the Board of Governors would
select a Member Voting Record Date 15
and a Voting Date.16 The Member
Voting Record Date would be at least 10
days but not more than 60 days prior to
the Voting Date.17 The Member
Nominating Committee would create a
list of one or more candidates for each
12 See Phlx By-Laws, Article III, Section 3–2(a)
and Article XXVIII, Section 28–2. On February 22,
2007, the Philadelphia Stock Exchange, Inc. (now
NASDAQ OMX PHLX, Inc.) entered into a Third
Amended and Restated Trust Agreement with
Wilmington Trust Company. The Exchange issued
to the Trust one share of Series A Preferred Stock,
which share has the exclusive right to elect and
remove Designated Governors. Wilmington Trust is
the Trustee of the Trust pursuant to the agreement.
13 See By-Law Article XXVIII, Section 28–3.
14 See similar provision in The NASDAQ Stock
Market LLC By-Laws at Article II, Section 1.
Currently, Governors are elected for terms of one
year.
15 A Member Voting Record Date definition is
proposed herein under the section titled
Definitions.
16 A Voting Date definition is proposed herein
under the section titled Definitions.
17 See similar provision in The NASDAQ Stock
Market LLC By-Laws at Article II, Section 1.
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Designated Governor position on the
Board to be elected by the Series A
Preferred Stock Holders at the annual
meeting of Stockholders or a special
meeting in lieu thereof.18 Promptly after
selection of the Voting Date, in a notice
transmitted to Member Organization
Representatives and in a prominent
location on a publicly accessible Web
site, the Exchange (i) shall announce the
Voting Date and the List of
Candidates,19 and (ii) shall describe the
procedures for Member Organization
Representatives to nominate candidates
for election at the next annual meeting
of Stockholders. In the event of a
Contested Vote,20 the Exchange shall
also send Member Organization
Representatives formal notice, which
notice shall be sent by the Exchange at
least 10 days but no more than 60 days
prior to the Voting Date to the Member
Organization Representatives of persons
that were Member Organizations on the
Member Voting Record Date, by any
means, including electronic
transmission, as determined by the
Board of Governors or committee
thereof.21 The notice shall indicate by
appropriate designation whether each
person on the List of Candidates is a
Member or a foreign currency options
participant of the Exchange or is a nonmember or non-foreign currency options
participant of the Exchange who is a
general partner or executive officer
(vice-president or above) of a Member
Organization or participant organization
of the Exchange or is nominated to be
a Designated Independent Governor.
An additional candidate may be
added to the List of Candidates by a
Member Organization Representative
that submits a timely and duly executed
written nomination to the Secretary of
the Exchange. To be timely, a Member
Organization Representative’s notice
would be delivered to the Secretary at
the principal executive offices of the
Exchange not later than the close of
business on the 90th day nor earlier
than the close of business on the 120th
day prior to the first anniversary of the
preceding year’s Voting Date, provided
however that in the event that the
Voting Date is more than 30 days before
or more than 70 days after such
18 This provision is similar to Exchange By-Law
Article III, Section 3–2 in that the Series A Preferred
Stock Holder would continue to be the mechanism
to elect the Member nominees. Moreover, it is
similar to The NASDAQ Stock Market LLC By-Law
Article II, Section 1, in that the Member Nominating
Committee creates the List of Candidates.
19 A List of Candidates definition is proposed
herein under the section titled Definitions.
20 A Contested Vote definition is proposed herein
under the section titled Definitions.
21 See similar provision in The NASDAQ Stock
Market LLC By-Laws at Article II, Section 1.
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anniversary date, notice by the Member
Organization Representative must be so
delivered not earlier than the close of
business on the 120th day prior to such
Voting Date and not later than the close
of business on the later of the 90th day
prior to such Voting Date or the tenth
day following the day on which public
announcement of such Voting Date is
first made by the Exchange.22 Such
Member Organization Representative’s
notice shall set forth: (i) As to the
person whom the Member Organization
Representative proposes to nominate for
election as a Designated Governor, all
information relating to that person that
is required to be disclosed in
solicitations of proxies for election of
directors in an election contest, or is
otherwise required, in each case
pursuant to Regulation 14A under the
Exchange Act and the rules thereunder
(and such person’s written consent to be
named in the List of Candidates as a
nominee and to serving as a Governor if
elected); (ii) a petition in support of the
nomination duly executed by the
Member Organization Representatives of
10% or more of all Member
Organizations; and (iii) the name and
address of the Member Organization
Representative making the
nomination.23 The Exchange may
require any proposed nominee to
furnish such other information as it may
reasonably require to determine the
eligibility of such proposed nominee to
serve as a Designated Governor.24
If by the date on which a Member
Organization Representative may no
longer submit a timely nomination,
there is only one candidate for each
Designated Governor position to be
voted on the Voting Date, the candidates
on the List of Candidates shall be the
‘‘Designated Nominees,’’ which the
holder of the Series A Preferred Stock
shall be required to elect as Designated
Governors in accordance with the
Certificate of Incorporation at Article
Six as well as the Trust Agreement. In
the event of a Contested Vote, the
Exchange would conduct a vote to
determine the Designated Nominees in
accordance with proposed Article III,
Section 3–7.25
If there is a Contested Vote, the
Designated Nominees would be selected
through a balloting process but without
a formal meeting of the Members and
22 See similar provision in The NASDAQ Stock
Market LLC By-Laws at Article II, Section 1.
23 See similar provision in The NASDAQ Stock
Market LLC By-Laws at Article II, Section 1.
24 See similar provisions in The NASDAQ Stock
Market LLC By-Laws at Article II, Section 1, which
relates to the nomination of alternate candidates.
25 See similar provisions in The NASDAQ Stock
Market LLC By-Laws at Article II, Section 1.
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Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices
Member Organizations. A formal notice
of the Voting Date and the List of
Candidates would be sent by the
Exchange at least 10 days but no more
than 60 days prior to the Voting Date to
the Member Organization
Representatives of persons that were
Member Organizations on the Member
Voting Record Date, by any means,
including electronic transmission, as
determined by the Board of Governors
or committee thereof.26 The notice
would indicate whether each person on
the List of Candidates was a Member or
foreign currency options participant of
the Exchange or a non-member or nonforeign currency options participant of
the Exchange who is a general partner
or executive officer of a Member
Organization or participant organization
of the Exchange or is nominated to be
a Designated Independent Governor.
Votes would be cast by written ballot,
electronic submission, or any other
means as set forth in a notice to the
Member Organization Representatives
sent by the Exchange prior to the Voting
Date. Only votes received prior to 11:59
p.m. Eastern Time on the Voting Date
would count for the election of a
Designated Nominee.27 The vote would
not be valid unless a majority of the
Member Organization Representatives
entitled to vote cast a vote; if a quorum
is lacking, the Board of Governors
would declare a subsequent Voting Date
and Member Voting Record Date for the
purpose of selecting Designated
Nominees and would again follow the
procedures for conducting a Contested
Election. These voting provisions
replace the current secret written ballot
provisions in Article III, Section 3–12.
Minor technical amendments were
made to Exchange By-Law Article III,
Section 3–13 related to quorums for
meetings of Members and Member
Organizations.
The persons on the List of Candidates
receiving the highest number of votes
for the category of Governor for which
they were nominated would be declared
the Designated Nominees for their
respective positions as Designated
Governors. In the case of a tie, the
names of the proposed Designated
Governors involved in such tie would
be referred to the Member Nominating
Committee, which would make the
selection as to who among such tying
proposed Designated Governors would
be nominated as the Designated
Nominees for election at the Annual
Meeting of Stockholders.
26 See similar provisions in The NASDAQ Stock
Market LLC By-Laws at Article II, Section 1.
27 See similar provision in The NASDAQ Stock
Market LLC By-Laws at Article II, Section 1 [sic].
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Except as provided in these By-Laws,
the Exchange shall not be required to
hold meetings of Members, Member
Organizations, or Member Organization
Representatives. If such a meeting is
held, however, the By-Laws currently
state that any notice of the meeting shall
be in writing and state the place, date,
hour and purpose of such meeting and
shall not be given less than ten days
before the date of the meeting nor more
than fifty days before the date of the
meeting. Exchange By-Law Article III,
Section 3–11 is proposed to be amended
to provide that the notice shall not be
given less than ten days before the date
of the meeting nor more than sixty days
before the date of the meeting. Also,
language is proposed to be added to that
By-Law to state that notice may be sent
via mail or electronic transmission and
if notice is sent via electronic
transmission, notice is given when sent
to the e-mail address of the Member
Organization Representative as it
appears on the books and records of the
Exchange.
Composition of Nominating Committee
This proposed rule change would
amend Exchange By-Law Article X,
Section 10–19 to create a Nominating
Committee which would nominate
candidates for all other vacant or new
Governor positions on the Board of
Governors that are not nominated by the
Member Nominating Committee. The
Nominating Committee would consist of
no fewer than six (6) and no more than
nine (9) members and the number of
Non-Industry members would equal or
exceed the number of Industry members
on the Committee. If the Nominating
Committee consists of six (6) members,
at least two (2) shall be Public Members.
If the Nominating Committee consists of
seven (7) or more members, at least
three shall be Public members. Also, no
officer or employee of the Company
shall serve as a member of the
Nominating Committee in any voting or
non-voting capacity. No more than three
of the Nominating Committee members
and no more than two of the Industry
members shall be current Governors.
Finally, a Nominating Committee
member may not simultaneously serve
on the Nominating Committee and the
Board of Governors unless such member
is in his or her final year of service on
the Board of Governors and following
that year, that member may not stand for
election to the Board of Governors until
such time as he or she is no longer a
member of the Nominating Committee.
Members of this Committee would be
appointed annually and may be
removed by a majority vote of the Board
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11155
of Governors.28 The Exchange’s
proposed amendments to the
Nominating Committee’s composition
and number of members attempts to
fairly represent the various interests of
the membership and trading
community, including investors. Also
the public governors should bring
diverse experience to the nominating
process.
Composition of Member Nominating
Committee
The proposal would amend Exchange
By-Law Article X, Section 10–19 to
create a Member Nominating Committee
which would nominate candidates for
each Designated Governor position on
the Board of Governors and also
nominate candidates for appointment by
the Board for each vacant or new
position on any committee that is to be
filled with a Member Representative
member. The Member Nominating
Committee would consist of no fewer
than three (3) and no more than six (6)
members. All members of the Member
Nominating Committee would be a
current associated person of a current
Member Organization. The Board of
Governors would appoint such
individuals after consultation with
Member Organization Representatives.
Members of this Committee would be
appointed annually and may be
removed by a majority vote of the Board
of Governors.29
By-Law Article X, Section 10–19
proposes to add language that the
Secretary shall collect from each
nominee for Governor such information
as is reasonably necessary to serve as
the basis for a determination of the
nominee’s classification as a Member
Governor, Stockholder Governor, or
Independent Governor, or Designated
Governor, if applicable, and the
Secretary shall certify to the Nominating
Committee or the Member Nominating
Committee each nominee’s
classification, if applicable. Governors
would update the information
submitted under this subsection at least
annually and upon request of the
Secretary, and shall report immediately
to the Secretary.
Board of Governor Vacancies and
Resignations
Under the proposed rule change, ByLaw Article III, Section 3–8, Article IV,
28 The provisions related to the Nominating
Committee are similar to the provisions in The
NASDAQ Stock Market LLC By-Laws at Article III,
Section 6.
29 The provisions related to the Member
Nominating Committee are similar to the provisions
in The NASDAQ Stock Market LLC By-Laws at
Article III, Section 6.
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Sections 4–6 and 4–7 and Article
XXVIII, Section 28–4 would be
amended to modify the procedures for
filling vacancies on the Board of
Governors. Currently, vacancies are
filled by the Nominating, Elections and
Governance Committee, subject to the
approval by a majority of the Governors
then in office, although less than a
quorum, or by a sole remaining
Governor.30 The proposed rule change
would provide that in the event of a
vacancy on the Board occurring between
annual meetings, the appropriate
nominating committee would nominate,
and the Board would appoint, a
replacement Governor to fill the
vacancy.31
Amendments are also proposed to
Exchange By-Law Article IV, Section 4–
6 to modify the timeframes associated
with submitting Board resignations.
Currently a Board member may resign at
any time by submitting a written
resignation to the Exchange which shall
take effect at the time of its receipt by
the Exchange unless another time is
fixed in the resignation.32 In the event
of a merger, consolidation or other
acquisition, the Board member is
currently required to notify the Chair of
the Board of Governors of their
resignation by the first day of the
January preceding the next annual
meeting of Stockholders. This proposal
seeks to revise the timeframe in the
event of a merger, consolidation or other
acquisition to state that a Board member
is required to notify the Chair of the
Board of Governors of their resignation
by the first day of the following month
of their resignation. Similarly, in the
event of a change in occupational
category or Member Organization or
participant organization, such Governor
is currently required to notify the Chair
of the Board of Governors of his
resignation by the first day of the
January preceding the next annual
election. This proposal seeks to amend
this language to similarly state that the
Board member shall notify the Chair in
the event of an occupational category or
Member Organization or participant
organization by the first day of the
following month. Additionally, Article
IV, Section 4–6 indicates that as related
to resignations in the event of a merger,
consolidation, or other acquisition or
because of a change in occupational
category, the resignations shall become
effective no later than the expiration of
the term of the outgoing class of
Governors. This language is being
30 See
By-Law Article IV, Section 4–7.
similar provisions in The NASDAQ Stock
Market LLC By-Laws at Article II, Section 3.
32 See By-Law Article IV, Section 4–6.
31 See
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deleted as it is no longer applicable. By
providing a shorter time period to
provide notification, the Exchange is
ensuring that the Board members will
continue to be qualified to serve on the
Board in their respective positions as
opposed to a longer notification period.
Definitions
The Exchange proposes to amend the
definitions of ‘‘Independent Governor’’,
and ‘‘Trust Agreement’’ and add the
definitions for ‘‘Industry Member’’,
‘‘Non-Industry Member’’ and ‘‘Public
Member.’’ The proposed rule change
would amend the definition of
Independent Governor as follows: The
term ‘‘Independent Governor’’ shall
mean a Governor who has no material
relationship with the Exchange or any
affiliate of the Exchange, any Member of
the Exchange or any affiliate of such
Member, or any issuer of securities that
are listed or traded on the Exchange or
a facility of the Exchange and is duly
elected to fill one of the vacancies on
the Board of Governors allocated to the
Independent Governors. The term
‘‘material relationship’’ will be defined
as a relationship, whether compensatory
or otherwise, that reasonably could
affect the independent judgment or
decision-making of the Governor.33
Also, the Exchange proposes to amend
By-Law Article I, Section 1–1–(dd) to
modify the definition of Trust
Agreement to include language that
indicates that such agreement may be
amended from time to time.34
The Exchange proposes adding the
following definition to Article I, Section
1–1, ‘‘Industry Member’’, ‘‘Non-Industry
Member’’ and ‘‘Public Member’’ as these
amendments correspond to the
proposed amendments to the election
process of Designated Governors. The
term ‘‘Industry Member’’ is proposed to
be added to Article I, Section 1–1(pp)
and shall mean a member of any
committee appointed by the Board of
Governors who (i) is or has served in the
prior three years as an officer, director,
or employee of a broker or dealer,
excluding an outside director or a
director not engaged in the day-to-day
management of a broker or dealer; (ii) is
an officer, director (excluding an
outside director), or employee of an
entity that owns more than ten percent
of the equity of a broker or dealer, and
the broker or dealer accounts for more
than five percent of the gross revenues
33 See footnote 5 for current Independent
Governor and Independent definitions.
34 The term ‘‘Trust Agreement’’ is currently
defined as the Third Amended and Restated Trust
Agreement, dated as of February 22, 2007, between
the Exchange and the trustee under such Trust
Agreement.
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received by the consolidated entity; (iii)
owns more than five percent of the
equity securities of any broker or dealer,
whose investments in brokers or dealers
exceed ten percent of his or her net
worth, or whose ownership interest
otherwise permits him or her to be
engaged in the day-to-day management
of a broker or dealer; (iv) provides
professional services to brokers or
dealers, and such services constitute 20
percent or more of the professional
revenues received by the committee
member or 20 percent or more of the
gross revenues received by the
committee member’s firm or
partnership; (v) provides professional
services to a director, officer, or
employee of a broker, dealer, or
corporation that owns 50 percent or
more of the voting stock of a broker or
dealer, and such services relate to the
director’s, officer’s, or employee’s
professional capacity and constitute 20
percent or more of the professional
revenues received by the committee
member or 20 percent or more of the
gross revenues received by the
committee member’s firm or
partnership; or (vi) has a consulting or
employment relationship with or
provides professional services to the
Exchange or any affiliate thereof or to
FINRA (or any predecessor) or has had
any such relationship or provided any
such services at any time within the
prior three years.35
The term ‘‘Non-Industry Member’’ is
proposed to be added at Article I,
Section 1–1(rr) and shall mean a
member of any committee appointed by
the Board of Governors who is (i) a
Public member; (ii) an officer, director,
or employee of an issuer of securities
listed on the Exchange; or (iii) any other
individual who would not be an
Industry member.36 The term ‘‘Public
Member is proposed to be added at
Article I, Section 1–1(ss) and shall mean
a member of any committee appointed
by the Board of Governors who has no
material business relationship with a
broker or dealer, the Exchange, or its
affiliates.37
The term ‘‘Member Representative
member’’ is proposed to be added at
Article I, Section 1–1(qq) and shall
mean a member of any committee
appointed by the Board of Governors
who has been elected or appointed after
35 This definition is substantially similar to the
same term found in The NASDAQ Stock Market
LLC By-Laws at Article I.
36 This definition is substantially similar to the
same term in The NASDAQ Stock Market LLC ByLaws at Article I.
37 This definition is substantially similar to the
same term found in The NASDAQ Stock Market
LLC By-Laws at Article I.
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Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices
having been nominated by the Member
Nominating Committee pursuant to
these By-Laws.38 The term ‘‘Contested
Vote’’ is proposed to be added at Article
I, Section 1–1(mm) and shall mean a
process for selection of one or more
Designated Governors for which the
number of candidates on the List of
Candidates exceeds the number of
positions to be elected by the holder of
the Series A Preferred Stock.39 The term
‘‘List of Candidates’’ is proposed to be
added at Article I, Section 1–1(nn) and
shall mean the list of candidates for
Designated Governor positions to be
voted upon by Member Organization
Representatives on a Voting Date.40 The
term ‘‘Member Voting Record Date’’ ‘‘ is
proposed to be added at Article I,
Section 1–1(oo) and shall mean a date
selected by the Board of Governors for
the purpose of determining the Member
Organization Representatives entitled to
vote for Designated Governors on a
Voting Date in the event of a Contested
Vote.41 Finally, the term ‘‘Voting Date’’
is proposed to be added at Article I,
Section 1–1(tt) and shall mean a date
selected by the Board of Governors for
Member Organization Representatives to
vote with respect to Designated
Governors in the event of a Contested
Vote.42
The amended and newly added
definitions are necessary to effectuate
the amendments proposed herein
related to the nominating process to
elect Designated Governors.
Vice Chair and PBOT Governor
Elimination
The Exchange’s proposed rule change
seeks to amend the Certificate of
Incorporation and delete By-Law Article
V, Section 5–3 to delete the Vice Chair
position as well as amend By-Law
Article 1, Section 1–1, Article III,
Section 3–16, Article IV, Sections 4–1
and 4–14, Article X, Sections 10–14 and
10–15 and Article XXVIII, Sections 28–
3 and 28–12 to eliminate references to
the Vice Chair position.43
38 This definition is substantially similar to the
same term found in The NASDAQ Stock Market
LLC By-Laws at Article I.
39 This definition is substantially similar to that
of Contested Election found in The NASDAQ Stock
Market LLC By-Laws at Article I.
40 This definition is substantially similar to the
same term found in The NASDAQ Stock Market
LLC By-Laws at Article I.
41 This definition is substantially similar to that
of Record Date found in The NASDAQ Stock
Market LLC By-Laws at Article I.
42 This definition is substantially similar to that
of Election Date found in The NASDAQ Stock
Market LLC By-Laws at Article I.
43 The Vice Chair is elected by the Holder of
Common Stock and does not effect the fair
representation requirement.
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11157
After integration and a period of time
functioning under a global holding
company structure, the Exchange has
determined that eliminating this
position would streamline the
governance structure. The NASDAQ
Stock Market does not have a Vice
Chair. References to the Vice Chair are
being deleted, including a description of
who may serve as Vice Chair, which
appears in the Certificate of
Incorporation and By-laws, as well as
the current function of the Vice Chair to
preside over Board meetings in the
absence of the Chair of the Board of
Governors.
The Exchange proposes to amend the
Certificate of Incorporation and By-Law
Article I, Sections 1–1(e) and 1–1(aa),
Article IV, Section 4–1 and Article V,
Section 5–3 [sic] to delete the position
of PBOT Governor. Since the
Philadelphia Board of Trade, Inc
(‘‘PBOT’’) 44 now has the status of one
of multiple subsidiaries within a global
holding company structure, it is no
longer appropriate to provide its
members special representation on the
Exchange board, which is likewise a
NASDAQ OMX subsidiary. The PBOT
Governor position would be replaced
with a Designated Independent
Governor. The Exchange’s proposed
changes will continue to provide for a
fair representation of its members on the
Board of Governors.
manipulative acts and practices, 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.
Specifically, Members will continue to
be represented on the Board and on key
standing committees, and will have a
voice in the selection of Governors
through the Member Nominating
Committee and the ability to nominate
alternate candidates and thereby cause a
Contested Vote in which all Member
Organization Representatives may vote.
2. Statutory Basis
Within 35 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 such proposed rule change, or
(b) institute proceedings to determine
whether the proposed rule change
should be disapproved.
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 45 in general, and furthers the
objectives of: (1) Section 6(b)(1) of the
Act,46 which requires a national
securities exchange to be so organized
and have the capacity to carry out
purposes of the Act and to enforce
compliance by its members and persons
associated with its members with the
provisions of the Act; (2) Section 6(b)(3)
of the Act,47 which requires that the
rules of a national securities exchange
assume the fair representation of its
members in the selection of its directors
and administration of its affairs, and
provide that one or more directors shall
be representative of issuers and
investors and not be associated with a
member of the exchange, broker or
dealer (the ‘‘fair representation
requirement’’); and Section 6(b)(5) of the
Act,48 in that it is designed, among other
things, to prevent fraudulent and
44 PBOT recently changed its corporate name to
NASDAQ OMX Futures Exchange, Inc.
45 15 U.S.C. 78f(b).
46 15 U.S.C. 78(b)(1). [sic]
47 15 U.S.C. 78(b)(3). [sic]
48 15 U.S.C. 78f(b)(5).
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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
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–Phlx–2009–17 on the
subject line.
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Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Notices
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59545; File No. SR–Phlx–
2009–20]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NASDAQ
All submissions should refer to File
OMX PHLX, Inc. Relating to Elimination
Number SR–Phlx–2009–17. This file
of Sector Index Options From Monthly
number should be included on the
subject line if e-mail is used. To help the Firm Cap
Commission process and review your
March 9, 2009.
comments more efficiently, please use
Pursuant to Section 19(b)(1) of the
only one method. The Commission will Securities Exchange Act of 1934
post all comments on the Commission’s (‘‘Act’’), 1 and Rule 19b–4 thereunder,2
Internet Web site (https://www.sec.gov/
notice is hereby given that on February
25, 2009, NASDAQ OMX PHLX, Inc.
rules/sro.shtml). Copies of the
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
submission, all subsequent
Securities and Exchange Commission
amendments, all written statements
(‘‘SEC’’ or ‘‘Commission’’) the proposed
with respect to the proposed rule
rule change as described in Items I, II,
change that are filed with the
and III, below, which Items have been
Commission, and all written
prepared by the Exchange. The
communications relating to the
Commission is publishing this notice to
proposed rule change between the
Commission and any person, other than solicit comments on the proposed rule
change from interested persons.
those that may be withheld from the
public in accordance with the
I. Self-Regulatory Organization’s
provisions of 5 U.S.C. 552, will be
Statement of the Terms of Substance of
the Proposed Rule Change
available for inspection and copying in
the Commission’s Public Reference
The Exchange proposes to eliminate
Room, 100 F Street, NE., Washington,
the sector index options from the
DC 20549, on official business days
Monthly Firm Cap.3 Additionally, the
between the hours of 10 a.m. and 3 p.m. Exchange proposes minor amendments
Copies of such filing also will be
to its fee schedule to clean up the
available for inspection and copying at
formatting of its fee schedule and
the principal office of Phlx. All
correct a typographical error.
The text of the proposed rule change
comments received will be posted
is available on the Exchange’s Web site
without change; the Commission does
at https://www.nasdaqtrader.com/
not edit personal identifying
micro.aspx?id=PHLXRulefilings, at the
information from submissions. You
principal office of the Exchange, and at
should submit only information that
the Commission’s Public Reference
you wish to make publicly available.
Room.
All submissions should refer to File
II. Self-Regulatory Organization’s
Number SR–Phlx–2009–17 and should
be submitted on or before April 6, 2009. Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
For the Commission, by the Division of
Change
Trading and Markets, pursuant to delegated
In its filing with the Commission, the
authority.49
Exchange included statements
Florence E. Harmon,
concerning the purpose of and basis for
Deputy Secretary.
the proposed rule change and discussed
[FR Doc. E9–5565 Filed 3–13–09; 8:45 am]
any comments it received on the
proposed rule change. The text of these
BILLING CODE 8011–01–P
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.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Firm Proprietary Options Transaction Charges
for equity and sector index options, in the
aggregate, for one billing month can not exceed
$75,000 per month, per member organization,
except for orders of joint back-office participants.
2 17
49 17
CFR 200.30–3(a)(12).
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15:38 Mar 13, 2009
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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 no longer include the
options transaction charge associated
with the sector index options in the
$75,000 Firm-Related Equity Option and
Index Option Cap calculation. The
Exchange believes that it can continue
to attract this business without offering
the cap, which should also help to raise
revenue. Specifically, ‘‘firm-related’’
charges include equity option firm
proprietary transaction charges and
index option firm proprietary
transaction charges (‘‘Monthly Firm
Cap’’). Currently, such firm-related
charges for equity option and index
options, in the aggregate for one billing
month, would not exceed $75,000 per
month per member organization. The
Monthly Firm Cap excludes orders of
joint back-office participants.4
Additionally, the Exchange proposes
the following clean-up amendments to
its Fee Schedule: (1) Removal of the
date from the first page of the Fee
Schedule; (2) removal of page numbers
from the Table of Contents to be
replaced by section numbers; and (3)
removal of underlining from all section
headers on each page of the Fee
Schedule.5 The Exchange believes that
these amendments will provide for ease
of motion in amending the Fee
Schedule.
The Exchange also proposes to amend
a typographical error related to its
Examinations Fee. In filing SR–Phlx–
2009–08 6, the Exchange inadvertently
indicated that the Examinations Fee for
the number of Off-Floor Traders, in the
same Member Organization, that
exceeded 200 in number is $12,000 per
month.7 This fourth tier should have
stated that the Examinations Fee for the
number of Off-Floor Traders, in the
same Member Organization, that
exceeded 200 in number is $12,500 per
month. The Exchange proposes to
amend this tier of the Examinations Fee
4 See Securities Exchange Act Release No. 59393
(February 11, 2009), 74 FR 7721 (February 19, 2009)
(SR–Phlx–2009–12) (increasing the Firm-Related
Equity Option and Index Option Cap to $75,000 and
exclude JBO participants).
5 See Securities Exchange Act Release No. 59402
(February 13, 2009), 74 FR 8134 (February 23, 2009)
(SR–Phlx–2009–08) (a proposal to create a more
user-friendly fee schedule).
6 Id.
7 See Securities Exchange Act Release No. 54941
(December 14, 2006), 71 FR 77079 (December 22,
2006) (SR–Phlx–2006–70) (adopting a tiered
Examinations Fee).
E:\FR\FM\16MRN1.SGM
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]]>Agencies
[Federal Register Volume 74, Number 49 (Monday, March 16, 2009)]
[Notices]
[Pages 11152-11158]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-5565]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59538; File No. SR-Phlx-2009-17]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing of a Proposed Rule Change Relating to the Nomination and
Election of Candidates for Governor and Independent Governor
March 9, 2009.
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 23, 2009, NASDAQ OMX PHLX, Inc. (``Phlx'' or the
``Exchange'') filed with
[[Page 11153]]
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 Phlx. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange, proposes to amend its By-Laws to: (i) Replace the
current ``Nominating, Elections and Governance Committee'' with a newly
named ``Nominating Committee'' and a ``Member Nominating Committee'';
(ii) modify the processes for nominating candidates for Governor and
Designated Independent Governor; (iii) modify the procedures for Member
Organization Representatives to vote for Designated Governor nominees
and the procedures for meetings of Members and Member Organizations;
(iv) modify the procedures for filling vacancies on the Board of
Governors; (v) modify the definitions of ``Independent Governor'',
``Trust Agreement'' and add the following definitions: ``Industry
Member'', ``Non-Industry Member'', ``Public Member'', ``Member
Representative member'', ``Contested Vote'', ``List of Candidates'',
``Member Voting Record Date'' and ``Voting Date''; and (vi) amend the
Certificate of Incorporation and By-Laws to eliminate the Vice Chair
and PBOT Governor positions from the Board of Governors.
The text of the proposed rule change is available on the Exchange's
Web site at https://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.
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 streamline the
processes related to the nomination and election of candidates for
Governor and Designated Independent Governor positions and to conform
the NASDAQ OMX PHLX, Inc. governance structure to that of The NASDAQ
Stock Market LLC.\3\ To that end, the proposal establishes independent
Nominating and Member Nominating Committees, modifies the process for
nominating candidates for Governor and Designated Independent Governor
and the procedures for Member Organization Representatives \4\ to vote
for Designated Governor nominees and eliminates the Vice Chair and PBOT
Governor positions on the Board similar to The NASDAQ Stock Market LLC,
structure.
---------------------------------------------------------------------------
\3\ The NASDAQ Stock Market LLC is a subsidiary of NASDAQ OMX
GROUP, Inc., the parent company of NASDAQ OMX PHLX, Inc. On July 24,
2008, The NASDAQ OMX GROUP, Inc. acquired the Philadelphia Stock
Exchange, Inc. See Securities Exchange Act Release No. 58098 (July
17, 2008), 73 FR 42850 (July 23, 2008) (SR-NASDAQ-2008-035) [sic].
Currently, the process for selection of Governors differs between
NASDAQ OMX PHLX, Inc. and The NASDAQ Stock Market LLC. See
Securities Exchange Act Release No. 57757 (May 1, 2008), 73 FR 26159
(May 8, 2008) (SR-BSE-2008-23) (Pursuant to a merger with The NASDAQ
OMX Group, Inc., the Boston Stock Exchange, Inc. proposed to adopt
By-Laws similar in all material respects to the By-Laws of The
NASDAQ Stock Market LLC so that the exchanges could be operated with
similar governance structures.)
\4\ Pursuant to By-Law Article I, Section 1-1(w), the term
``Member Organization Representative'' means the officer (or person
in a similar position) of a Member Organization designated by such
Member Organization as such Member Organization's Member
Organization Representative, who shall have the sole authority, with
respect to the selection or removal of Designated Nominees as
defined in Section 3-2(a) to exercise any and all rights and to take
any and all actions on behalf of such Member Organization and each
Member who has designated such Member Organization as his primary
affiliation.
---------------------------------------------------------------------------
Nominating and Election of Governors
Current Nominating Process
Currently, the Nominating, Elections and Governance Committee is
comprised of five members including four Independent Governors \5\ (one
of whom must be a Designated Independent Governor \6\) and one Member
Governor \7\. The Nominating, Elections and Governance Committee
submits nominations for the positions of Designated Governors from
candidates selected in accordance with Exchange By-Law Article III,
Section 3-4 and 3-6 concerning qualifications and recommendations
received at open meetings and in writing by the Secretary of the
Exchange. The Nominating, Elections and Governance Committee holds at
least two (2) open meetings to receive recommendations for the
positions of Designated Independent Governors or Member Governor.\8\
Recommendations may be made by any Member, participant or Member
Organization Representative or by any Member of the Nominating,
Elections or Governance Committee then in office and may be submitted
in writing or in person.\9\ Independent nominations for the positions
of Designated Governors may be made by a written petition by Member
Organization Representatives and filed with the Secretary of the
Exchange in a sealed envelope within two (2) weeks after the posting of
the report of the Nominating, Elections and Governance Committee to the
Member Organization Representatives.\10\ Nominations are valid only
when signed by Member Organization Representatives representing not
less than fifty (50) votes.\11\
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\5\ By-Law Article I, Section 1-1(p) defines an Independent
Governor as ``* * * a Governor who must satisfy the definition of
Independent as set forth herein and is duly elected to fill one of
the vacancies on the Board of Governors allocated to the Independent
Governors.'' By-Law Article I, Section 1-1(o) defines Independent as
``The term ``Independent'' when used in the context of Governors or
committee members, shall mean persons affirmatively determined by
the Board as having no Material Relationship with the Exchange or
any affiliate of the Exchange, any Member of the Exchange or any
affiliate of such Member, or any issuer of securities that are
listed or traded on the Exchange or a facility of the Exchange.''
\6\ By-Law Article I, Section 1-1(f) defines a Designated
Independent Governor as, ``* * * those * * * who are elected by the
holder of the Series A Preferred Stock in accordance with Article
SIXTH of the Certificate of Incorporation.''
\7\ By-Law Article I, Section 1-1(u) defines a Member Governor
as, ``* * * a Governor who is a Member or a general partner or an
executive officer (vice-president and above) of a Member
Organization and is duly elected to fill the one (1) vacancy on the
Board of Governors allocated to the Member Governor.''
\8\ See By-Law Article III, Section 3-6.
\9\ See By-Law Article III, Section 3-6.
\10\ See By-Law Article III, Section 3-7.
\11\ See By-Law Article III, Section 3-7. Further, ``[a] Member
Organization Representative shall not endorse more than one (1)
nominee per vacancy; provided, however, that the Member Organization
Representatives representing not less than seventy-five (75) votes
may, by petition, propose an entire ticket, or any portion thereof,
for the vacancies of Designated Governors on the Board of Governors
to be filled at the ensuing election.''
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At the annual meeting of Members and Member Organizations, Member
Organization representatives elect the Designated Governors, who are
then elected at the annual Stockholders meeting by the holder of the
Series A
[[Page 11154]]
Preferred Stock.\12\ At the annual meeting of stockholders, the Holder
of Common Stock presents for nomination to the Nominating, Elections
and Governance Committee the candidates for Vice Chair, Stockholder
Governor and Independent Governors for placement on the ballot for
election by the Holder of Common Stock.\13\
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\12\ See Phlx By-Laws, Article III, Section 3-2(a) and Article
XXVIII, Section 28-2. On February 22, 2007, the Philadelphia Stock
Exchange, Inc. (now NASDAQ OMX PHLX, Inc.) entered into a Third
Amended and Restated Trust Agreement with Wilmington Trust Company.
The Exchange issued to the Trust one share of Series A Preferred
Stock, which share has the exclusive right to elect and remove
Designated Governors. Wilmington Trust is the Trustee of the Trust
pursuant to the agreement.
\13\ See By-Law Article XXVIII, Section 28-3.
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Proposed Nominating Process
Under the proposed rule change, By-Law Article III, Sections 3-4,
3-6, 3-7 and 3-16, Article X, Sections 10-1 and 10-19, Article XI,
Section 11-1 and Article XXVIII, Sections 28-3, 28-8 and 28-12 would be
amended to replace the current ``Nominating, Elections and Governance
Committee'' with a newly named ``Nominating Committee'' and a ``Member
Nominating Committee'' as well as modify the processes for nominating
candidates for Governor and Designated Independent Governor. Further,
By-Law Article III, Sections 3-2, 3-3, 3-4, 3-6, 3-7, 3-8, 3-11, 3-12,
3-13 and 3-14, and Article XXVIII, Section 28-2 would be amended to
modify the procedures for Member Organization Representatives to vote
for Designated Governor nominees and the procedures for meetings of
Members and Member Organizations. These proposed amendments would
conform the NASDAQ OMX PHLX, Inc. By-Laws to those of The NASDAQ Stock
Market LLC.
The proposed rule change amends By-Law Article III, Sections 3-2
and 3-7 so that Designated Governors would be elected to the Board of
Governors on an annual basis.\14\ For each annual election, the Board
of Governors would select a Member Voting Record Date \15\ and a Voting
Date.\16\ The Member Voting Record Date would be at least 10 days but
not more than 60 days prior to the Voting Date.\17\ The Member
Nominating Committee would create a list of one or more candidates for
each Designated Governor position on the Board to be elected by the
Series A Preferred Stock Holders at the annual meeting of Stockholders
or a special meeting in lieu thereof.\18\ Promptly after selection of
the Voting Date, in a notice transmitted to Member Organization
Representatives and in a prominent location on a publicly accessible
Web site, the Exchange (i) shall announce the Voting Date and the List
of Candidates,\19\ and (ii) shall describe the procedures for Member
Organization Representatives to nominate candidates for election at the
next annual meeting of Stockholders. In the event of a Contested
Vote,\20\ the Exchange shall also send Member Organization
Representatives formal notice, which notice shall be sent by the
Exchange at least 10 days but no more than 60 days prior to the Voting
Date to the Member Organization Representatives of persons that were
Member Organizations on the Member Voting Record Date, by any means,
including electronic transmission, as determined by the Board of
Governors or committee thereof.\21\ The notice shall indicate by
appropriate designation whether each person on the List of Candidates
is a Member or a foreign currency options participant of the Exchange
or is a non-member or non-foreign currency options participant of the
Exchange who is a general partner or executive officer (vice-president
or above) of a Member Organization or participant organization of the
Exchange or is nominated to be a Designated Independent Governor.
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\14\ See similar provision in The NASDAQ Stock Market LLC By-
Laws at Article II, Section 1. Currently, Governors are elected for
terms of one year.
\15\ A Member Voting Record Date definition is proposed herein
under the section titled Definitions.
\16\ A Voting Date definition is proposed herein under the
section titled Definitions.
\17\ See similar provision in The NASDAQ Stock Market LLC By-
Laws at Article II, Section 1.
\18\ This provision is similar to Exchange By-Law Article III,
Section 3-2 in that the Series A Preferred Stock Holder would
continue to be the mechanism to elect the Member nominees. Moreover,
it is similar to The NASDAQ Stock Market LLC By-Law Article II,
Section 1, in that the Member Nominating Committee creates the List
of Candidates.
\19\ A List of Candidates definition is proposed herein under
the section titled Definitions.
\20\ A Contested Vote definition is proposed herein under the
section titled Definitions.
\21\ See similar provision in The NASDAQ Stock Market LLC By-
Laws at Article II, Section 1.
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An additional candidate may be added to the List of Candidates by a
Member Organization Representative that submits a timely and duly
executed written nomination to the Secretary of the Exchange. To be
timely, a Member Organization Representative's notice would be
delivered to the Secretary at the principal executive offices of the
Exchange not later than the close of business on the 90th day nor
earlier than the close of business on the 120th day prior to the first
anniversary of the preceding year's Voting Date, provided however that
in the event that the Voting Date is more than 30 days before or more
than 70 days after such anniversary date, notice by the Member
Organization Representative must be so delivered not earlier than the
close of business on the 120th day prior to such Voting Date and not
later than the close of business on the later of the 90th day prior to
such Voting Date or the tenth day following the day on which public
announcement of such Voting Date is first made by the Exchange.\22\
Such Member Organization Representative's notice shall set forth: (i)
As to the person whom the Member Organization Representative proposes
to nominate for election as a Designated Governor, all information
relating to that person that is required to be disclosed in
solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation
14A under the Exchange Act and the rules thereunder (and such person's
written consent to be named in the List of Candidates as a nominee and
to serving as a Governor if elected); (ii) a petition in support of the
nomination duly executed by the Member Organization Representatives of
10% or more of all Member Organizations; and (iii) the name and address
of the Member Organization Representative making the nomination.\23\
The Exchange may require any proposed nominee to furnish such other
information as it may reasonably require to determine the eligibility
of such proposed nominee to serve as a Designated Governor.\24\
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\22\ See similar provision in The NASDAQ Stock Market LLC By-
Laws at Article II, Section 1.
\23\ See similar provision in The NASDAQ Stock Market LLC By-
Laws at Article II, Section 1.
\24\ See similar provisions in The NASDAQ Stock Market LLC By-
Laws at Article II, Section 1, which relates to the nomination of
alternate candidates.
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If by the date on which a Member Organization Representative may no
longer submit a timely nomination, there is only one candidate for each
Designated Governor position to be voted on the Voting Date, the
candidates on the List of Candidates shall be the ``Designated
Nominees,'' which the holder of the Series A Preferred Stock shall be
required to elect as Designated Governors in accordance with the
Certificate of Incorporation at Article Six as well as the Trust
Agreement. In the event of a Contested Vote, the Exchange would conduct
a vote to determine the Designated Nominees in accordance with proposed
Article III, Section 3-7.\25\
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\25\ See similar provisions in The NASDAQ Stock Market LLC By-
Laws at Article II, Section 1.
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If there is a Contested Vote, the Designated Nominees would be
selected through a balloting process but without a formal meeting of
the Members and
[[Page 11155]]
Member Organizations. A formal notice of the Voting Date and the List
of Candidates would be sent by the Exchange at least 10 days but no
more than 60 days prior to the Voting Date to the Member Organization
Representatives of persons that were Member Organizations on the Member
Voting Record Date, by any means, including electronic transmission, as
determined by the Board of Governors or committee thereof.\26\ The
notice would indicate whether each person on the List of Candidates was
a Member or foreign currency options participant of the Exchange or a
non-member or non-foreign currency options participant of the Exchange
who is a general partner or executive officer of a Member Organization
or participant organization of the Exchange or is nominated to be a
Designated Independent Governor.
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\26\ See similar provisions in The NASDAQ Stock Market LLC By-
Laws at Article II, Section 1.
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Votes would be cast by written ballot, electronic submission, or
any other means as set forth in a notice to the Member Organization
Representatives sent by the Exchange prior to the Voting Date. Only
votes received prior to 11:59 p.m. Eastern Time on the Voting Date
would count for the election of a Designated Nominee.\27\ The vote
would not be valid unless a majority of the Member Organization
Representatives entitled to vote cast a vote; if a quorum is lacking,
the Board of Governors would declare a subsequent Voting Date and
Member Voting Record Date for the purpose of selecting Designated
Nominees and would again follow the procedures for conducting a
Contested Election. These voting provisions replace the current secret
written ballot provisions in Article III, Section 3-12. Minor technical
amendments were made to Exchange By-Law Article III, Section 3-13
related to quorums for meetings of Members and Member Organizations.
---------------------------------------------------------------------------
\27\ See similar provision in The NASDAQ Stock Market LLC By-
Laws at Article II, Section 1 [sic].
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The persons on the List of Candidates receiving the highest number
of votes for the category of Governor for which they were nominated
would be declared the Designated Nominees for their respective
positions as Designated Governors. In the case of a tie, the names of
the proposed Designated Governors involved in such tie would be
referred to the Member Nominating Committee, which would make the
selection as to who among such tying proposed Designated Governors
would be nominated as the Designated Nominees for election at the
Annual Meeting of Stockholders.
Except as provided in these By-Laws, the Exchange shall not be
required to hold meetings of Members, Member Organizations, or Member
Organization Representatives. If such a meeting is held, however, the
By-Laws currently state that any notice of the meeting shall be in
writing and state the place, date, hour and purpose of such meeting and
shall not be given less than ten days before the date of the meeting
nor more than fifty days before the date of the meeting. Exchange By-
Law Article III, Section 3-11 is proposed to be amended to provide that
the notice shall not be given less than ten days before the date of the
meeting nor more than sixty days before the date of the meeting. Also,
language is proposed to be added to that By-Law to state that notice
may be sent via mail or electronic transmission and if notice is sent
via electronic transmission, notice is given when sent to the e-mail
address of the Member Organization Representative as it appears on the
books and records of the Exchange.
Composition of Nominating Committee
This proposed rule change would amend Exchange By-Law Article X,
Section 10-19 to create a Nominating Committee which would nominate
candidates for all other vacant or new Governor positions on the Board
of Governors that are not nominated by the Member Nominating Committee.
The Nominating Committee would consist of no fewer than six (6) and no
more than nine (9) members and the number of Non-Industry members would
equal or exceed the number of Industry members on the Committee. If the
Nominating Committee consists of six (6) members, at least two (2)
shall be Public Members. If the Nominating Committee consists of seven
(7) or more members, at least three shall be Public members. Also, no
officer or employee of the Company shall serve as a member of the
Nominating Committee in any voting or non-voting capacity. No more than
three of the Nominating Committee members and no more than two of the
Industry members shall be current Governors. Finally, a Nominating
Committee member may not simultaneously serve on the Nominating
Committee and the Board of Governors unless such member is in his or
her final year of service on the Board of Governors and following that
year, that member may not stand for election to the Board of Governors
until such time as he or she is no longer a member of the Nominating
Committee. Members of this Committee would be appointed annually and
may be removed by a majority vote of the Board of Governors.\28\ The
Exchange's proposed amendments to the Nominating Committee's
composition and number of members attempts to fairly represent the
various interests of the membership and trading community, including
investors. Also the public governors should bring diverse experience to
the nominating process.
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\28\ The provisions related to the Nominating Committee are
similar to the provisions in The NASDAQ Stock Market LLC By-Laws at
Article III, Section 6.
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Composition of Member Nominating Committee
The proposal would amend Exchange By-Law Article X, Section 10-19
to create a Member Nominating Committee which would nominate candidates
for each Designated Governor position on the Board of Governors and
also nominate candidates for appointment by the Board for each vacant
or new position on any committee that is to be filled with a Member
Representative member. The Member Nominating Committee would consist of
no fewer than three (3) and no more than six (6) members. All members
of the Member Nominating Committee would be a current associated person
of a current Member Organization. The Board of Governors would appoint
such individuals after consultation with Member Organization
Representatives. Members of this Committee would be appointed annually
and may be removed by a majority vote of the Board of Governors.\29\
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\29\ The provisions related to the Member Nominating Committee
are similar to the provisions in The NASDAQ Stock Market LLC By-Laws
at Article III, Section 6.
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By-Law Article X, Section 10-19 proposes to add language that the
Secretary shall collect from each nominee for Governor such information
as is reasonably necessary to serve as the basis for a determination of
the nominee's classification as a Member Governor, Stockholder
Governor, or Independent Governor, or Designated Governor, if
applicable, and the Secretary shall certify to the Nominating Committee
or the Member Nominating Committee each nominee's classification, if
applicable. Governors would update the information submitted under this
subsection at least annually and upon request of the Secretary, and
shall report immediately to the Secretary.
Board of Governor Vacancies and Resignations
Under the proposed rule change, By-Law Article III, Section 3-8,
Article IV,
[[Page 11156]]
Sections 4-6 and 4-7 and Article XXVIII, Section 28-4 would be amended
to modify the procedures for filling vacancies on the Board of
Governors. Currently, vacancies are filled by the Nominating, Elections
and Governance Committee, subject to the approval by a majority of the
Governors then in office, although less than a quorum, or by a sole
remaining Governor.\30\ The proposed rule change would provide that in
the event of a vacancy on the Board occurring between annual meetings,
the appropriate nominating committee would nominate, and the Board
would appoint, a replacement Governor to fill the vacancy.\31\
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\30\ See By-Law Article IV, Section 4-7.
\31\ See similar provisions in The NASDAQ Stock Market LLC By-
Laws at Article II, Section 3.
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Amendments are also proposed to Exchange By-Law Article IV, Section
4-6 to modify the timeframes associated with submitting Board
resignations. Currently a Board member may resign at any time by
submitting a written resignation to the Exchange which shall take
effect at the time of its receipt by the Exchange unless another time
is fixed in the resignation.\32\ In the event of a merger,
consolidation or other acquisition, the Board member is currently
required to notify the Chair of the Board of Governors of their
resignation by the first day of the January preceding the next annual
meeting of Stockholders. This proposal seeks to revise the timeframe in
the event of a merger, consolidation or other acquisition to state that
a Board member is required to notify the Chair of the Board of
Governors of their resignation by the first day of the following month
of their resignation. Similarly, in the event of a change in
occupational category or Member Organization or participant
organization, such Governor is currently required to notify the Chair
of the Board of Governors of his resignation by the first day of the
January preceding the next annual election. This proposal seeks to
amend this language to similarly state that the Board member shall
notify the Chair in the event of an occupational category or Member
Organization or participant organization by the first day of the
following month. Additionally, Article IV, Section 4-6 indicates that
as related to resignations in the event of a merger, consolidation, or
other acquisition or because of a change in occupational category, the
resignations shall become effective no later than the expiration of the
term of the outgoing class of Governors. This language is being deleted
as it is no longer applicable. By providing a shorter time period to
provide notification, the Exchange is ensuring that the Board members
will continue to be qualified to serve on the Board in their respective
positions as opposed to a longer notification period.
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\32\ See By-Law Article IV, Section 4-6.
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Definitions
The Exchange proposes to amend the definitions of ``Independent
Governor'', and ``Trust Agreement'' and add the definitions for
``Industry Member'', ``Non-Industry Member'' and ``Public Member.'' The
proposed rule change would amend the definition of Independent Governor
as follows: The term ``Independent Governor'' shall mean a Governor who
has no material relationship with the Exchange or any affiliate of the
Exchange, any Member of the Exchange or any affiliate of such Member,
or any issuer of securities that are listed or traded on the Exchange
or a facility of the Exchange and is duly elected to fill one of the
vacancies on the Board of Governors allocated to the Independent
Governors. The term ``material relationship'' will be defined as a
relationship, whether compensatory or otherwise, that reasonably could
affect the independent judgment or decision-making of the Governor.\33\
Also, the Exchange proposes to amend By-Law Article I, Section 1-1-(dd)
to modify the definition of Trust Agreement to include language that
indicates that such agreement may be amended from time to time.\34\
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\33\ See footnote 5 for current Independent Governor and
Independent definitions.
\34\ The term ``Trust Agreement'' is currently defined as the
Third Amended and Restated Trust Agreement, dated as of February 22,
2007, between the Exchange and the trustee under such Trust
Agreement.
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The Exchange proposes adding the following definition to Article I,
Section 1-1, ``Industry Member'', ``Non-Industry Member'' and ``Public
Member'' as these amendments correspond to the proposed amendments to
the election process of Designated Governors. The term ``Industry
Member'' is proposed to be added to Article I, Section 1-1(pp) and
shall mean a member of any committee appointed by the Board of
Governors who (i) is or has served in the prior three years as an
officer, director, or employee of a broker or dealer, excluding an
outside director or a director not engaged in the day-to-day management
of a broker or dealer; (ii) is an officer, director (excluding an
outside director), or employee of an entity that owns more than ten
percent of the equity of a broker or dealer, and the broker or dealer
accounts for more than five percent of the gross revenues received by
the consolidated entity; (iii) owns more than five percent of the
equity securities of any broker or dealer, whose investments in brokers
or dealers exceed ten percent of his or her net worth, or whose
ownership interest otherwise permits him or her to be engaged in the
day-to-day management of a broker or dealer; (iv) provides professional
services to brokers or dealers, and such services constitute 20 percent
or more of the professional revenues received by the committee member
or 20 percent or more of the gross revenues received by the committee
member's firm or partnership; (v) provides professional services to a
director, officer, or employee of a broker, dealer, or corporation that
owns 50 percent or more of the voting stock of a broker or dealer, and
such services relate to the director's, officer's, or employee's
professional capacity and constitute 20 percent or more of the
professional revenues received by the committee member or 20 percent or
more of the gross revenues received by the committee member's firm or
partnership; or (vi) has a consulting or employment relationship with
or provides professional services to the Exchange or any affiliate
thereof or to FINRA (or any predecessor) or has had any such
relationship or provided any such services at any time within the prior
three years.\35\
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\35\ This definition is substantially similar to the same term
found in The NASDAQ Stock Market LLC By-Laws at Article I.
---------------------------------------------------------------------------
The term ``Non-Industry Member'' is proposed to be added at Article
I, Section 1-1(rr) and shall mean a member of any committee appointed
by the Board of Governors who is (i) a Public member; (ii) an officer,
director, or employee of an issuer of securities listed on the
Exchange; or (iii) any other individual who would not be an Industry
member.\36\ The term ``Public Member is proposed to be added at Article
I, Section 1-1(ss) and shall mean a member of any committee appointed
by the Board of Governors who has no material business relationship
with a broker or dealer, the Exchange, or its affiliates.\37\
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\36\ This definition is substantially similar to the same term
in The NASDAQ Stock Market LLC By-Laws at Article I.
\37\ This definition is substantially similar to the same term
found in The NASDAQ Stock Market LLC By-Laws at Article I.
---------------------------------------------------------------------------
The term ``Member Representative member'' is proposed to be added
at Article I, Section 1-1(qq) and shall mean a member of any committee
appointed by the Board of Governors who has been elected or appointed
after
[[Page 11157]]
having been nominated by the Member Nominating Committee pursuant to
these By-Laws.\38\ The term ``Contested Vote'' is proposed to be added
at Article I, Section 1-1(mm) and shall mean a process for selection of
one or more Designated Governors for which the number of candidates on
the List of Candidates exceeds the number of positions to be elected by
the holder of the Series A Preferred Stock.\39\ The term ``List of
Candidates'' is proposed to be added at Article I, Section 1-1(nn) and
shall mean the list of candidates for Designated Governor positions to
be voted upon by Member Organization Representatives on a Voting
Date.\40\ The term ``Member Voting Record Date'' `` is proposed to be
added at Article I, Section 1-1(oo) and shall mean a date selected by
the Board of Governors for the purpose of determining the Member
Organization Representatives entitled to vote for Designated Governors
on a Voting Date in the event of a Contested Vote.\41\ Finally, the
term ``Voting Date'' is proposed to be added at Article I, Section 1-
1(tt) and shall mean a date selected by the Board of Governors for
Member Organization Representatives to vote with respect to Designated
Governors in the event of a Contested Vote.\42\
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\38\ This definition is substantially similar to the same term
found in The NASDAQ Stock Market LLC By-Laws at Article I.
\39\ This definition is substantially similar to that of
Contested Election found in The NASDAQ Stock Market LLC By-Laws at
Article I.
\40\ This definition is substantially similar to the same term
found in The NASDAQ Stock Market LLC By-Laws at Article I.
\41\ This definition is substantially similar to that of Record
Date found in The NASDAQ Stock Market LLC By-Laws at Article I.
\42\ This definition is substantially similar to that of
Election Date found in The NASDAQ Stock Market LLC By-Laws at
Article I.
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The amended and newly added definitions are necessary to effectuate
the amendments proposed herein related to the nominating process to
elect Designated Governors.
Vice Chair and PBOT Governor Elimination
The Exchange's proposed rule change seeks to amend the Certificate
of Incorporation and delete By-Law Article V, Section 5-3 to delete the
Vice Chair position as well as amend By-Law Article 1, Section 1-1,
Article III, Section 3-16, Article IV, Sections 4-1 and 4-14, Article
X, Sections 10-14 and 10-15 and Article XXVIII, Sections 28-3 and 28-12
to eliminate references to the Vice Chair position.\43\
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\43\ The Vice Chair is elected by the Holder of Common Stock and
does not effect the fair representation requirement.
---------------------------------------------------------------------------
After integration and a period of time functioning under a global
holding company structure, the Exchange has determined that eliminating
this position would streamline the governance structure. The NASDAQ
Stock Market does not have a Vice Chair. References to the Vice Chair
are being deleted, including a description of who may serve as Vice
Chair, which appears in the Certificate of Incorporation and By-laws,
as well as the current function of the Vice Chair to preside over Board
meetings in the absence of the Chair of the Board of Governors.
The Exchange proposes to amend the Certificate of Incorporation and
By-Law Article I, Sections 1-1(e) and 1-1(aa), Article IV, Section 4-1
and Article V, Section 5-3 [sic] to delete the position of PBOT
Governor. Since the Philadelphia Board of Trade, Inc (``PBOT'') \44\
now has the status of one of multiple subsidiaries within a global
holding company structure, it is no longer appropriate to provide its
members special representation on the Exchange board, which is likewise
a NASDAQ OMX subsidiary. The PBOT Governor position would be replaced
with a Designated Independent Governor. The Exchange's proposed changes
will continue to provide for a fair representation of its members on
the Board of Governors.
---------------------------------------------------------------------------
\44\ PBOT recently changed its corporate name to NASDAQ OMX
Futures Exchange, Inc.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \45\ in general, and furthers the objectives of: (1)
Section 6(b)(1) of the Act,\46\ which requires a national securities
exchange to be so organized and have the capacity to carry out purposes
of the Act and to enforce compliance by its members and persons
associated with its members with the provisions of the Act; (2) Section
6(b)(3) of the Act,\47\ which requires that the rules of a national
securities exchange assume the fair representation of its members in
the selection of its directors and administration of its affairs, and
provide that one or more directors shall be representative of issuers
and investors and not be associated with a member of the exchange,
broker or dealer (the ``fair representation requirement''); and Section
6(b)(5) of the Act,\48\ in that it is designed, among other things, to
prevent fraudulent and manipulative acts and practices, 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.
Specifically, Members will continue to be represented on the Board and
on key standing committees, and will have a voice in the selection of
Governors through the Member Nominating Committee and the ability to
nominate alternate candidates and thereby cause a Contested Vote in
which all Member Organization Representatives may vote.
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\45\ 15 U.S.C. 78f(b).
\46\ 15 U.S.C. 78(b)(1). [sic]
\47\ 15 U.S.C. 78(b)(3). [sic]
\48\ 15 U.S.C. 78f(b)(5).
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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 35 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
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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2009-17 on the subject line.
[[Page 11158]]
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2009-17. 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 (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 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 Phlx. 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-Phlx-2009-17 and should
be submitted on or before April 6, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\49\
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\49\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-5565 Filed 3-13-09; 8:45 am]
BILLING CODE 8011-01-P
