Self-Regulatory Organizations; Boston Stock Exchange Clearing Corporation; Order Granting Approval of a Proposed Rule Change To Amend the Articles of Organization and By-Laws of Boston Stock Exchange Clearing Corporation, 21031-21033 [E9-10464]
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Federal Register / Vol. 74, No. 86 / Wednesday, May 6, 2009 / Notices
BILLING CODE 8010–01–C
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59839; File No. SR–
BSECC–2009–02]
Self-Regulatory Organizations; Boston
Stock Exchange Clearing Corporation;
Order Granting Approval of a
Proposed Rule Change To Amend the
Articles of Organization and By-Laws
of Boston Stock Exchange Clearing
Corporation
April 28, 2008.
mstockstill on PROD1PC66 with NOTICES
I. Introduction
On February 20, 2009, Boston Stock
Exchange Clearing Corporation
(‘‘BSECC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
proposed rule change SR–BSECC–2009–
02 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’).1 Notice of the proposal was
published in the Federal Register on
1 15
2 Securities Exchange Act Release No. 59571
(March 12, 2009), 74 FR 11983.
U.S.C. 78s(b)(1).
VerDate Nov<24>2008
18:36 May 05, 2009
II. Description
The proposed rule change amends
BSECC’s Articles of Organization and
By-Laws to increase BSECC’s authorized
shares and to reflect a transfer in
ownership of five percent of BSECC’s
shares. The proposed rule change also
amends BSECC’s Articles of
Organization and By-Laws to change its
name to the NASDAQ Clearing
Corporation and to make other
miscellaneous changes.
On August 29, 2008, The NASDAQ
OMX Group, Inc. (‘‘NASDAQ OMX’’)
completed its acquisition of the Boston
Stock Exchange, Incorporated (recently
renamed NASDAQ OMX BX, Inc.) and
several of its wholly owned
subsidiaries, including BSECC. As a
result, BSECC has become an indirect
wholly owned subsidiary of NASDAQ
OMX. On January 5, 2009, OMX AB,
which is another indirect wholly owned
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Fmt 4703
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subsidiary of NASDAQ OMX, entered
into agreements with Fortis Bank Global
Clearing N.V. (‘‘Fortis’’) and European
Multilateral Clearing Facility N.V.
(‘‘EMCF’’), pursuant to which, among
other things, OMX AB (i) has acquired
a 22% equity stake in EMCF and (ii) has
agreed to acquire a 5% equity stake in
BSECC from NASDAQ OMX BX, Inc.
and in turn to transfer this stake to
EMCF.
The Articles of BSECC provide that:
All of the authorized shares of Common
Stock of [BSECC] shall be issued and
outstanding, and shall be held by Boston
Stock Exchange, Incorporated, a Delaware
corporation. Boston Stock Exchange,
Incorporated may not transfer or assign any
shares of stock of BSECC, in whole or in part,
to any entity, unless such transfer or
assignment shall be filed with and approved
by the U.S. Securities and Exchange
Commission under Section 19 of the
Securities Exchange Act of 1934, as
amended, and the rules promulgated
thereunder.
Accordingly, in order to complete the
transfer of shares of BSECC
contemplated by the agreements, BSECC
must amend its Articles to specify an
additional stockholder in BSECC and
must obtain Commission approval for
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EN06MY09.084</GPH>
March 20, 2009.2 No comment letters
were received. For the reasons
discussed below, the Commission is
granting approval of the proposed rule
change.
[FR Doc. E9–10401 Filed 5–5–09; 8:45 am]
21031
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21032
Federal Register / Vol. 74, No. 86 / Wednesday, May 6, 2009 / Notices
the transfer of stock. In addition, BSECC
is proposing to amend its Articles and
its By-Laws to change its name to
NASDAQ Clearing Corporation and to
adopt other miscellaneous changes.
EMCF is a central counterparty
clearinghouse for European equity
trading on exchanges and multilateral
trading facilities, including NASDAQ
OMX Europe Ltd., Chi-X Europe Ltd.,
and BATS Trading Europe Ltd. In
addition, EMCF has agreed to provide
central counterparty clearing services to
NASDAQ OMX exchanges in
Stockholm, Helsinki, Copenhagen, and
Iceland. EMCF clears stocks traded on
multiple European markets, including
stocks comprising the AEX, DAX,
FTSE100, CAC40, and SMI20 indexes.
Services offered by EMCF include
novation, gross trade netting, settlement,
margining, and fails and buy-in
management. EMCF is headquartered in
the Netherlands and is subject to
voluntary supervision by De
Nederlandsche Bank and Autoriteit
Financiele Markten. In addition to OMX
AB, EMCF’s stockholders are Fortis
Bank Nederland (Holding) N.V. and
Fortis Bank Global Clearing N.V.
NASDAQ OMX and EMCF’s other
stockholders will seek to further
broaden EMCF’s ownership structure to
include order flow providers and
financial institutions. It is expected that
this will increase the commitment of
banks and flow providers towards
EMCF, decrease EMCF’s dependence on
one shareholder, and demonstrate to the
market that EMCF is a solid company
with firm backing of shareholders with
high standing and is a company that
looks after the interests of all its
interested parties. Also, a key purpose
of the diversified shareholders’ base is
to facilitate the further development of
EMCF into becoming the leading central
counterparty services provider for
European cash equities.
Under the Share Transfer Agreement
dated January 5, 2009, among Fortis,
OMX AB, and EMCF, OMX AB has
agreed, subject to Commission approval,
to transfer a 5% stake in BSECC to
EMCF. The transfer of BSECC’s shares is
a portion of the consideration to be paid
by OMX AB for obtaining a 22% stake
in EMCF. Accordingly, OMX AB must
obtain the shares from NASDAQ OMX
BX, Inc. prior to transferring them to
EMCF. OMX AB has agreed to
undertake to use reasonable endeavors
to obtain Commission approval for the
transfer as soon as possible and in any
event by July 5, 2009.
Currently, the authorized share
capital of BSECC is 150 shares, each
with a par value of $100. Because 5%
of the 150 BSECC shares is 7.5 shares,
VerDate Nov<24>2008
18:36 May 05, 2009
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BSECC must increase its authorized
share capital and pay a 2 for 1 stock
dividend to NASDAQ OMX BX, Inc. so
that NASDAQ OMX BX, Inc. will own
300 shares of BSECC and be able to
transfer 15 of them. Accordingly, BSECC
proposes to amend its Articles in order
to increase its authorized share capital
to 300 shares. BSECC proposes to
amend its Articles to reflect either OMX
AB or EMCF as one of its stockholders
and to reflect the name change of the
Boston Stock Exchange to NASDAQ
OMX BX, Inc.
The amended provisions would state:
All of the authorized shares of Common
Stock of [BSECC] shall be issued and
outstanding, and shall be held by NASDAQ
OMX BX, Inc., a Delaware corporation, and
either OMX AB, a corporation organized
under the laws of Sweden, or European
Multilateral Clearing Facility, N.V., a public
company with limited liability incorporated
under the laws of the Netherlands.
The language in the Articles providing
that a stockholder may not transfer or
assign shares of stock of BSECC without
approval of the Commission would
remain in place so that all of the
stockholders of BSECC would be bound
by that restriction.
The Share Transfer Agreement also
provides that under certain
circumstances, EMCF may transfer the
shares of BSECC back to OMX AB or
NASDAQ OMX BX, Inc., thereby
unwinding this aspect of the
transaction. In order to avoid the need
to seek approval for such an unwinding
in the future, BSECC requests that the
Commission approve at this time both
the initial transfer and any future
unwinding.
Finally, at the time of the transfer
EMCF and NASDAQ OMX BX, Inc. will
enter into a Shareholders Agreement to
govern their relationship with respect to
BSECC. The key provisions of the
Shareholders Agreement are as follows.
First, EMCF will grant BSECC a right of
first refusal to purchase all or any
portion of its shares that EMCF may
propose to transfer. Second, if NASDAQ
OMX BX, Inc. proposes to transfer any
of its shares of BSECC to any person, it
must provide EMCF with the right to
substitute EMCF’s shares in such
transfer in proportion to EMCF’s
percentage share of ownership in
BSECC. Third, if NASDAQ OMX BX,
Inc. proposes to enter into a transaction
under which it would no longer own a
majority of BSECC’s outstanding shares
or a sale of all or substantially all of the
assets of BSECC (‘‘Sale Transaction’’),
EMCF will in most circumstances take
such actions as are necessary to support
the consummation of the Sale
Transaction. Fourth, if BSECC issues
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new securities it must first offer them to
NASDAQ OMX BX, Inc. and EMCF.
Finally, the Shareholders Agreement
provides for rights of the stockholders to
obtain information from BSECC about
its financial performance and
operations.
Because the share transfers described
by the Shareholders Agreement would
require Commission approval under the
Articles, the Agreement also provides
that ‘‘[n]othing in the Agreement shall
be construed to authorize [BSECC] or
any stockholder of [BSECC] to transfer
any share or other interests in [BSECC]
unless such transfer is approved in
accordance with the restrictions
contained in the [Articles] of [BSECC]
and such other restrictions as may be
imposed by the * * * Commission or
other governmental authority having
jurisdiction over [BSECC].’’
BSECC is also changing its name from
Boston Stock Exchange Clearing
Corporation to NASDAQ Clearing
Corporation. The change reflects
BSECC’s changed status as a subsidiary
of NASDAQ OMX. In addition, BSECC
is making the following miscellaneous
changes to its Articles and By-Laws.
First, BSECC is restating its Articles to
consolidate prior amendments into a
single document. Under Massachusetts
law, the form for restatement of the
Articles necessitates nonsubstantive
changes to citations to Massachusetts
statutes in the title of the Articles,
changes to prefatory language in Article
IV of the Articles, and the addition of
nonsubstantive language regarding date
of effectiveness as a new Article VII.
Second, BSECC is amending the Articles
and By-Laws to reflect the change in the
name of Boston Stock Exchange,
Incorporated to NASDAQ OMX BX, Inc.
Finally, BSECC is correcting several
typographical errors in Article X of the
By-Laws.
III. Discussion
Section 17A(b)(3)(C) of the Act
requires, among other things, that a
clearing agency’s rules assure the fair
representation of its shareholders (or
members) and participants in the
selection of its directors and
administration of its affairs.3 The
Commission previously determined that
Nasdaq OMX’s acquisition of BSECC as
an indirect wholly-owned subsidiary
would not affect BSECC’s ability to meet
the requirements of Section 17A(b)(3)(C)
because BSECC’s By-Laws relating to
the selection, composition, powers, and
duties of the BSECC Board, committees,
and officers of BSECC would remain
essentially unchanged after the
3 15
U.S.C. 78q–1(b)(3)(C).
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Federal Register / Vol. 74, No. 86 / Wednesday, May 6, 2009 / Notices
acquisition.4 Similarly, the proposal to
transfer a 5% interest in BSECC to
EMCF does not require modification to
BSECC’s By-Laws, other than to include
EMCF as an authorized shareholder and
to make other minor changes discussed
above, and should not alter the
effectiveness of the By-Laws to assure
fair representation of BSECC’s
shareholders and participants.
Furthermore, we note that the proposed
rule change does not alter the provisions
of NASDAQ OMX’s Certificate and
NASDAQ OMX’s By-Laws that are
designed to maintain the independence
of each of its SRO subsidiaries’ selfregulatory functions, enable each SRO
subsidiary to operate in a manner that
complies with the federal securities
laws, and facilitate the ability of each
SRO subsidiary and the Commission to
fulfill their regulatory and oversight
obligations under the Act. For these
reasons, we find that the proposed rule
change is designed to allow BSECC to
continue to meet the requirement under
Section 17A(b)(3)(C) that it assure the
fair representation of its shareholders
and participants in the selection of its
directors and administration of its
affairs.5 In addition, the amendments to
the BSECC’s Articles and By-Laws to
change the name of BSECC, consolidate
prior amendments, and correct certain
errors are non-substantive amendments
which should not affect BSECC’s
obligations under Section 17A.
IV. Conclusion
mstockstill on PROD1PC66 with NOTICES
4 Securities Exchange Act Release No. 58324
(August 7, 2008), 73 FR 46936 (August 12, 2008)
(SR–BSE–2008–02; SR–BSE–2008–23; SR–BSE–
2008–25; SR–BSECC–2008–01).
5 This order grants approval to the current
transfer of ownership from BSECC to EMCF only.
It does not as requested by BSECC in its filing
approve potential unwinds of the transfer of
ownership that may occur in the future.
6 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition and capital formation. 15
U.S.C. 78c(f).
7 17 CFR 200.30–3(a)(12).
18:36 May 05, 2009
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BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59846; File No. SR–
NYSEArca–2009–34]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NYSE
Arca, Inc. Amending Rule 6.76A Order
Execution–OX
April 29, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on April 21,
2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. 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
Rule 6.76A to allow marketable orders
to be exposed to market participants for
a brief period of time before routing to
an away market center for execution at
the National Best Bid/Offer (‘‘NBBO’’).
The text of the proposed rule change is
attached as Exhibit 5 to the 19b–4 form.
A copy of this filing is available on the
Exchange’s Web site at https://
www.nyse.com, at the Exchange’s
principal office and at the Commission’s
Public Reference Room.
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and in
particular Section 17A of the Act and
the rules and regulations thereunder.6
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (File No. SR–
BSECC–2009–02) be and hereby is
approved.
VerDate Nov<24>2008
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.7
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–10464 Filed 5–5–09; 8:45 am]
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
1 15
U.S.C.78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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21033
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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposed rule
change is to provide marketable orders
an opportunity for execution on NYSE
Arca before being routed to an away
market center at the NBBO.
Currently, if an order that is
marketable against the NBBO is
received, it is matched against any
possible contra side interest in the
Display Order process and in the
Working Order Process, including any
available Tracking Orders. If the order is
still unexecuted, or if only partially
unexecuted, the order is then routed
away to the market or markets at the
NBBO.
The proposed rule change will
provide for the NYSE Arca System to
expose the order, at the NBBO price, to
any OTP Holders who wish to subscribe
to such notices, for a brief period of time
(the ‘‘exposure period’’) not to exceed
one second.
During the exposure period, orders
and quotes that are equal to the NBBO
and on the opposite side of the market
will be matched against the exposed
order and immediately executed as they
are received. Orders and quotes that are
better than the NBBO and on the
opposite side of the market will also be
matched against the exposed order, and
immediately executed as they are
received at the exposed price. At the
end of the exposure period, the System
will again attempt to match the balance
of the order, if any, against any available
Tracking Orders. If the order is still
unexecuted, or if only partially
unexecuted, it will be routed to the
market(s) at the NBBO for execution.
Marketable orders that are on the
same side of the market as the exposed
order will join the exposure period
through a size update to the exposure
message, but will not extend the
exposure period.
Any update to the NBBO during the
exposure period that unlocks the
exposed order will cause the exposure
period to terminate, and any unexecuted
portion of the order will either be (i)
Matched against contra interest in the
Display Process and the Working Order
Process, and, if still not completely
executed, (ii) immediately routed to the
new NBBO market(s); or, (iii) if no
E:\FR\FM\06MYN1.SGM
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]]>Agencies
[Federal Register Volume 74, Number 86 (Wednesday, May 6, 2009)]
[Notices]
[Pages 21031-21033]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-10464]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59839; File No. SR-BSECC-2009-02]
Self-Regulatory Organizations; Boston Stock Exchange Clearing
Corporation; Order Granting Approval of a Proposed Rule Change To Amend
the Articles of Organization and By-Laws of Boston Stock Exchange
Clearing Corporation
April 28, 2008.
I. Introduction
On February 20, 2009, Boston Stock Exchange Clearing Corporation
(``BSECC'') filed with the Securities and Exchange Commission
(``Commission'') proposed rule change SR-BSECC-2009-02 pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\1\
Notice of the proposal was published in the Federal Register on March
20, 2009.\2\ No comment letters were received. For the reasons
discussed below, the Commission is granting approval of the proposed
rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ Securities Exchange Act Release No. 59571 (March 12, 2009),
74 FR 11983.
---------------------------------------------------------------------------
II. Description
The proposed rule change amends BSECC's Articles of Organization
and By-Laws to increase BSECC's authorized shares and to reflect a
transfer in ownership of five percent of BSECC's shares. The proposed
rule change also amends BSECC's Articles of Organization and By-Laws to
change its name to the NASDAQ Clearing Corporation and to make other
miscellaneous changes.
On August 29, 2008, The NASDAQ OMX Group, Inc. (``NASDAQ OMX'')
completed its acquisition of the Boston Stock Exchange, Incorporated
(recently renamed NASDAQ OMX BX, Inc.) and several of its wholly owned
subsidiaries, including BSECC. As a result, BSECC has become an
indirect wholly owned subsidiary of NASDAQ OMX. On January 5, 2009, OMX
AB, which is another indirect wholly owned subsidiary of NASDAQ OMX,
entered into agreements with Fortis Bank Global Clearing N.V.
(``Fortis'') and European Multilateral Clearing Facility N.V.
(``EMCF''), pursuant to which, among other things, OMX AB (i) has
acquired a 22% equity stake in EMCF and (ii) has agreed to acquire a 5%
equity stake in BSECC from NASDAQ OMX BX, Inc. and in turn to transfer
this stake to EMCF.
The Articles of BSECC provide that:
All of the authorized shares of Common Stock of [BSECC] shall be
issued and outstanding, and shall be held by Boston Stock Exchange,
Incorporated, a Delaware corporation. Boston Stock Exchange,
Incorporated may not transfer or assign any shares of stock of
BSECC, in whole or in part, to any entity, unless such transfer or
assignment shall be filed with and approved by the U.S. Securities
and Exchange Commission under Section 19 of the Securities Exchange
Act of 1934, as amended, and the rules promulgated thereunder.
Accordingly, in order to complete the transfer of shares of BSECC
contemplated by the agreements, BSECC must amend its Articles to
specify an additional stockholder in BSECC and must obtain Commission
approval for
[[Page 21032]]
the transfer of stock. In addition, BSECC is proposing to amend its
Articles and its By-Laws to change its name to NASDAQ Clearing
Corporation and to adopt other miscellaneous changes.
EMCF is a central counterparty clearinghouse for European equity
trading on exchanges and multilateral trading facilities, including
NASDAQ OMX Europe Ltd., Chi-X Europe Ltd., and BATS Trading Europe Ltd.
In addition, EMCF has agreed to provide central counterparty clearing
services to NASDAQ OMX exchanges in Stockholm, Helsinki, Copenhagen,
and Iceland. EMCF clears stocks traded on multiple European markets,
including stocks comprising the AEX, DAX, FTSE100, CAC40, and SMI20
indexes. Services offered by EMCF include novation, gross trade
netting, settlement, margining, and fails and buy-in management. EMCF
is headquartered in the Netherlands and is subject to voluntary
supervision by De Nederlandsche Bank and Autoriteit Financiele Markten.
In addition to OMX AB, EMCF's stockholders are Fortis Bank Nederland
(Holding) N.V. and Fortis Bank Global Clearing N.V. NASDAQ OMX and
EMCF's other stockholders will seek to further broaden EMCF's ownership
structure to include order flow providers and financial institutions.
It is expected that this will increase the commitment of banks and flow
providers towards EMCF, decrease EMCF's dependence on one shareholder,
and demonstrate to the market that EMCF is a solid company with firm
backing of shareholders with high standing and is a company that looks
after the interests of all its interested parties. Also, a key purpose
of the diversified shareholders' base is to facilitate the further
development of EMCF into becoming the leading central counterparty
services provider for European cash equities.
Under the Share Transfer Agreement dated January 5, 2009, among
Fortis, OMX AB, and EMCF, OMX AB has agreed, subject to Commission
approval, to transfer a 5% stake in BSECC to EMCF. The transfer of
BSECC's shares is a portion of the consideration to be paid by OMX AB
for obtaining a 22% stake in EMCF. Accordingly, OMX AB must obtain the
shares from NASDAQ OMX BX, Inc. prior to transferring them to EMCF. OMX
AB has agreed to undertake to use reasonable endeavors to obtain
Commission approval for the transfer as soon as possible and in any
event by July 5, 2009.
Currently, the authorized share capital of BSECC is 150 shares,
each with a par value of $100. Because 5% of the 150 BSECC shares is
7.5 shares, BSECC must increase its authorized share capital and pay a
2 for 1 stock dividend to NASDAQ OMX BX, Inc. so that NASDAQ OMX BX,
Inc. will own 300 shares of BSECC and be able to transfer 15 of them.
Accordingly, BSECC proposes to amend its Articles in order to increase
its authorized share capital to 300 shares. BSECC proposes to amend its
Articles to reflect either OMX AB or EMCF as one of its stockholders
and to reflect the name change of the Boston Stock Exchange to NASDAQ
OMX BX, Inc.
The amended provisions would state:
All of the authorized shares of Common Stock of [BSECC] shall be
issued and outstanding, and shall be held by NASDAQ OMX BX, Inc., a
Delaware corporation, and either OMX AB, a corporation organized
under the laws of Sweden, or European Multilateral Clearing
Facility, N.V., a public company with limited liability incorporated
under the laws of the Netherlands.
The language in the Articles providing that a stockholder may not
transfer or assign shares of stock of BSECC without approval of the
Commission would remain in place so that all of the stockholders of
BSECC would be bound by that restriction.
The Share Transfer Agreement also provides that under certain
circumstances, EMCF may transfer the shares of BSECC back to OMX AB or
NASDAQ OMX BX, Inc., thereby unwinding this aspect of the transaction.
In order to avoid the need to seek approval for such an unwinding in
the future, BSECC requests that the Commission approve at this time
both the initial transfer and any future unwinding.
Finally, at the time of the transfer EMCF and NASDAQ OMX BX, Inc.
will enter into a Shareholders Agreement to govern their relationship
with respect to BSECC. The key provisions of the Shareholders Agreement
are as follows. First, EMCF will grant BSECC a right of first refusal
to purchase all or any portion of its shares that EMCF may propose to
transfer. Second, if NASDAQ OMX BX, Inc. proposes to transfer any of
its shares of BSECC to any person, it must provide EMCF with the right
to substitute EMCF's shares in such transfer in proportion to EMCF's
percentage share of ownership in BSECC. Third, if NASDAQ OMX BX, Inc.
proposes to enter into a transaction under which it would no longer own
a majority of BSECC's outstanding shares or a sale of all or
substantially all of the assets of BSECC (``Sale Transaction''), EMCF
will in most circumstances take such actions as are necessary to
support the consummation of the Sale Transaction. Fourth, if BSECC
issues new securities it must first offer them to NASDAQ OMX BX, Inc.
and EMCF. Finally, the Shareholders Agreement provides for rights of
the stockholders to obtain information from BSECC about its financial
performance and operations.
Because the share transfers described by the Shareholders Agreement
would require Commission approval under the Articles, the Agreement
also provides that ``[n]othing in the Agreement shall be construed to
authorize [BSECC] or any stockholder of [BSECC] to transfer any share
or other interests in [BSECC] unless such transfer is approved in
accordance with the restrictions contained in the [Articles] of [BSECC]
and such other restrictions as may be imposed by the * * * Commission
or other governmental authority having jurisdiction over [BSECC].''
BSECC is also changing its name from Boston Stock Exchange Clearing
Corporation to NASDAQ Clearing Corporation. The change reflects BSECC's
changed status as a subsidiary of NASDAQ OMX. In addition, BSECC is
making the following miscellaneous changes to its Articles and By-Laws.
First, BSECC is restating its Articles to consolidate prior amendments
into a single document. Under Massachusetts law, the form for
restatement of the Articles necessitates nonsubstantive changes to
citations to Massachusetts statutes in the title of the Articles,
changes to prefatory language in Article IV of the Articles, and the
addition of nonsubstantive language regarding date of effectiveness as
a new Article VII. Second, BSECC is amending the Articles and By-Laws
to reflect the change in the name of Boston Stock Exchange,
Incorporated to NASDAQ OMX BX, Inc. Finally, BSECC is correcting
several typographical errors in Article X of the By-Laws.
III. Discussion
Section 17A(b)(3)(C) of the Act requires, among other things, that
a clearing agency's rules assure the fair representation of its
shareholders (or members) and participants in the selection of its
directors and administration of its affairs.\3\ The Commission
previously determined that Nasdaq OMX's acquisition of BSECC as an
indirect wholly-owned subsidiary would not affect BSECC's ability to
meet the requirements of Section 17A(b)(3)(C) because BSECC's By-Laws
relating to the selection, composition, powers, and duties of the BSECC
Board, committees, and officers of BSECC would remain essentially
unchanged after the
[[Page 21033]]
acquisition.\4\ Similarly, the proposal to transfer a 5% interest in
BSECC to EMCF does not require modification to BSECC's By-Laws, other
than to include EMCF as an authorized shareholder and to make other
minor changes discussed above, and should not alter the effectiveness
of the By-Laws to assure fair representation of BSECC's shareholders
and participants. Furthermore, we note that the proposed rule change
does not alter the provisions of NASDAQ OMX's Certificate and NASDAQ
OMX's By-Laws that are designed to maintain the independence of each of
its SRO subsidiaries' self-regulatory functions, enable each SRO
subsidiary to operate in a manner that complies with the federal
securities laws, and facilitate the ability of each SRO subsidiary and
the Commission to fulfill their regulatory and oversight obligations
under the Act. For these reasons, we find that the proposed rule change
is designed to allow BSECC to continue to meet the requirement under
Section 17A(b)(3)(C) that it assure the fair representation of its
shareholders and participants in the selection of its directors and
administration of its affairs.\5\ In addition, the amendments to the
BSECC's Articles and By-Laws to change the name of BSECC, consolidate
prior amendments, and correct certain errors are non-substantive
amendments which should not affect BSECC's obligations under Section
17A.
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\3\ 15 U.S.C. 78q-1(b)(3)(C).
\4\ Securities Exchange Act Release No. 58324 (August 7, 2008),
73 FR 46936 (August 12, 2008) (SR-BSE-2008-02; SR-BSE-2008-23; SR-
BSE-2008-25; SR-BSECC-2008-01).
\5\ This order grants approval to the current transfer of
ownership from BSECC to EMCF only. It does not as requested by BSECC
in its filing approve potential unwinds of the transfer of ownership
that may occur in the future.
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IV. Conclusion
On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular Section 17A of the Act and the rules and regulations
thereunder.\6\
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\6\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition and
capital formation. 15 U.S.C. 78c(f).
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It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-BSECC-2009-02) be and hereby
is approved.
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\7\ 17 CFR 200.30-3(a)(12).
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\7\
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-10464 Filed 5-5-09; 8:45 am]
BILLING CODE 8010-01-P
