Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, to Amend the By-Laws of The NASDAQ OMX Group, Inc., 32207-32209 [E9-15899]

Download as PDF Federal Register / Vol. 74, No. 128 / Tuesday, July 7, 2009 / Notices security is required to file reports with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; 86 (b) Is a closing transaction to offset a position in a contract of sale for future delivery that satisfied the conditions in paragraph (1)(a) of this order at the time such position was opened. (2) Is executed on, or subject to the rules of, an exchange or contract market that has its principal place of business outside the U.S., that is regulated as an exchange or contract market in a country other than the U.S., and that is not required to register with the Commission under Section 5 of the Exchange Act; 87 (3) Is cleared and settled on, and with respect to such clearance and settlement subject to the rules of, an exchange, contract market, or clearing entity that is regulated as an exchange, contract market, or clearing entity in a country other than the U.S. and that is not required to register with the Commission under Section 5 or Section 17A of the Exchange Act;88 (4) Is for a security future, that cannot be closed or liquidated by effecting an offsetting transaction on or through the facility of any exchange or association registered in the U.S. under Section 6 or Section 15A of the Exchange Act,89 respectively; and (5) Does not result in such person taking physical delivery of the underlying security in the U.S. in connection with settlement; B. Conditional Exemptions From Section 15(a)(1) of the Exchange Act and Certain Other Requirements For the reasons stated in, and by, this order, the Commission is exempting foreign brokers or dealers (as defined in Rule 15a–6(b)(3) under the Exchange Act) 90 that induce or attempt to induce the purchase or sale of any foreign security futures by a QIB that is subject to the exemption from Section 6(h)(1) of the Exchange Act, from the registration requirements of Section 15(a)(1) of the Exchange Act 91 and the reporting and other requirements of the Exchange Act (other than Sections 15(b)(4) and 15(b)(6)),92 and the rules and regulations thereunder, that apply specifically to a broker or dealer whether or not registered with the Commission; provided that the foreign broker or dealer and the registered broker or 86 15 U.S.C. 78m and 78o(d). U.S.C. 78e. 88 15 U.S.C. 78e and 78q–1. 89 15 U.S.C. 78f and 15 U.S.C. 78o–3. 90 17 CFR 240.15a–6(b)(3). 91 15 U.S.C. 78o(a)(1). 92 15 U.S.C. 78o(b)(4) and 78o(b)(6). 87 15 VerDate Nov<24>2008 14:45 Jul 06, 2009 Jkt 217001 dealer (as defined in Rule 15a–6(b)(5) under the Exchange Act), through which any resulting transactions with QIBs are effected, comply with the requirements of paragraphs (a)(3)(i) through (iii) 93 of Rule 15a–6 under the Exchange Act, except as otherwise provided below.94 If the registered broker or dealer through which any resulting transactions with QIBs are effected is a broker or dealer registered with the Commission pursuant to Section 15(b)(11) of the Exchange Act (‘‘Notice BD’’), then: (1) In lieu of the requirement in paragraph (a)(3)(iii)(A)(5) of Rule 15a–6, the Notice BD shall be responsible for complying with Rule 1.17 under the Commodity Exchange Act (‘‘CEA’’) (17 CFR 1.17) with respect to the transactions; and (2) In lieu of the requirement in paragraph (a)(3)(iii)(A)(6) of Rule 15a–6, the Notice BD shall be responsible for receiving, delivering, and safeguarding funds and securities in connection with transactions on behalf of the QIB in compliance with the segregation requirements of the CEA and the regulations thereunder. Accordingly, It is hereby ordered, pursuant to Section 36 of the Exchange Act,95 that certain persons are exempt from the provisions of Section 6(h)(1) of the Exchange Act 96 that prohibit persons from effecting transactions in security futures products that are not listed on a national securities exchange or a national securities association registered pursuant to Section 15A(a) of the Exchange Act,97 subject to the conditions set forth above. It is hereby further ordered, pursuant to Section 15(a)(2) of the Exchange Act,98 that a foreign broker or dealer as defined in Rule 15a–6(b)(3) 99 is exempt, with respect only to the activities described above in Section V.B. of this 93 For purposes of this exemption, references in paragraphs (a)(3)(i) through (iii) and paragraph (b)(2) of Rule 15a–6 to major U.S. institutional investors shall be deemed to be references to QIBs. In addition, for purposes of this exemption, the reference in paragraph (a)(3)(iii)(D) to Form BD shall be deemed a reference to Form BD–N with respect to Notice BDs. 94 Notwithstanding paragraph (a)(3)(ii)(A)(1) of the rule, foreign associated persons of the foreign broker or dealer may have in-person contacts (without the participation of an associated person of a registered broker or dealer) during visits to the United States with QIBs, so long as the number of days on which such in-person contacts occur does not exceed 30 per year and the foreign associated persons engaged in such in-person contacts do not accept orders to effect securities transactions while in the United States. See supra note 65. 95 15 U.S.C. 78mm. 96 15 U.S.C. 78f(h)(1). 97 15 U.S.C. 78o–3(a). 98 15 U.S.C. 78o(a)(2). 99 17 CFR 240.15a–6(b)(3). PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 32207 order, from the registration requirements of Section 15(a)(1) of the Exchange Act, subject to the conditions set forth above.100 It is hereby further ordered, pursuant to Section 36 of the Exchange Act,101 that a foreign broker or dealer as defined in Rule 15a-6(b)(3) 102 is exempt, with respect only to the activities described above in Section V.B. of this order, from the reporting and other requirements of the Exchange Act (other than Sections 15(b)(4) and 15(b)(6)),103 and the rules and regulations thereunder, that apply specifically to a broker or dealer whether or not registered with the Commission, subject to the conditions set forth above. By the Commission. Elizabeth M. Murphy, Secretary. [FR Doc. E9–15890 Filed 7–6–09; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60183; File No. SR– NASDAQ–2009–039] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, to Amend the By-Laws of The NASDAQ OMX Group, Inc. June 26, 2009. On April 27, 2009, The NASDAQ Stock Market LLC (‘‘NASDAQ Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 a proposed rule change to amend the ByLaws of The NASDAQ OMX Group, Inc. (‘‘NASDAQ OMX’’). The proposed rule change was published for comment in the Federal Register on May 12, 2009.3 On June 2, 2009, the NASDAQ Exchange filed Amendment No. 1 to the proposed rule change.4 The Commission 100 15 U.S.C. 78o(a)(1). U.S.C. 78mm. 102 17 CFR 240.15a–6(b)(3). 103 15 U.S.C. 78o(b)(4) and 78o(b)(6). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 59858 (May 4, 2009), 74 FR 22191 (‘‘Notice’’). 4 Amendment No. 1 modified the original rule proposal to indicate that the Board of Directors of NASDAQ OMX approved the proposed rule change on May 28, 2009, in addition to December 17, 2008, and to revise the proposed rule change with respect to ‘‘Extension of Time Period for Commission Action.’’ Because these are technical modifications, 101 15 E:\FR\FM\07JYN1.SGM Continued 07JYN1 32208 Federal Register / Vol. 74, No. 128 / Tuesday, July 7, 2009 / Notices received no comments regarding the proposal. This order approves the proposed rule change. I. Description of the Proposal As provided in Article XI of the NASDAQ OMX By-Laws, proposed amendments to the By-Laws are to be reviewed by the Board of Directors of each self-regulatory subsidiary of NASDAQ OMX, and if any such proposed amendment must, under Section 19 of the Act and the rules promulgated thereunder, be filed with, or filed with and approved by, the Commission before such amendment may be effective, then such amendment shall not be effective until filed with, or filed with and approved by, the Commission, as the case may be. Consistent with such requirement, the NASDAQ Exchange has filed proposed amendments to the NASDAQ OMX ByLaws.5 As described more fully in the Notice, the NASDAQ Exchange proposed the following amendments to the By-Laws. 1. Amend Article I to reflect the recent name changes of the Philadelphia Stock Exchange and the Boston Stock Exchange to NASDAQ OMX PHLX, Inc. and NASDAQ OMX BX, Inc., respectively; 2. Amend Article III to require a stockholder making a proposal to supply more complete information about the stockholder’s background. 3. Amend Article IV to state that both the NASDAQ OMX Audit and Management Compensation Committees shall be composed of independent directors within the meaning of the rules of the NASDAQ Exchange that govern NASDAQ OMX’s listing (and, in the case of the Audit Committee, Section 10A of the Act). 4. Amend Article IV to revise the compositional requirements of the NASDAQ OMX Nominating Committee. 5. Amend Article VIII to: (a) Require NASDAQ OMX to provide indemnification against liability, advancement of expenses, and the power to purchase and maintain insurance on behalf of persons serving as a director, officer, or employee of any wholly owned subsidiary of NASDAQ OMX to the same extent as indemnification, advancement of the Commission is not publishing Amendment No. 1 for comment. 5 Although there is a reference in the Notice to a proposed amendment to the Certificate of Incorporation of NASDAQ OMX (‘‘NASDAQ OMX Certificate’’), this proposal does not in fact amend the NASDAQ OMX Certificate. The Exchange recently amended the NASDAQ OMX Certificate pursuant to a separate filing with the Commission. See Securities Exchange Act Release No. 59460 (February 26, 2009), 74 FR 9841 (March 6, 2009). VerDate Nov<24>2008 14:45 Jul 06, 2009 Jkt 217001 expenses, and the power to maintain insurance is provided for directors, officers, or employees of NASDAQ OMX; (b) extend the discretionary authority of NASDAQ OMX under Section 8.1(c) of the By-Laws to provide indemnification to persons serving as an agent of NASDAQ OMX to persons serving as an agent of any wholly owned subsidiary of NASDAQ OMX; and (c) clarify that any repeal, modification or amendment of, or adoption of any provision inconsistent with, the indemnification and advancement of expenses provided for in Article VIII will not adversely affect the right of any person covered by the provision if the act or omission that any proceeding arises out of or is related to had occurred prior to the time for the repeal, amendment, adoption or modification. 6. Amend Article IX to revise the language of the provisions dealing with capital stock to reflect possible participation in the Direct Registration System (‘‘DRS’’). 7. Amend Article XII to conform certain provisions applicable to NASDAQ OMX’s directors, officers, employees, and/or agents more closely to corresponding provisions in the Amended and Restated By-Laws of NYSE Euronext (‘‘NYSE Euronext ByLaws’’). II. Discussion and Commission’s Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.6 In particular, for the reasons discussed below, the Commission finds that the proposed rule change is consistent with Section 6(b)(1) of the Act,7 which requires a national securities exchange to be so organized and have the capacity to carry out the purposes of the Act and to enforce compliance by its members and persons associated with its members with the provisions of the Act, and Section 6(b)(5) of the Act,8 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 6 In approving this proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 7 15 U.S.C. 78(b)(1). 8 15 U.S.C. 78f(b)(5). PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 general, to protect investors and the public interest. The NASDAQ Exchange proposes to revise the structure of the NASDAQ OMX Nominating Committee. Currently, the NASDAQ OMX Nominating Committee is required to be composed solely of persons who are not directors, or who are directors not standing for reelection. Under the amended By-Laws, the NASDAQ OMX Nominating Committee would be composed of four or five directors, all of whom must be independent within the meaning of the rules of the NASDAQ Exchange.9 Further, the number of Non-Industry Directors (i.e., Directors without material ties to the securities industry) must equal or exceed the number of Industry Directors, and at least two members of the committee must be Public Directors (i.e., directors who have no material business relationship with a broker or dealer, NASDAQ OMX or its affiliates, or FINRA).10 The Commission believes that it is appropriate for NASDAQ OMX to revise the composition of its Nominating Committee so that it is composed exclusively of directors that would be considered independent within the meaning of the listing rules of the NASDAQ Exchange,11 to provide for a compositional balance between Industry Directors, Non-Industry Directors, and to specify that at least two Nominating Committee members must be Public Directors. The Commission further believes that it is appropriate for the ByLaws to be amended to specify that the NASDAQ OMX Management Compensation Committee and the Audit Committee must be composed exclusively of independent director members within the meaning of the listing rules of the NASDAQ Exchange (and, in the case of the Audit Committee, Section 10A of the Act).12 The NASDAQ Exchange has represented that NASDAQ OMX adheres to the director independence requirements in the NASDAQ Exchange’s listing rules and, in the case the of the Audit Committee) Section 10A of the Act, but believed that such requirements should be set forth expressly in the By-Laws. Currently, NASDAQ OMX directors, officers, and employees, as well as 9 See NASDAQ Exchange Rule 5605(a)(2). Rule 5605(a)(2) was formerly designated Rule 4200(a)(15). See Securities Exchange Act Release No. 59663 (March 31, 2009), 74 FR 15552 (April 6, 2009) (SR–NASDAQ–2009–018). 10 See NASDAQ OMX By-laws, Article I (j), (m), and (n) for the definitions of Industry Director, NonIndustry Director, and Public Director, respectively. 11 Id. 12 See NASDAQ Exchange Rule 5605(a)(2). 15 U.S.C. 78j–1(m). E:\FR\FM\07JYN1.SGM 07JYN1 Federal Register / Vol. 74, No. 128 / Tuesday, July 7, 2009 / Notices agents, are required by the By-Laws to give due regard to the preservation of the independence of each self-regulatory subsidiary of NASDAQ OMX, not to take any actions that would interfere with each self-regulatory subsidiary’s regulatory functions, to cooperate with the Commission, to consent to U.S. jurisdiction, and to consent in writing to the applicability of these provisions. As more fully described in the Notice, the proposed rule change would conform Article XII of the By-Laws more closely to corresponding provisions in the NYSE Euronext By-Laws, which the Commission previously approved.13 III. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,14 that the proposed rule change (SR–NASDAQ– 2009–039) be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Elizabeth M. Murphy, Secretary. [FR Doc. E9–15899 Filed 7–6–09; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–60184; File No. SR– NYSEArca–2009–52] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To Amend the Schedule of Fees and Charges for Exchange Services June 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 June 10, 2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit 13 See NYSE Euronext Bylaws, Article III, Section 9.3; NYSE Euronext Bylaws, Article VII, Section 7.1. See also Securities Exchange Act Release No. 55293 (February 14, 2007), 72 FR 8033 (February 22, 2007) (SR–NYSE–2006–120). 14 15 U.S.C. 78s(b)(2). 15 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. VerDate Nov<24>2008 14:45 Jul 06, 2009 Jkt 217001 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 NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) [sic], through its wholly owned subsidiary NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’), is proposing to amend its Schedule of Fees and Charges for Exchange Services (‘‘Fee Schedule’’) to revise the Listing Fees applicable to Derivative Securities Products under NYSE Arca Rules 5.2(j)(3), 8.100, 8.200, 8.201, 8.202, 8.203, 8.204, 8.300, 8.500 and 8.600 on NYSE Arca, LLC (‘‘NYSE Arca Marketplace’’), the equities facility of NYSE Arca Equities. The revised Fee Schedule is attached as Exhibit 5 [sic]. The text of the proposed rule change 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. 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 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 NYSE Arca has determined to amend the Exchange’s Fee Schedule to revise the Listing Fee applicable to Derivative Securities Products listed on the NYSE Arca Marketplace under Rules 5.2(j)(3) (Investment Company Units), 8.100 (Portfolio Depositary Receipts), 8.200 (Trust Issued Receipts), 8.201 (Commodity-Based Trust Shares), 8.202 (Currency Trust Shares), 8.203 (Commodity Index Trust Shares), 8.204 (Commodity Futures Trust Shares), 8.300 (Partnership Units), 8.500 (Trust Units), and 8.600 (Managed Fund Shares). Specifically, the Exchange proposes to add a new provision to the Fee Schedule which states that in the case where a sponsor, managing owner, general partner or equivalent PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 32209 (collectively, the ‘‘Sponsor’’) is listing a new Derivative Securities Product on the Exchange for the first time, the Sponsor will be charged a one time consultation fee in the amount of $20,000. Under the current Fee Schedule for Derivative Securities Products, the Listing Fee is $5,000 and the Annual Fees range between $2,000 and $25,000 depending on the number of shares outstanding for each issue. The current Listing and Annual Fees applicable to Derivative Securities Products will remain unchanged and be applicable to all Sponsors of Derivative Securities Products. The proposed consulting charge would apply to all new Sponsors listing for the first time, a new Derivative Securities Product. Therefore, existing issuers, issuing a new Derivative Securities Product would not be charged the proposed consulting fee. The Exchange believes that the imposition of this proposed one time consulting charge to new Sponsors of new Derivative Securities Products is necessary in order to adequately compensate the Exchange for all of the additional Exchange resources dedicated to such new Sponsors, such as the additional legal and business resources required to properly advise novice Sponsors through the listing process. The Exchange dedicates extensive time and resources to new Sponsors in the way of conference calls, meetings, correspondences, etc., to educate such new Sponsors about the listing and approval process, a process that veteran Sponsors are already familiar with. The Exchange notes that the proposed new Sponsor Fee is substantially below the initial listing fee for issuers of traditional equity securities, e.g., common stock. The Exchange further believes that the proposed consulting fee will enable the Exchange to continue to provide new issuers with the level of service necessary to successfully navigate an initial launch of a Derivative Securities Product. 2. Statutory Basis NYSE Arca believes that the proposal is consistent with Section 6(b) 4 of the Securities Exchange Act of 1934 (the ‘‘Act’’) [sic], in general, and Section 6(b)(4) 5 of the Act, in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among its issuers and other persons using its facilities. The Exchange believes that the proposal is 4 15 5 15 E:\FR\FM\07JYN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(4). 07JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 74, Number 128 (Tuesday, July 7, 2009)]
[Notices]
[Pages 32207-32209]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-15899]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60183; File No. SR-NASDAQ-2009-039]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, 
to Amend the By-Laws of The NASDAQ OMX Group, Inc.

June 26, 2009.
    On April 27, 2009, The NASDAQ Stock Market LLC (``NASDAQ 
Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend the By-Laws of The NASDAQ OMX Group, Inc. 
(``NASDAQ OMX''). The proposed rule change was published for comment in 
the Federal Register on May 12, 2009.\3\ On June 2, 2009, the NASDAQ 
Exchange filed Amendment No. 1 to the proposed rule change.\4\ The 
Commission

[[Page 32208]]

received no comments regarding the proposal. This order approves the 
proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 59858 (May 4, 2009), 
74 FR 22191 (``Notice'').
    \4\ Amendment No. 1 modified the original rule proposal to 
indicate that the Board of Directors of NASDAQ OMX approved the 
proposed rule change on May 28, 2009, in addition to December 17, 
2008, and to revise the proposed rule change with respect to 
``Extension of Time Period for Commission Action.'' Because these 
are technical modifications, the Commission is not publishing 
Amendment No. 1 for comment.
---------------------------------------------------------------------------

I. Description of the Proposal

    As provided in Article XI of the NASDAQ OMX By-Laws, proposed 
amendments to the By-Laws are to be reviewed by the Board of Directors 
of each self-regulatory subsidiary of NASDAQ OMX, and if any such 
proposed amendment must, under Section 19 of the Act and the rules 
promulgated thereunder, be filed with, or filed with and approved by, 
the Commission before such amendment may be effective, then such 
amendment shall not be effective until filed with, or filed with and 
approved by, the Commission, as the case may be. Consistent with such 
requirement, the NASDAQ Exchange has filed proposed amendments to the 
NASDAQ OMX By-Laws.\5\ As described more fully in the Notice, the 
NASDAQ Exchange proposed the following amendments to the By-Laws.
---------------------------------------------------------------------------

    \5\ Although there is a reference in the Notice to a proposed 
amendment to the Certificate of Incorporation of NASDAQ OMX 
(``NASDAQ OMX Certificate''), this proposal does not in fact amend 
the NASDAQ OMX Certificate. The Exchange recently amended the NASDAQ 
OMX Certificate pursuant to a separate filing with the Commission. 
See Securities Exchange Act Release No. 59460 (February 26, 2009), 
74 FR 9841 (March 6, 2009).
---------------------------------------------------------------------------

    1. Amend Article I to reflect the recent name changes of the 
Philadelphia Stock Exchange and the Boston Stock Exchange to NASDAQ OMX 
PHLX, Inc. and NASDAQ OMX BX, Inc., respectively;
    2. Amend Article III to require a stockholder making a proposal to 
supply more complete information about the stockholder's background.
    3. Amend Article IV to state that both the NASDAQ OMX Audit and 
Management Compensation Committees shall be composed of independent 
directors within the meaning of the rules of the NASDAQ Exchange that 
govern NASDAQ OMX's listing (and, in the case of the Audit Committee, 
Section 10A of the Act).
    4. Amend Article IV to revise the compositional requirements of the 
NASDAQ OMX Nominating Committee.
    5. Amend Article VIII to: (a) Require NASDAQ OMX to provide 
indemnification against liability, advancement of expenses, and the 
power to purchase and maintain insurance on behalf of persons serving 
as a director, officer, or employee of any wholly owned subsidiary of 
NASDAQ OMX to the same extent as indemnification, advancement of 
expenses, and the power to maintain insurance is provided for 
directors, officers, or employees of NASDAQ OMX; (b) extend the 
discretionary authority of NASDAQ OMX under Section 8.1(c) of the By-
Laws to provide indemnification to persons serving as an agent of 
NASDAQ OMX to persons serving as an agent of any wholly owned 
subsidiary of NASDAQ OMX; and (c) clarify that any repeal, modification 
or amendment of, or adoption of any provision inconsistent with, the 
indemnification and advancement of expenses provided for in Article 
VIII will not adversely affect the right of any person covered by the 
provision if the act or omission that any proceeding arises out of or 
is related to had occurred prior to the time for the repeal, amendment, 
adoption or modification.
    6. Amend Article IX to revise the language of the provisions 
dealing with capital stock to reflect possible participation in the 
Direct Registration System (``DRS'').
    7. Amend Article XII to conform certain provisions applicable to 
NASDAQ OMX's directors, officers, employees, and/or agents more closely 
to corresponding provisions in the Amended and Restated By-Laws of NYSE 
Euronext (``NYSE Euronext By-Laws'').

II. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\6\ 
In particular, for the reasons discussed below, the Commission finds 
that the proposed rule change is consistent with Section 6(b)(1) of the 
Act,\7\ which requires a national securities exchange to be so 
organized and have the capacity to carry out the purposes of the Act 
and to enforce compliance by its members and persons associated with 
its members with the provisions of the Act, and Section 6(b)(5) of the 
Act,\8\ 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.
---------------------------------------------------------------------------

    \6\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78(b)(1).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The NASDAQ Exchange proposes to revise the structure of the NASDAQ 
OMX Nominating Committee. Currently, the NASDAQ OMX Nominating 
Committee is required to be composed solely of persons who are not 
directors, or who are directors not standing for re-election. Under the 
amended By-Laws, the NASDAQ OMX Nominating Committee would be composed 
of four or five directors, all of whom must be independent within the 
meaning of the rules of the NASDAQ Exchange.\9\ Further, the number of 
Non-Industry Directors (i.e., Directors without material ties to the 
securities industry) must equal or exceed the number of Industry 
Directors, and at least two members of the committee must be Public 
Directors (i.e., directors who have no material business relationship 
with a broker or dealer, NASDAQ OMX or its affiliates, or FINRA).\10\
---------------------------------------------------------------------------

    \9\ See NASDAQ Exchange Rule 5605(a)(2). Rule 5605(a)(2) was 
formerly designated Rule 4200(a)(15). See Securities Exchange Act 
Release No. 59663 (March 31, 2009), 74 FR 15552 (April 6, 2009) (SR-
NASDAQ-2009-018).
    \10\ See NASDAQ OMX By-laws, Article I (j), (m), and (n) for the 
definitions of Industry Director, Non-Industry Director, and Public 
Director, respectively.
---------------------------------------------------------------------------

    The Commission believes that it is appropriate for NASDAQ OMX to 
revise the composition of its Nominating Committee so that it is 
composed exclusively of directors that would be considered independent 
within the meaning of the listing rules of the NASDAQ Exchange,\11\ to 
provide for a compositional balance between Industry Directors, Non-
Industry Directors, and to specify that at least two Nominating 
Committee members must be Public Directors. The Commission further 
believes that it is appropriate for the By-Laws to be amended to 
specify that the NASDAQ OMX Management Compensation Committee and the 
Audit Committee must be composed exclusively of independent director 
members within the meaning of the listing rules of the NASDAQ Exchange 
(and, in the case of the Audit Committee, Section 10A of the Act).\12\ 
The NASDAQ Exchange has represented that NASDAQ OMX adheres to the 
director independence requirements in the NASDAQ Exchange's listing 
rules and, in the case the of the Audit Committee) Section 10A of the 
Act, but believed that such requirements should be set forth expressly 
in the By-Laws.
---------------------------------------------------------------------------

    \11\ Id.
    \12\ See NASDAQ Exchange Rule 5605(a)(2). 15 U.S.C. 78j-1(m).
---------------------------------------------------------------------------

    Currently, NASDAQ OMX directors, officers, and employees, as well 
as

[[Page 32209]]

agents, are required by the By-Laws to give due regard to the 
preservation of the independence of each self-regulatory subsidiary of 
NASDAQ OMX, not to take any actions that would interfere with each 
self-regulatory subsidiary's regulatory functions, to cooperate with 
the Commission, to consent to U.S. jurisdiction, and to consent in 
writing to the applicability of these provisions. As more fully 
described in the Notice, the proposed rule change would conform Article 
XII of the By-Laws more closely to corresponding provisions in the NYSE 
Euronext By-Laws, which the Commission previously approved.\13\
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    \13\ See NYSE Euronext Bylaws, Article III, Section 9.3; NYSE 
Euronext Bylaws, Article VII, Section 7.1. See also Securities 
Exchange Act Release No. 55293 (February 14, 2007), 72 FR 8033 
(February 22, 2007) (SR-NYSE-2006-120).
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III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\14\ that the proposed rule change (SR-NASDAQ-2009-039) be, and it 
hereby is, approved.
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    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-15899 Filed 7-6-09; 8:45 am]
BILLING CODE 8010-01-P

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