Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Amendment to Rule 862 Relating to, Among Other Things, Eliminate Broker Discretionary Voting for All Elections of Directors, Except for Companies Registered Under the Investment Company Act of 1940, 53725-53727 [2010-21849]
Download as PDF
<![CDATA[
Federal Register / Vol. 75, No. 169 / Wednesday, September 1, 2010 / Notices
concerning Proposed collection. The
document contained incorrect dates.
DATES:
Effective on September 1, 2010.
FOR FURTHER INFORMATION CONTACT:
U.S.
Office of Personnel Management,
Employment Services, USAJOBS, 1900
E Street, NW., Washington, DC 20415,
Attention: Patricia Stevens or send
electronic mail to
patricia.stevens@opm.gov.
Correction
In the Federal Register of Monday,
August 2, 2010, at 75 FR 45173, in the
third column, correct the DATES section
to read:
DATES:
Effective on December 12, 2010.
U.S. Office of Personnel Management.
Angela Bailey,
Deputy Associate Director for Recruitment
and Diversity.
[FR Doc. 2010–21799 Filed 8–31–10; 8:45 am]
BILLING CODE 6325–39–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62775; File No. SR–PHLX–
2010–115]
Self-Regulatory Organizations;
NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Amendment to Rule
862 Relating to, Among Other Things,
Eliminate Broker Discretionary Voting
for All Elections of Directors, Except
for Companies Registered Under the
Investment Company Act of 1940
hsrobinson on DSK69SOYB1PROD with NOTICES
August 26, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 2 thereunder,
notice is hereby given that on August
18, 2010, NASDAQ OMX PHLX, Inc.
(‘‘PHLX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II,
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 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).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
VerDate Mar<15>2010
18:24 Aug 31, 2010
Jkt 220001
53725
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
The Exchange, pursuant to Section
19(b)(1) of the Act 5 and Rule 19b–4
thereunder,6 proposes to amend PHLX
Rule 862 (Proxies at Direction of Owner)
to comport with the Chicago Board
Options Exchange (‘‘CBOE’’) Rule
31.85(b) and the New York Stock
Exchange (‘‘NYSE’’) Rule 452 to
eliminate broker discretionary voting for
all elections of directors at shareholder
meetings, whether contested or not,
except for companies registered under
the Investment Company Act of 1940
(the ‘‘1940 Act’’),7 to amend PHLX Rule
862 to preclude broker discretionary
voting on a matter that materially
amends an investment advisory contract
with an investment company, and to
define that a material amendment to an
investment advisory contract would
include any proposal to obtain
shareholder approval of an investment
company’s investment advisory contract
with a new investment advisor. In
addition, including the changes noted
above, this proposal reorganizes the
broker voting rules to specifically
include 20 instances where member
organizations may not vote without
customer instructions, while retaining
the prohibition that the member
organization may not vote without
instructions from the customer on
matters that may substantially affect the
rights and privileges of the stockholders.
This proposal also clarifies proxy
procedures and proxy record retention.
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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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
5 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
7 The Commission notes that the exception for
companies registered under the 1940 Act only
apply to uncontested director elections, i.e., when
there is no counter solicitation. See proposed Phlx
Rule 862(b)(2).
6 17
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
1. Purpose
PHLX Rule 862 provides instructions
on how the proxies are voted. The
purpose of the proposed rule change is
to amend PHLX Rule 862(2) to comport
with CBOE Rule 31.85(b) and NYSE
Rule 452 to eliminate broker
discretionary voting for all elections of
directors at shareholder meetings,
whether contested or not, except for
companies registered under the
Investment Company Act of 1940 (the
‘‘1940 Act’’), to amend PHLX Rule 862
to preclude broker discretionary voting
on a matter that materially amends an
investment advisory contract with an
investment company, and to define that
a material amendment to an investment
advisory contract would include any
proposal to obtain shareholder approval
of an investment company’s investment
advisory contract with a new
investment advisor. In addition,
including the changes noted above, this
proposal reorganizes the broker voting
rules to specifically include 20
instances where member organizations
may not vote without customer
instructions, while retaining the
prohibition that the member
organization may not vote without
instructions from the customer on
matters that may substantially affect the
rights and privileges of the stockholders.
This proposal also clarifies proxy
procedures and proxy record retention.
The proposed amendment does not
materially change the proxy rules with
the exception of the changes made in
this filing. Amending PHLX Rule 862 to
comport with CBOE Rule 31.85 (b) and
NYSE Rule 452 provides consistency
among the exchanges to eliminate
disparities regarding proxy voting. The
Exchange proposes this amendment in
response to a request by the Securities
and Exchange Commission (the
‘‘Commission’’) that self-regulatory
organizations have uniform proxy rules
regarding broker discretionary voting.8
As a result, PHLX believes the broker
discretionary voting amendments will
have little impact on the market
participants since the changes are in
line with the rules of the other selfregulatory organizations as defined
within the meaning of Section 3(a)(26)
8 See NYSE Approval Order, 74 FR at 33298,
Commission Release No. 34–60215 (July 1, 2009),
note 69.
E:\FR\FM\01SEN1.SGM
01SEN1
53726
Federal Register / Vol. 75, No. 169 / Wednesday, September 1, 2010 / Notices
of the Act 9 (otherwise known as
‘‘SROs’’). PHLX members with
customers are also members of one of
the other SROs.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 10 in general, and furthers the
objectives of Section 6(b)(5) of the Act 11
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest.
Specifically, the Exchange believes that
the proposed rule change will protect
investors and the public interest by
ensuring better corporate governance
and transparency of the election process
for directors and by promoting greater
uniformity with the proxy rules of other
SROs. In particular, for Exchange
member organizations that are also
member firms of other SROs, confusion
might arise as to which SROs’ proxy
voting rules are applicable to a company
listed on the Exchange if there are
disparities between the rules of the
Exchange and the other SROs.
The proposal should further the
protection of investors and the public
interest by assuring that voting on
matters as critical as the election of
directors can no longer be determined
by member organizations without
specific instructions from the beneficial
owner, and thus should enhance
corporate governance and accountability
to shareholders. Additionally, other
changes enhance the proxy rules by
providing clarity to proxy handling and
record retention matters which also
improves the protection to the investors.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
hsrobinson on DSK69SOYB1PROD with NOTICES
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.
9 15
U.S.C. 78c(a)(26).
U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
10 15
VerDate Mar<15>2010
18:24 Aug 31, 2010
Jkt 220001
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)
of the Act 12 and Rule 19b–4(f)(6) 13
thereunder because the proposal does
not: (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) by its
terms, become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate if consistent with the
protection of investors and the public
interest, provided that the Exchange has
given the Commission notice of its
intent to file the proposed rule change,
along with a brief description and text
of the proposed rule change, at least five
business days prior to the date of filing
of the proposed rule change, or such
shorter time as designated by the
Commission.14
A proposed rule change filed under
Rule 19b–4(f)(6) normally may not
become operative prior to 30 days after
the date of filing. However, Rule 19b–
4(f)(6)(iii) 15 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange has requested that the
Commission waive the 30-day operative
delay period. In making this request, the
Exchange noted that waiver of the
30-day operative delay will conform to
the Commission’s desire to eliminate
any disparities with proxy voting.
The Commission believes that the
waiver of the 30-day operative delay
period is consistent with the protection
of investors and the public interest.16
The proposal would permit the
Exchange to comply with the
Commission’s stated goal that selfregulatory organizations who currently
allow members to use discretionary
voting for director elections conform
their rules to the NYSE’s rules to
eliminate any voting disparities
depending on where the shares are
held.17 In this regard, Phlx’s proposed
changes to Rule 862 are substantively
similar to NYSE Rule 452 and CBOE
Rule 31.85. Further, the proposal would
conform the Exchange’s rule to the
12 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
14 The Exchange has satisfied the five business
day pre-filing requirement.
15 17 CFR 240.19b–4(f)(6)(iii).
16 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
17 See supra note 8.
13 17
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
NYSE’s rule with respect to voting on
investment advisory contracts.
Moreover, the Commission notes that
the NYSE’s adopted rule changes were
subject to full notice and comment, and
considered and approved by the
Commission.18 Finally, the Commission
notes that the clarification of proxy
procedures, record retention, and other
changes to Phlx Rule 862 are based
substantially on CBOE’s rules. Based on
the above, the Commission finds that
waiving the 30-day operative delay
period is consistent with the protection
of investors and the public interest, and
the proposal is therefore deemed
operative upon filing.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.19
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–2010–115 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–PHLX–2010–115. 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
18 See
19 15
E:\FR\FM\01SEN1.SGM
id.
U.S.C. 78s(b)(3)(C).
01SEN1
Federal Register / Vol. 75, No. 169 / Wednesday, September 1, 2010 / Notices
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such 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–
2010–115 and should be submitted on
or before September 22, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–21849 Filed 8–31–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62776; File No. SR–Phlx–
2010–91]
Self-Regulatory Organizations;
NASDAQ OMX PHLX, Inc.; Order
Approving Proposed Rule Change, as
Modified by Amendment No. 1 Thereto,
To Amend Phlx Rule 604 Relating to
Registration and Qualification
Requirements for PSX
August 26, 2010.
hsrobinson on DSK69SOYB1PROD with NOTICES
I. Introduction
On June 29, 2010, NASDAQ OMX
PHLX, Inc. (‘‘Phlx’’ or ‘‘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 adopt provisions relating to
the registration and qualification of
members and persons associated with
member organizations. On July 13, 2010,
the Exchange submitted Amendment
No. 1 to the proposed rule change. The
proposed rule change was published for
comment in the Federal Register on July
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
22, 2010.3 The Commission received no
comment letters on the proposal. This
order approves the proposed rule
change, as modified by Amendment No.
1.
II. Description of the Proposal
Phlx proposes to amend Rule 604,
‘‘Registration and Termination of
Registered Persons,’’ to adopt new and
modify existing provisions governing
general and limited categories of
principals and representatives. The
proposal is meant to capture all persons
associated with member organizations
who trade on the Exchange’s new equity
platform, NASDAQ OMX PSX (‘‘PSX’’).
Specifically, the Exchange proposes to
adopt Rule 604(g), ‘‘Principal
Registration,’’ and Supplementary
Material .01–.03 to set forth the
categories of principal registration. The
rule would require, among other things,
that all associated persons who perform
certain functions pass an appropriate
examination and register as principals;
every member organization to have at
least two registered principals (unless
an exception applies); and each member
organization to have a Limited
Principal—Financial/Operations. In
addition, Phlx Rule 604(h) and
Supplementary Material .04 would
require that each representative be
registered and pass the General
Securities Representative Examination
(‘‘Series 7’’).
Phlx also proposes to adopt Phlx Rule
604(i)(1) to delineate categories of
persons that are exempt from
registration, Rule 604(i)(2) to allow
member organizations and persons
associated with member organizations
to pay to non-registered foreign persons
transaction-related compensation based
upon business of customers they direct
to member organizations if certain
conditions are met, and Phlx Rule 604(j)
to allow for waiver of qualification
examination requirements in
exceptional circumstances. In
connection with the above amendments,
Phlx proposes to add several related
terms to Rule 1, ‘‘Definitions.’’ Finally,
Phlx proposes to amend Rule 640,
‘‘Continuing Education for Registered
Persons,’’ to delete an outdated
reference.
Applicability—Rule 604(f)
Proposed Phlx Rule 604(f) would state
that sub-paragraphs (g) and (h),
discussed in greater detail below, apply
to member organizations, and associated
persons of member organizations, that
20 17
1 15
VerDate Mar<15>2010
18:24 Aug 31, 2010
3 See Securities Exchange Act Release No. 62509
(July 15, 2010), 75 FR 42804.
Jkt 220001
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
53727
are registered with the Exchange for the
purpose of trading NMS stocks.4
Principal Registration—Rule 604(g)
Proposed Phlx Rule 604(g) would
provide that persons associated with a
member organization who are actively
engaged in the management of the
member organization’s investment
banking or securities business,
including supervision, solicitation,
conduct of business or training of
persons associated with a member
organization for any of these functions,
shall be registered as principals. Such
persons would include sole proprietors,
officers, partners, managers of offices of
supervisory jurisdiction, and directors
of corporations.
Every member organization, except a
sole proprietorship, would be required
to have at least two officers or partners
who are registered as principals with
respect to each aspect of the member
organization’s investment banking and
securities business; 5 provided,
however, that a proprietary trading firm
with 25 or fewer registered
representatives would only be required
to have one officer or partner registered
as a principal. The proposed rule would
allow Phlx to waive the two-principal
requirement in situations that indicate
conclusively that only one person
should be required to register as a
principal.6
All persons who are to function as
principals 7 would be required to pass
the General Securities Principal
Qualification Examination (‘‘Series 24’’)
and submit a Form U4 through WebCRD
reflecting registration as such, unless a
different category of principal
registration applies. Each person
seeking to register and qualify as a
General Securities Principal would be
required to, before or concurrent with
4 PSX will not be used for trading any securities
other than NMS stocks. Existing rules would
continue to govern registration of associated
persons of member organizations that trade options,
but not cash equities, through Phlx. The
Commission understands that Phlx intends to
amend its registration rules for its options members
shortly.
5 See proposed Rule 604(g)(5)(A).
6 See proposed Rule 604(g)(5)(B).
7 Any person associated with a member
organization as a registered representative whose
duties are changed to require registration in any
principal classification would be allowed a period
of 90 calendar days following the change in his
duties to pass the appropriate principal
qualification examination. Upon elevation, the
member organization shall submit to the Exchange
through FINRA’s Central Registration Depository
(‘‘Web CRD’’) an amended ‘‘Uniform Application for
Securities Industry Registration or Transfer’’ (‘‘Form
U4’’) and any applicable fees. No one may function
as a principal beyond the initial 90 calendar day
period following the change in his duties without
having passed the appropriate qualification
examination. See proposed Rule 604(g)(4).
E:\FR\FM\01SEN1.SGM
01SEN1
]]>Agencies
[Federal Register Volume 75, Number 169 (Wednesday, September 1, 2010)]
[Notices]
[Pages 53725-53727]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-21849]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62775; File No. SR-PHLX-2010-115]
Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Amendment to Rule
862 Relating to, Among Other Things, Eliminate Broker Discretionary
Voting for All Elections of Directors, Except for Companies Registered
Under the Investment Company Act of 1940
August 26, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on August 18, 2010, NASDAQ OMX PHLX, Inc. (``PHLX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II, below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange, pursuant to Section 19(b)(1) of the Act \5\ and Rule
19b-4 thereunder,\6\ proposes to amend PHLX Rule 862 (Proxies at
Direction of Owner) to comport with the Chicago Board Options Exchange
(``CBOE'') Rule 31.85(b) and the New York Stock Exchange (``NYSE'')
Rule 452 to eliminate broker discretionary voting for all elections of
directors at shareholder meetings, whether contested or not, except for
companies registered under the Investment Company Act of 1940 (the
``1940 Act''),\7\ to amend PHLX Rule 862 to preclude broker
discretionary voting on a matter that materially amends an investment
advisory contract with an investment company, and to define that a
material amendment to an investment advisory contract would include any
proposal to obtain shareholder approval of an investment company's
investment advisory contract with a new investment advisor. In
addition, including the changes noted above, this proposal reorganizes
the broker voting rules to specifically include 20 instances where
member organizations may not vote without customer instructions, while
retaining the prohibition that the member organization may not vote
without instructions from the customer on matters that may
substantially affect the rights and privileges of the stockholders.
This proposal also clarifies proxy procedures and proxy record
retention.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78s(b)(1).
\6\ 17 CFR 240.19b-4.
\7\ The Commission notes that the exception for companies
registered under the 1940 Act only apply to uncontested director
elections, i.e., when there is no counter solicitation. See proposed
Phlx Rule 862(b)(2).
---------------------------------------------------------------------------
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
PHLX Rule 862 provides instructions on how the proxies are voted.
The purpose of the proposed rule change is to amend PHLX Rule 862(2) to
comport with CBOE Rule 31.85(b) and NYSE Rule 452 to eliminate broker
discretionary voting for all elections of directors at shareholder
meetings, whether contested or not, except for companies registered
under the Investment Company Act of 1940 (the ``1940 Act''), to amend
PHLX Rule 862 to preclude broker discretionary voting on a matter that
materially amends an investment advisory contract with an investment
company, and to define that a material amendment to an investment
advisory contract would include any proposal to obtain shareholder
approval of an investment company's investment advisory contract with a
new investment advisor. In addition, including the changes noted above,
this proposal reorganizes the broker voting rules to specifically
include 20 instances where member organizations may not vote without
customer instructions, while retaining the prohibition that the member
organization may not vote without instructions from the customer on
matters that may substantially affect the rights and privileges of the
stockholders. This proposal also clarifies proxy procedures and proxy
record retention.
The proposed amendment does not materially change the proxy rules
with the exception of the changes made in this filing. Amending PHLX
Rule 862 to comport with CBOE Rule 31.85 (b) and NYSE Rule 452 provides
consistency among the exchanges to eliminate disparities regarding
proxy voting. The Exchange proposes this amendment in response to a
request by the Securities and Exchange Commission (the ``Commission'')
that self-regulatory organizations have uniform proxy rules regarding
broker discretionary voting.\8\ As a result, PHLX believes the broker
discretionary voting amendments will have little impact on the market
participants since the changes are in line with the rules of the other
self-regulatory organizations as defined within the meaning of Section
3(a)(26)
[[Page 53726]]
of the Act \9\ (otherwise known as ``SROs''). PHLX members with
customers are also members of one of the other SROs.
---------------------------------------------------------------------------
\8\ See NYSE Approval Order, 74 FR at 33298, Commission Release
No. 34-60215 (July 1, 2009), note 69.
\9\ 15 U.S.C. 78c(a)(26).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \10\ in general, and furthers the objectives of Section
6(b)(5) of the Act \11\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest. Specifically, the Exchange believes that the proposed rule
change will protect investors and the public interest by ensuring
better corporate governance and transparency of the election process
for directors and by promoting greater uniformity with the proxy rules
of other SROs. In particular, for Exchange member organizations that
are also member firms of other SROs, confusion might arise as to which
SROs' proxy voting rules are applicable to a company listed on the
Exchange if there are disparities between the rules of the Exchange and
the other SROs.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The proposal should further the protection of investors and the
public interest by assuring that voting on matters as critical as the
election of directors can no longer be determined by member
organizations without specific instructions from the beneficial owner,
and thus should enhance corporate governance and accountability to
shareholders. Additionally, other changes enhance the proxy rules by
providing clarity to proxy handling and record retention matters which
also improves the protection to the investors.
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) of the Act \12\ and Rule 19b-4(f)(6) \13\ thereunder
because the proposal does not: (i) Significantly affect the protection
of investors or the public interest; (ii) impose any significant burden
on competition; and (iii) by its terms, become operative for 30 days
from the date on which it was filed, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest, provided that the Exchange has given the
Commission notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.\14\
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ The Exchange has satisfied the five business day pre-filing
requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \15\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay period. In making this
request, the Exchange noted that waiver of the 30-day operative delay
will conform to the Commission's desire to eliminate any disparities
with proxy voting.
---------------------------------------------------------------------------
\15\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
The Commission believes that the waiver of the 30-day operative
delay period is consistent with the protection of investors and the
public interest.\16\ The proposal would permit the Exchange to comply
with the Commission's stated goal that self-regulatory organizations
who currently allow members to use discretionary voting for director
elections conform their rules to the NYSE's rules to eliminate any
voting disparities depending on where the shares are held.\17\ In this
regard, Phlx's proposed changes to Rule 862 are substantively similar
to NYSE Rule 452 and CBOE Rule 31.85. Further, the proposal would
conform the Exchange's rule to the NYSE's rule with respect to voting
on investment advisory contracts. Moreover, the Commission notes that
the NYSE's adopted rule changes were subject to full notice and
comment, and considered and approved by the Commission.\18\ Finally,
the Commission notes that the clarification of proxy procedures, record
retention, and other changes to Phlx Rule 862 are based substantially
on CBOE's rules. Based on the above, the Commission finds that waiving
the 30-day operative delay period is consistent with the protection of
investors and the public interest, and the proposal is therefore deemed
operative upon filing.
---------------------------------------------------------------------------
\16\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\17\ See supra note 8.
\18\ See id.
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.\19\
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------
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-2010-115 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-PHLX-2010-115. 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
[[Page 53727]]
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street, NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of such
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-2010-115 and should be submitted on or before
September 22, 2010.
---------------------------------------------------------------------------
\20\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-21849 Filed 8-31-10; 8:45 am]
BILLING CODE 8010-01-P
