Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Adopt Rule 3.22 (Proxy Voting), in Accordance With the Provisions of Section 957 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 20067-20070 [2011-8477]

Download as PDF Federal Register / Vol. 76, No. 69 / Monday, April 11, 2011 / Notices srobinson on DSKHWCL6B1PROD with NOTICES securities, and believes that it is appropriate to designate strike price intervals and ranges for series in such options that are comparable to those strike price intervals and ranges in effect for the SPX option series. The Exchange hopes that this will permit calculation of volatility index values that are recognized to be as accurate and reliable as the VIX values. The Exchange stated that allowing smaller strike price intervals for options overlying single stocks, ETFs, and indexes with prices of $150 or less will allow the Exchange to calculate volatility indexes that are better estimates of the expected volatility of option classes with underlying prices that are low relative to the level of the S&P 500. The Exchange also stated its belief that the expansion of strike prices resulting from the proposal is limited because the proposal will apply only to options that are used to calculate a volatility index. CBOE further stated that it has analyzed its capacity and represented that it believes that the Exchange and the Options Price Reporting Authority have the necessary systems capacity to handle the additional traffic associated with the listing series with strike prices in $0.50 intervals where the strike price is less than $75, and series with strike prices in $1.00 intervals where the strike price is between $75 and $150 for option classes used to calculate volatility indexes that would result from the Exchange’s proposal. III. Discussion 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.5 Specifically, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,6 which requires, among other things, that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, 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. The proposal appears to strike a reasonable balance between the Exchange’s desire to offer a wider array of investment opportunities and the 5 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 6 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 17:49 Apr 08, 2011 Jkt 223001 need to avoid unnecessary proliferation of options series and the corresponding increase in quotes and market fragmentation. The Commission expects the Exchange to monitor the trading volume associated with the additional options series listed as a result of this proposal and the effect of these additional series on market fragmentation and on the capacity of the Exchange’s, OPRA’s, and vendors’ automated systems. The Commission notes that CBOE has represented that it believes the Exchange and the Options Price Reporting Authority have the necessary systems capacity to handle the additional traffic associated with the newly permitted listings. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,7 that the proposed rule change (SR–CBOE–2011– 008) be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–8498 Filed 4–8–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64187; File No. SR–EDGA– 2011–08] Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Adopt Rule 3.22 (Proxy Voting), in Accordance With the Provisions of Section 957 of the Dodd-Frank Wall Street Reform and Consumer Protection Act April 5, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 24, 2011, EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons, and is 7 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 8 17 PO 00000 Frm 00117 Fmt 4703 approving the proposed rule change on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt Rule 3.22 (Proxy Voting), in accordance with the provisions of Section 957 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the ‘‘DoddFrank Act’’). The text of the proposed rule change is attached as Exhibit 5 and is available on the Exchange’s Web site at https://www.directedge.com, at the Exchange’s principal office, and at the Public Reference Room of the Commission. 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 III below. The self-regulatory organization 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 Purpose The Exchange is proposing to adopt EDGA Rule 3.22 (Proxy Voting), in accordance with the provisions of Section 957 of the Dodd-Frank Act, to prohibit Members from voting uninstructed shares if the matter voted on relates to (i) the election of a member of the board of directors of an issuer (other than an uncontested election of a director of an investment company registered under the Investment Company Act of 1940 (the ‘‘Investment Company Act’’)), (ii) executive compensation, or (iii) any other significant matter, as determined by the Securities and Exchange Commission (the ‘‘Commission’’), by rule. Section 957 of the Dodd-Frank Act amends Section 6(b) 3 of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’) [sic] to require the rules of each national securities exchange to prohibit any member organization that is not the beneficial owner of a security registered 3 15 Sfmt 4703 20067 E:\FR\FM\11APN1.SGM U.S.C. 78f(b). 11APN1 srobinson on DSKHWCL6B1PROD with NOTICES 20068 Federal Register / Vol. 76, No. 69 / Monday, April 11, 2011 / Notices under Section 12 4 of the Exchange Act from granting a proxy to vote the security in connection with certain stockholder votes, unless the beneficial owner of the security has instructed the member organization to vote the proxy in accordance with the voting instructions of the beneficial owner. The stockholder votes covered by Section 957 include any vote with respect to (i) the election of a member of the board of directors of an issuer (other than an uncontested election of a director of an investment company registered under the Investment Company Act), (ii) executive compensation, or (iii) any other significant matter, as determined by the Commission, by rule. Accordingly, in order to carry out the requirements of Section 957 of the Dodd-Frank Act, the Exchange proposes to adopt proposed EDGA Rule 3.22 to prohibit any Member from giving a proxy to vote stock that is registered in its name, unless: (i) Such Member is the beneficial owner of such stock; (ii) pursuant to the written instructions of the beneficial owner; or (iii) pursuant to the rules of any national securities exchange or association of which it is a member provided that the records of the Member clearly indicate the procedure it is following. The Exchange is proposing to adopt these rules because other national securities exchanges and associations do allow proxy voting under certain limited circumstances while the current Exchange Rules are silent on such matters. Therefore, a Member that is also a member of another national securities exchange or association may vote the shares held for a customer when allowed under its membership at another national securities exchange or association, provided that the records of the Member clearly indicate the procedure it is following. Notwithstanding the foregoing, a Member that is not the beneficial owner of a security registered under Section 12 of the Exchange Act is prohibited from granting a proxy to vote the security in connection with a shareholder vote with respect to the election of a member of the board of directors of an issuer (except for a vote with respect to uncontested election of a member of the board of directors of any investment company registered under the Investment Company Act), executive compensation, or any other significant matter, as determined by the Commission, by rule, unless the beneficial owner of the security has instructed the Member to vote the proxy 4 15 U.S.C. 781. VerDate Mar<15>2010 17:49 Apr 08, 2011 Jkt 223001 in accordance with the voting instructions of the beneficial owner. Because Section 957 of the DoddFrank Act does not provide for a transition phase, the Exchange is proposing to adopt the proposed rule change pursuant to Section 19(b) of the Exchange Act to comply with Section 957 of the Dodd-Frank Act and is requesting that the Commission approve the proposal on an accelerated basis. Additionally, proposed EDGA Rule 3.22(a) is based on NYSE Arca, Inc. (‘‘NYSE Arca’’) rule 9.4 and Financial Industry Regulatory Authority (‘‘FINRA’’) rule 2251, International Securities Exchange, LLC (‘‘ISE’’) rule 421(a) and proposed EDGA Rule 3.22(b) is based on Nasdaq rule 2251(d) and ISE rule 421(b). Basis The Exchange believes the proposed rule change is consistent with the Act 5 and the rules and regulations thereunder and, in particular, the requirements of Section 6(b) of the Act.6 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(10) 7 requirements that all national securities exchanges adopt rules prohibiting members from voting, without receiving instructions from the beneficial owner of shares, on the election of a member of a board of directors of an issuer (except for a vote with respect to the uncontested election of a member of the board of directors of any investment company registered under the Investment Company Act of 1940), executive compensation, or any other significant matter, as determined by the Commission, by rule. The Exchange also believes that the proposed rule change is consistent with the requirements under Section 6(b)(5) 8 that an exchange have rules that are designed 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, in general, to protect investors and the public interest. The Exchange is adopting this proposed rule change to comply with the requirements of Section 957 of the Dodd-Frank Act, and therefore believes the proposed rule change to be consistent with the Act, particularly with respect to the protection of investors and the public interest. 5 15 U.S.C. 78a et seq. U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(10). 8 15 U.S.C. 78f(b)(5). 6 15 PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 B. Self-Regulatory Organization’s Statement on Burden on Competition The proposed rule change does not impose any burden on competition that is 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 The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. III. 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–EDGA–2011–08 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–EDGA–2011–08. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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 E:\FR\FM\11APN1.SGM 11APN1 Federal Register / Vol. 76, No. 69 / Monday, April 11, 2011 / Notices 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–EDGA– 2011–08 and should be submitted on or before May 2, 2011. srobinson on DSKHWCL6B1PROD with NOTICES IV. Commission’s Findings and Order Granting Accelerated Approval of the Proposed Rule Change In its filing, the Exchange requested that the Commission approve the proposal on an accelerated basis so that the Exchange could immediately comply with the requirements imposed by the Dodd-Frank Act, and because the proposed rule text is based upon ISE Rule 421, FINRA Rule 2251, Nasdaq Rule 2251(d), and NYSE Arca Rule 9.4.9 After careful consideration, 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.10 The Commission believes that proposed Rule 3.22(a) is consistent with Section 6(b)(5) 11 of the Act, which provides, among other things, that the rules of the Exchange must be designed to promote just and equitable principles of trade, 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, and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. Under proposed Rule 3.22(a), a Member shall be prohibited from voting uninstructed shares unless (1) That Member is the beneficial owner of the stock; (2) pursuant to the written instructions of the beneficial owner; or (3) pursuant to the rules of any national securities exchange or association of 9 See Securities Exchange Act Release 63139 (October 20, 2010), 75 FR 65680 (October 26, 2010) (SR–ISE–2010–99); 61052 (November 23, 2009), 74 FR 62857 (December 1, 2009) (SR–FINRA–2009– 066) (finding that the proposed rule change was consistent with the Act because the Rule ‘‘will continue to provide FINRA members with guidance on the forwarding of proxy and other issuer-related materials.’’); 62992 (September 24, 2010), 75 FR 60844 (October 1, 2010) (SR–NASDAQ–2010–114); and 48735 (October 31, 2003), 68 FR 63173 (November 7, 2003) (SR–PCX–2003–50). 10 In approving this 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). 11 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 17:49 Apr 08, 2011 Jkt 223001 which it is also a member, provided that the Member’s records clearly indicate the procedure it is following. This provision is based on ISE Rule 421, FINRA Rule 2251 and NYSE Arca Rule 9.4, which were previously approved by the Commission.12 The Commission notes that the proposed change will provide clarity to Exchange Members going forward on whether broker discretionary voting is permitted by Exchange Members under limited circumstances when the Member is also a member of another national securities exchange that permits broker discretionary voting. In approving this portion of the proposal, the Commission notes that Rule 3.22(a) is consistent with the approach taken under the rules of other national securities exchanges or national securities association, and for Exchange Members who are not also members of another national securities exchange prohibits broker discretionary voting on any matter, consistent with investor protection and the public interest. The Commission believes that proposed Rule 3.22(b) is consistent with Section 6(b)(10) 13 of the Act, which requires that national securities exchanges adopt rules prohibiting members that are not beneficial holders of a security from voting uninstructed proxies with respect to the election of a member of the board of directors of an issuer (except for uncontested elections of directors for companies registered under the Investment Company Act), executive compensation, or any other significant matter, as determined by the Commission by rule. The Commission believes that proposed Rule 3.22(b) is consistent with Section 6(b)(10) of the Act because it adopts revisions that comply with that section. As noted in the accompanying Senate Report, Section 957, which enacted Section 6(b)(10), reflects the principle that ‘‘final vote tallies should reflect the wishes of the beneficial owners of the stock and not be affected by the wishes of the broker that holds the shares.’’ 14 The proposed rule change will make the Exchange compliant with the new requirements of Section 6(b)(10) by specifically prohibiting broker-dealers, who are not beneficial owners of a security, from voting uninstructed shares in connection with a shareholder vote on the election of a member of the board of directors of an issuer (except for a vote with respect to the uncontested election of a member of the board of directors of any investment 12 See supra note 9. U.S.C. 78f(b)(10). 14 See S. Rep. No. 111–176, at 136 (2010). 13 15 PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 20069 company registered under the Investment Company Act of 1940), executive compensation, or any other significant matter, as determined by the Commission by rule, unless the member receives voting instructions from the beneficial owner of the shares.15 The Commission also believes that proposed Rule 3.22(b) is consistent with Section 6(b)(5) 16 of the Act, which provides, among other things, that the rules of the Exchange must be designed to promote just and equitable principles of trade, 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, and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Commission believes that the rule assures that shareholder votes on the election of the board of directors of an issuer (except for a vote with respect to the uncontested election of a member of the board of directors of any investment company registered under the Investment Company Act of 1940) and on executive compensation matters are made by those with an economic interest in the company, rather than by a broker that has no such economic interest, which should enhance corporate governance and accountability to shareholders.17 Based on the above, the Commission finds that the Exchange’s proposal will further the purposes of Sections 6(b)(5) and 6(b)(10) of the Act because it should enhance corporate accountability to shareholders while also serving to fulfill the Congressional intent in adopting Section 6(b)(10) of the Act. The Commission also finds good cause, pursuant to Section 19(b)(2) of the Act,18 for approving the proposed rule change prior to the 30th day after the date of publication of notice in the Federal Register. The Commission believes that good cause exists to grant accelerated approval to proposed Rule 3.22(a), because this proposed rule will conform the Exchange rule to ISE Rule 15 The Commission has not, to date, adopted rules concerning other significant matters where uninstructed broker votes should be prohibited, although it may do so in the future. Should the Commission adopt such rules, we would expect the Exchange to adopt coordinating rules promptly to comply with the statute. 16 15 U.S.C. 78f(b)(5). 17 As the Commission stated in approving NYSE rules prohibiting broker voting in the election of directors, having those with an economic interest in the company vote the shares, rather than the broker who has no such economic interest, furthers the goal of enfranchising shareholders. See Securities Exchange Act Release No. 60215 (July 1, 2009), 74 FR 33293 (July 10, 2009) (SR–NYSE–2006–92). 18 15 U.S.C. 78s(b)(2). E:\FR\FM\11APN1.SGM 11APN1 20070 Federal Register / Vol. 76, No. 69 / Monday, April 11, 2011 / Notices 421, NYSE Arca Rule 9.4 and FINRA Rule 2251, which were published for public comment in the Federal Register and approved by the Commission, and for which no comments were received.19 Because proposed Rule 3.22(a) is substantially similar to the ISE, NYSE Arca and FINRA rules, it raises no new regulatory issues. The Commission also believes that good cause exists to grant accelerated approval to proposed Rule 3.22(b), which conforms the Exchange’s rules to the requirements of Section 6(b)(10) of the Act. Section 6(b)(10) of the Act, enacted under Section 957 of the DoddFrank Act, does not provide for a transition phase, and requires rules of national securities exchanges to prohibit broker voting on the election of a member of the board of directors of an issuer (except for a vote with respect to the uncontested election of a member of the board of directors of any investment company registered under the Investment Company Act of 1940), executive compensation, or any other significant matter, as determined by the Commission by rule. The Commission believes that good cause exists to grant accelerated approval to proposed Rule 3.22(b), because it will conform the Exchange rule to the requirements of Section 6(b)(10) of the Act. Moreover, proposed Rule 3.22(b) is substantially similar to ISE Rule 421 and Nasdaq Rule 2251.20 V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,21 that the proposed rule change (SR–EDGA–2011– 08) be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–8477 Filed 4–8–11; 8:45 am] srobinson on DSKHWCL6B1PROD with NOTICES BILLING CODE 8011–01–P 19 See supra notes 9. supra note 9. 21 15 U.S.C. 78s(b)(2). 22 17 CFR 200.30–3(a)(12). 20 See VerDate Mar<15>2010 17:49 Apr 08, 2011 Jkt 223001 DEPARTMENT OF STATE [Public Notice: 7411] 30-Day Notice of Proposed Information Collection: DS–156, Nonimmigrant Visa Application, OMB Control Number 1405–0018 Notice of request for public comment and submission to OMB of proposed collection of information. ACTION: The Department of State has submitted the following information collection request to the Office of Management and Budget (OMB) for approval in accordance with the Paperwork Reduction Act of 1995. • Title of Information Collection: Nonimmigrant Visa Application. • OMB Control Number: 1405–0018. • Type of Request: Extension of a Currently Approved Collection. • Originating Office: Bureau of Consular Affairs (CA/VO). • Form Number: DS–156. • Respondents: Nonimmigrant visa applicants. • Estimated Number of Respondents: 800,000. • Estimated Number of Responses: 800,000. • Average Hours per Response: 1 hour. • Total Estimated Burden: 800,000 hours per year. • Frequency: Once per respondent. • Obligation to Respond: Required to Obtain or Retain a Benefit. DATES: Submit comments to the Office of Management and Budget (OMB) for up to 30 days from April 11, 2011. ADDRESSES: Direct comments to the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB). You may submit comments by the following methods: • E-mail: oira_submission@omb.eop.gov. You must include the DS form number, information collection title, and OMB control number in the subject line of your message. • Fax: 202–395–5806. Attention: Desk Officer for Department of State. FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed information collection and supporting documents, to Stefanie Claus of the Office of Visa Services, U.S. Department of State, 2401 E. Street, NW., L–603, Washington, DC 20522, who may be reached at (202) 663–2910. SUPPLEMENTARY INFORMATION: SUMMARY: PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 We are soliciting public comments to permit the Department to: • Evaluate whether the proposed information collection is necessary to properly perform our functions. • Evaluate the accuracy of our estimate of the burden of the proposed collection, including the validity of the methodology and assumptions used. • Enhance the quality, utility, and clarity of the information to be collected. • Minimize the reporting burden on those who are to respond. Abstract of proposed collection: Form DS–156 is required by regulation of all nonimmigrant visa applicants who do not use the Online Application for Nonimmigrant Visa (Form DS–160). Posts will use the DS– 156 to elicit information necessary to determine an applicant’s visa eligibility. Methodology: The DS–156 is completed by applicants online or, in exceptional circumstances, applicants may submit a paper application to posts abroad. The applicant prints the application and a 2–D barcode. When the applicant appears at the interview the barcode is scanned and the information electronically received. Dated: March 31, 2011. David T. Donahue, Deputy Assistant Secretary, Bureau of Consular Affairs, Department of State. [FR Doc. 2011–8539 Filed 4–8–11; 8:45 am] BILLING CODE 4710–06–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Commercial Space Transportation Safety Approval Performance Criteria Federal Aviation Administration (FAA), DOT. ACTION: Notification of criteria used to evaluate the National Aerospace Training and Research (NASTAR) Center safety approval application. AGENCY: NASTAR was issued a safety approval, subject to the provisions of Title 51 U.S.C. subtitle V, chapter 509, and the orders, rules and regulations issued under it. Pursuant to 14 CFR 414.35, this Notice publishes the criteria that were used to evaluate the safety approval application. Background: NASTAR applied for, and received, a safety approval for the ability of its Space Training System: Model 400 (STS–400) to replicate G levels. The performance criteria for this safety approval are applicant developed per 14 CFR 414.19 (a)(4). NASTAR’s SUMMARY: E:\FR\FM\11APN1.SGM 11APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 76, Number 69 (Monday, April 11, 2011)]
[Notices]
[Pages 20067-20070]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8477]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64187; File No. SR-EDGA-2011-08]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Order Granting Accelerated Approval of Proposed Rule Change 
To Adopt Rule 3.22 (Proxy Voting), in Accordance With the Provisions of 
Section 957 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act

April 5, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ 
notice is hereby given that on March 24, 2011, EDGA Exchange, Inc. (the 
``Exchange'' or ``EDGA'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II below, which items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons, and is approving 
the proposed rule change on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt Rule 3.22 (Proxy Voting), in 
accordance with the provisions of Section 957 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (the ``Dodd-Frank Act''). The 
text of the proposed rule change is attached as Exhibit 5 and is 
available on the Exchange's Web site at https://www.directedge.com, at 
the Exchange's principal office, and at the Public Reference Room of 
the Commission.

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 III below. The self-regulatory organization 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

Purpose
    The Exchange is proposing to adopt EDGA Rule 3.22 (Proxy Voting), 
in accordance with the provisions of Section 957 of the Dodd-Frank Act, 
to prohibit Members from voting uninstructed shares if the matter voted 
on relates to (i) the election of a member of the board of directors of 
an issuer (other than an uncontested election of a director of an 
investment company registered under the Investment Company Act of 1940 
(the ``Investment Company Act'')), (ii) executive compensation, or 
(iii) any other significant matter, as determined by the Securities and 
Exchange Commission (the ``Commission''), by rule.
    Section 957 of the Dodd-Frank Act amends Section 6(b) \3\ of the 
Securities Exchange Act of 1934 (the ``Exchange Act'') [sic] to require 
the rules of each national securities exchange to prohibit any member 
organization that is not the beneficial owner of a security registered

[[Page 20068]]

under Section 12 \4\ of the Exchange Act from granting a proxy to vote 
the security in connection with certain stockholder votes, unless the 
beneficial owner of the security has instructed the member organization 
to vote the proxy in accordance with the voting instructions of the 
beneficial owner. The stockholder votes covered by Section 957 include 
any vote with respect to (i) the election of a member of the board of 
directors of an issuer (other than an uncontested election of a 
director of an investment company registered under the Investment 
Company Act), (ii) executive compensation, or (iii) any other 
significant matter, as determined by the Commission, by rule.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 781.
---------------------------------------------------------------------------

    Accordingly, in order to carry out the requirements of Section 957 
of the Dodd-Frank Act, the Exchange proposes to adopt proposed EDGA 
Rule 3.22 to prohibit any Member from giving a proxy to vote stock that 
is registered in its name, unless: (i) Such Member is the beneficial 
owner of such stock; (ii) pursuant to the written instructions of the 
beneficial owner; or (iii) pursuant to the rules of any national 
securities exchange or association of which it is a member provided 
that the records of the Member clearly indicate the procedure it is 
following. The Exchange is proposing to adopt these rules because other 
national securities exchanges and associations do allow proxy voting 
under certain limited circumstances while the current Exchange Rules 
are silent on such matters. Therefore, a Member that is also a member 
of another national securities exchange or association may vote the 
shares held for a customer when allowed under its membership at another 
national securities exchange or association, provided that the records 
of the Member clearly indicate the procedure it is following.
    Notwithstanding the foregoing, a Member that is not the beneficial 
owner of a security registered under Section 12 of the Exchange Act is 
prohibited from granting a proxy to vote the security in connection 
with a shareholder vote with respect to the election of a member of the 
board of directors of an issuer (except for a vote with respect to 
uncontested election of a member of the board of directors of any 
investment company registered under the Investment Company Act), 
executive compensation, or any other significant matter, as determined 
by the Commission, by rule, unless the beneficial owner of the security 
has instructed the Member to vote the proxy in accordance with the 
voting instructions of the beneficial owner.
    Because Section 957 of the Dodd-Frank Act does not provide for a 
transition phase, the Exchange is proposing to adopt the proposed rule 
change pursuant to Section 19(b) of the Exchange Act to comply with 
Section 957 of the Dodd-Frank Act and is requesting that the Commission 
approve the proposal on an accelerated basis. Additionally, proposed 
EDGA Rule 3.22(a) is based on NYSE Arca, Inc. (``NYSE Arca'') rule 9.4 
and Financial Industry Regulatory Authority (``FINRA'') rule 2251, 
International Securities Exchange, LLC (``ISE'') rule 421(a) and 
proposed EDGA Rule 3.22(b) is based on Nasdaq rule 2251(d) and ISE rule 
421(b).
Basis
    The Exchange believes the proposed rule change is consistent with 
the Act \5\ and the rules and regulations thereunder and, in 
particular, the requirements of Section 6(b) of the Act.\6\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(10) \7\ requirements that all national 
securities exchanges adopt rules prohibiting members from voting, 
without receiving instructions from the beneficial owner of shares, on 
the election of a member of a board of directors of an issuer (except 
for a vote with respect to the uncontested election of a member of the 
board of directors of any investment company registered under the 
Investment Company Act of 1940), executive compensation, or any other 
significant matter, as determined by the Commission, by rule. The 
Exchange also believes that the proposed rule change is consistent with 
the requirements under Section 6(b)(5) \8\ that an exchange have rules 
that are designed 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, in general, to protect investors and the public interest. The 
Exchange is adopting this proposed rule change to comply with the 
requirements of Section 957 of the Dodd-Frank Act, and therefore 
believes the proposed rule change to be consistent with the Act, 
particularly with respect to the protection of investors and the public 
interest.
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    \5\ 15 U.S.C. 78a et seq.
    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(10).
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is 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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. 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-EDGA-2011-08 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-EDGA-2011-08. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for 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

[[Page 20069]]

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-EDGA-2011-08 and should be 
submitted on or before May 2, 2011.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    In its filing, the Exchange requested that the Commission approve 
the proposal on an accelerated basis so that the Exchange could 
immediately comply with the requirements imposed by the Dodd-Frank Act, 
and because the proposed rule text is based upon ISE Rule 421, FINRA 
Rule 2251, Nasdaq Rule 2251(d), and NYSE Arca Rule 9.4.\9\ After 
careful consideration, 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.\10\
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    \9\ See Securities Exchange Act Release 63139 (October 20, 
2010), 75 FR 65680 (October 26, 2010) (SR-ISE-2010-99); 61052 
(November 23, 2009), 74 FR 62857 (December 1, 2009) (SR-FINRA-2009-
066) (finding that the proposed rule change was consistent with the 
Act because the Rule ``will continue to provide FINRA members with 
guidance on the forwarding of proxy and other issuer-related 
materials.''); 62992 (September 24, 2010), 75 FR 60844 (October 1, 
2010) (SR-NASDAQ-2010-114); and 48735 (October 31, 2003), 68 FR 
63173 (November 7, 2003) (SR-PCX-2003-50).
    \10\ In approving this 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).
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    The Commission believes that proposed Rule 3.22(a) is consistent 
with Section 6(b)(5) \11\ of the Act, which provides, among other 
things, that the rules of the Exchange must be designed to promote just 
and equitable principles of trade, 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, and are 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Under proposed Rule 3.22(a), a Member shall be prohibited from 
voting uninstructed shares unless (1) That Member is the beneficial 
owner of the stock; (2) pursuant to the written instructions of the 
beneficial owner; or (3) pursuant to the rules of any national 
securities exchange or association of which it is also a member, 
provided that the Member's records clearly indicate the procedure it is 
following. This provision is based on ISE Rule 421, FINRA Rule 2251 and 
NYSE Arca Rule 9.4, which were previously approved by the 
Commission.\12\ The Commission notes that the proposed change will 
provide clarity to Exchange Members going forward on whether broker 
discretionary voting is permitted by Exchange Members under limited 
circumstances when the Member is also a member of another national 
securities exchange that permits broker discretionary voting. In 
approving this portion of the proposal, the Commission notes that Rule 
3.22(a) is consistent with the approach taken under the rules of other 
national securities exchanges or national securities association, and 
for Exchange Members who are not also members of another national 
securities exchange prohibits broker discretionary voting on any 
matter, consistent with investor protection and the public interest.
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    \12\ See supra note 9.
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    The Commission believes that proposed Rule 3.22(b) is consistent 
with Section 6(b)(10) \13\ of the Act, which requires that national 
securities exchanges adopt rules prohibiting members that are not 
beneficial holders of a security from voting uninstructed proxies with 
respect to the election of a member of the board of directors of an 
issuer (except for uncontested elections of directors for companies 
registered under the Investment Company Act), executive compensation, 
or any other significant matter, as determined by the Commission by 
rule.
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    \13\ 15 U.S.C. 78f(b)(10).
---------------------------------------------------------------------------

    The Commission believes that proposed Rule 3.22(b) is consistent 
with Section 6(b)(10) of the Act because it adopts revisions that 
comply with that section. As noted in the accompanying Senate Report, 
Section 957, which enacted Section 6(b)(10), reflects the principle 
that ``final vote tallies should reflect the wishes of the beneficial 
owners of the stock and not be affected by the wishes of the broker 
that holds the shares.'' \14\ The proposed rule change will make the 
Exchange compliant with the new requirements of Section 6(b)(10) by 
specifically prohibiting broker-dealers, who are not beneficial owners 
of a security, from voting uninstructed shares in connection with a 
shareholder vote on the election of a member of the board of directors 
of an issuer (except for a vote with respect to the uncontested 
election of a member of the board of directors of any investment 
company registered under the Investment Company Act of 1940), executive 
compensation, or any other significant matter, as determined by the 
Commission by rule, unless the member receives voting instructions from 
the beneficial owner of the shares.\15\
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    \14\ See S. Rep. No. 111-176, at 136 (2010).
    \15\ The Commission has not, to date, adopted rules concerning 
other significant matters where uninstructed broker votes should be 
prohibited, although it may do so in the future. Should the 
Commission adopt such rules, we would expect the Exchange to adopt 
coordinating rules promptly to comply with the statute.
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    The Commission also believes that proposed Rule 3.22(b) is 
consistent with Section 6(b)(5) \16\ of the Act, which provides, among 
other things, that the rules of the Exchange must be designed to 
promote just and equitable principles of trade, 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, and are not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the rule assures that shareholder 
votes on the election of the board of directors of an issuer (except 
for a vote with respect to the uncontested election of a member of the 
board of directors of any investment company registered under the 
Investment Company Act of 1940) and on executive compensation matters 
are made by those with an economic interest in the company, rather than 
by a broker that has no such economic interest, which should enhance 
corporate governance and accountability to shareholders.\17\
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    \17\ As the Commission stated in approving NYSE rules 
prohibiting broker voting in the election of directors, having those 
with an economic interest in the company vote the shares, rather 
than the broker who has no such economic interest, furthers the goal 
of enfranchising shareholders. See Securities Exchange Act Release 
No. 60215 (July 1, 2009), 74 FR 33293 (July 10, 2009) (SR-NYSE-2006-
92).
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    Based on the above, the Commission finds that the Exchange's 
proposal will further the purposes of Sections 6(b)(5) and 6(b)(10) of 
the Act because it should enhance corporate accountability to 
shareholders while also serving to fulfill the Congressional intent in 
adopting Section 6(b)(10) of the Act.
    The Commission also finds good cause, pursuant to Section 19(b)(2) 
of the Act,\18\ for approving the proposed rule change prior to the 
30th day after the date of publication of notice in the Federal 
Register. The Commission believes that good cause exists to grant 
accelerated approval to proposed Rule 3.22(a), because this proposed 
rule will conform the Exchange rule to ISE Rule

[[Page 20070]]

421, NYSE Arca Rule 9.4 and FINRA Rule 2251, which were published for 
public comment in the Federal Register and approved by the Commission, 
and for which no comments were received.\19\ Because proposed Rule 
3.22(a) is substantially similar to the ISE, NYSE Arca and FINRA rules, 
it raises no new regulatory issues.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(2).
    \19\ See supra notes 9.
---------------------------------------------------------------------------

    The Commission also believes that good cause exists to grant 
accelerated approval to proposed Rule 3.22(b), which conforms the 
Exchange's rules to the requirements of Section 6(b)(10) of the Act. 
Section 6(b)(10) of the Act, enacted under Section 957 of the Dodd-
Frank Act, does not provide for a transition phase, and requires rules 
of national securities exchanges to prohibit broker voting on the 
election of a member of the board of directors of an issuer (except for 
a vote with respect to the uncontested election of a member of the 
board of directors of any investment company registered under the 
Investment Company Act of 1940), executive compensation, or any other 
significant matter, as determined by the Commission by rule. The 
Commission believes that good cause exists to grant accelerated 
approval to proposed Rule 3.22(b), because it will conform the Exchange 
rule to the requirements of Section 6(b)(10) of the Act. Moreover, 
proposed Rule 3.22(b) is substantially similar to ISE Rule 421 and 
Nasdaq Rule 2251.\20\
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    \20\ See supra note 9.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\21\ that the proposed rule change (SR-EDGA-2011-08) be, and it 
hereby is, approved on an accelerated basis.
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    \21\ 15 U.S.C. 78s(b)(2).
    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-8477 Filed 4-8-11; 8:45 am]
BILLING CODE 8011-01-P

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