Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order Approving Proposed Rule Change Relating to Board of Director Qualifications, 54271-54272 [2011-22307]

Download as PDF Federal Register / Vol. 76, No. 169 / Wednesday, August 31, 2011 / Notices IV. Commission’s Findings and Order Granting Accelerated Approval of Proposed Rule Change C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Section 19(b) of the Act 4 directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and the rules III. Solicitation of Comments and regulations thereunder applicable to such organization. The Commission Interested persons are invited to finds that the proposed rule change is submit written data, views and consistent with the requirements of the arguments concerning the foregoing, Act, in particular the requirements of including whether the proposed rule Section 17A of the Act,5 and the rules change is consistent with the Act. and regulations thereunder applicable to Comments may be submitted by any of CME. Specifically, the Commission the following methods: finds that the proposed rule change is • Electronic comments may be consistent with Section 17A(b)(3)(F) of submitted by using the Commission’s the Act which requires, among other Internet comment form (http:// things, that the rules of a clearing www.sec.gov/rules/sro.shtml), or send agency be designed to promote the an e-mail to rule-comments@sec.gov Please include File No. SR–CME–2011– prompt and accurate clearance and 05 on the subject line. settlement of derivative agreements, contracts, and transactions because it • Paper comments should be sent in should allow CME to enhance its triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange services in clearing interest rate swaps, Commission, 100 F Street, NE., thereby promoting the prompt and Washington, DC 20549–1090. accurate clearance and settlement of derivative agreements, contracts, and All submissions should refer to File transactions.6 Number SR–CME–2011–05. This file number should be included on the The Commission finds good cause for subject line if e-mail is used. To help the accelerating approval because: (i) The Commission process and review your proposed rule change does not comments more efficiently, please use significantly affect any securities only one method. The Commission will clearing operations of the clearing post all comments on the Commission’s agency (whether in existence or Internet Web site (http://www.sec.gov/ contemplated by its rules) or any related rules/sro.shtml). Copies of the rights or obligations of the clearing submission, all subsequent agency or persons using such service; amendments, all written statements (ii) CME has indicated that not with respect to the proposed rule providing accelerated approval would change that are filed with the have a significant impact on the swap Commission, and all written clearing business of CME as a communications relating to the designated clearing organization; and proposed rule change between the Commission and any person, other than (iii) the activity relating to the nonsecurity clearing operations of the those that may be withheld from the clearing agency for which the clearing public in accordance with the agency is seeking approval is subject to provisions of 5 U.S.C. 552, will be regulation by another regulator. available for Web site viewing and printing in the Commission’s Public V. Conclusion Reference Room, 100 F Street, NE., Washington, DC 20549. Copies of such It Is Therefore Ordered, pursuant to filing also will be available for Section 19(b)(2) 7 of the Act, that the inspection and copying at the principal proposed rule change (SR–CME–2011– office of CME. All comments received 05) is approved on an accelerated basis. will be posted without change; the Commission does not edit personal identifying information from 4 15 U.S.C. 78s(b). submissions. You should submit only 5 15 U.S.C. 78q–1. In approving this proposed information that you wish to make rule change, the Commission has considered the available publicly. All submissions proposed rule’s impact on efficiency, competition, should refer to File Number SR–CME– and capital formation. 15 U.S.C. 78c(f). 2011–05 and should be submitted on or 6 15 U.S.C. 78q–1(b)(3)(F). before September 21, 2011. 7 15 U.S.C. 78s(b)(2). jlentini on DSK4TPTVN1PROD with NOTICES CME has not solicited, and does not intend to solicit, comments regarding this proposed rule change. CME has not received any unsolicited written comments from interested parties. VerDate Mar<15>2010 16:51 Aug 30, 2011 Jkt 223001 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 54271 For the Commission by the Division of Trading and Markets, pursuant to delegated authority.8 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–22258 Filed 8–30–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65201; File No. SR–Phlx– 2011–90] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order Approving Proposed Rule Change Relating to Board of Director Qualifications August 25, 2011. I. Introduction On June 30, 2011, NASDAQ OMX PHLX LLC (‘‘Phlx’’ or the ‘‘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 relating to the qualifications of its Board of Directors (‘‘Board’’). The proposed rule change was published for comment in the Federal Register on July 14, 2011.3 The Commission received no comment letters regarding the proposal. This order approves the proposed rule change. II. Description of the Proposal The Exchange proposes to amend its By-Laws to revise the qualifications for any position on the Board required to be representative of issuers. Currently, Section 3–2 of the Exchange By-Laws provides: ‘‘[T]he number of NonIndustry Directors, including at least one Public Director 4 and at least one issuer representative (or if the Board consists of ten or more Directors, at least two issuer representatives), shall equal or exceed the sum of the number of Industry Directors 5 and Member 8 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 64845 (July 8, 2011), 76 FR 41549 (July 14, 2011) (‘‘Notice’’). 4 A Public Director is ‘‘a Director who has no material business relationship with a broker or dealer, the Exchange or its affiliates, or FINRA.’’ See Exchange By-Law Article I(gg). 5 An Industry Director is ‘‘a Director (excluding any two officers of the Exchange, selected at the sole discretion of the Board, amongst those officers who may be serving as Directors (the ‘Staff Directors’)), who (i) is or has served in the prior three years as an officer, director, or employee of a broker or dealer, excluding an outside director or 1 15 E:\FR\FM\31AUN1.SGM Continued 31AUN1 54272 Federal Register / Vol. 76, No. 169 / Wednesday, August 31, 2011 / Notices jlentini on DSK4TPTVN1PROD with NOTICES Representative Directors 6 to be elected under the terms of the LLC Agreement.’’ 7 The Exchange recently adopted this provision when it conformed its By-Laws to those of NASDAQ.8 According to the Exchange, however, it does not have a significant number of original listings as does NASDAQ,9 and therefore has less available issuer representatives to serve on the Board. Consequently, the Exchange now proposes to change the requirement by broadening it to require a director representative of issuers and investors instead of a director that is representative only of issuers. The Exchange believes that the expansion of the director position from one that is representative of issuers to one that is representative of issuers and investors is more appropriate for Phlx.10 The nomination and election process for such directors would remain the same. The director representative of issuers and investors would be nominated by the Nominating Committee and elected a director not engaged in the day-to-day management of a broker or dealer; (ii) is an officer, director (excluding an outside director), or employee of an entity that owns more than ten percent of the equity of a broker or dealer, and the broker or dealer accounts for more than five percent of the gross revenues received by the consolidated entity; (iii) owns more than five percent of the equity securities of any broker or dealer, whose investments in brokers or dealers exceed ten percent of his or her net worth, or whose ownership interest otherwise permits him or her to be engaged in the day-to-day management of a broker or dealer; (iv) provides professional services to brokers or dealers, and such services constitute 20 percent or more of the professional revenues received by the Director or 20 percent or more of the gross revenues received by the Director’s firm or partnership; (v) provides professional services to a director, officer, or employee of a broker, dealer, or corporation that owns 50 percent or more of the voting stock of a broker or dealer, and such services relate to the director’s, officer’s, or employee’s professional capacity and constitute 20 percent or more of the professional revenues received by the Director or member or 20 percent or more of the gross revenues received by the Director’s or member’s firm or partnership; or (vi) has a consulting or employment relationship with or provides professional services to the Exchange or any affiliate thereof or to FINRA (or any predecessor) or has had any such relationship or provided any such services at any time within the prior three years.’’ See Exchange By-Law Article I(p). 6 A Member Representative Director is ‘‘a Director who has been elected or appointed after having been nominated by the Member Nominating Committee or by a Member pursuant to [the] ByLaws. A Member Representative Director may, but is not required to be, an officer, director, employee, or agent of a Member. See Exchange By-Law Article I(w). 7 The Exchange recently adopted this provision to its By-Laws. See Securities Exchange Act Release No. 64338 (April 25, 2011), 76 FR 24069 (April 29, 2011) (SR–Phlx–2011–13) (conforming some of the Exchange By-Laws to the By-Laws of The NASDAQ Stock Market LLC (‘‘NASDAQ’’)). 8 See id. 9 See Notice, supra note 3, 76 FR at 41550 n.9. 10 Id. VerDate Mar<15>2010 16:51 Aug 30, 2011 Jkt 223001 by the sole shareholder, The NASDAQ OMX Group, Inc.11 The Exchange also proposes to eliminate the requirement that there be at least two of these director positions representative of issuers if the Board consists of ten or more directors. In its proposal, the Exchange notes that Section 6(b)(3) of the Act 12 only requires that one Director representative represents issuers and investors.13 III. Discussion After careful review of the proposal, 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.14 In particular, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,15 which requires, among other things, that the rules of an exchange be 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. The Commission further finds that the proposal is consistent with Section 6(b)(3) of the Act,16 which requires that one or more directors be representative of issuers and investors and not be associated with a member of the exchange, broker, or dealer. The Commission believes that the proposed expansion from an issuer representative to a representative of issuers and investors, and elimination of the requirement that the Board have two such representatives if the Board consists of ten or more directors are consistent with the Act. The fair representation requirement in Section 6(b)(3) of the Act 17 is intended to give members a voice in the selection of an exchange’s directors and the administration of its affairs. The Commission notes that this change tracks the statutory language included in Section 6(b)(3) of the Act,18 which requires one or more directors to be ‘‘representative of issuers and investors.’’ The Commission also notes that the elimination of the requirement to have at least two director positions 11 See Exchange By-Law Article V, Section 5–3 and Article II, Section 2–1. 12 15 U.S.C. 78f(b)(3). 13 See Notice, supra note 3, 76 FR at 41550. 14 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). 15 15 U.S.C. 78f(b)(5). 16 15 U.S.C. 78f(b)(3). 17 Id. 18 Id. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 representative of issuers if the Board consists of ten or more directors is consistent with Section 6(b)(3) of the Act,19 which only requires the Board to have one such representative. Further, the proposed rule change is consistent with the Act in that it is designed to ensure that the Board continues to satisfy compositional requirements, particularly those concerning fair representation. The Exchange will continue to require the Board composition to include the requisite Public Directors, Industry Directors, and Member Representative Directors (the latter will continue to constitute twenty percent of the Board). In addition, the proposed change will not impact the procedures to nominate and elect any director to the Board that are currently in place. Accordingly, the Commission finds that Phlx’s revised By-Laws, as proposed, will continue to provide board qualification requirements that are consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,20 that the proposed rule change (SR–Phlx–2011– 90) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–22307 Filed 8–30–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65192; File No. SR– NYSEAmex–2011–62] Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Adding New Commentary .02 to NYSE Amex Options Rule 965NY To Provide for the Nullification of Reported Trades by Mutual Agreement of the Parties Thereto August 24, 2011. 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 August 16, 2011, NYSE Amex LLC (the ‘‘Exchange’’ or ‘‘NYSE Amex’’) filed with the Securities and Exchange 19 Id. 20 15 U.S.C. 78s(b)(2). 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. 21 17 E:\FR\FM\31AUN1.SGM 31AUN1

Agencies

[Federal Register Volume 76, Number 169 (Wednesday, August 31, 2011)]
[Notices]
[Pages 54271-54272]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22307]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65201; File No. SR-Phlx-2011-90]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Order 
Approving Proposed Rule Change Relating to Board of Director 
Qualifications

August 25, 2011.

I. Introduction

    On June 30, 2011, NASDAQ OMX PHLX LLC (``Phlx'' or the 
``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 relating to the qualifications of its Board of 
Directors (``Board''). The proposed rule change was published for 
comment in the Federal Register on July 14, 2011.\3\ The Commission 
received no comment letters regarding the proposal. This order approves 
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 64845 (July 8, 
2011), 76 FR 41549 (July 14, 2011) (``Notice'').
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II. Description of the Proposal

    The Exchange proposes to amend its By-Laws to revise the 
qualifications for any position on the Board required to be 
representative of issuers. Currently, Section 3-2 of the Exchange By-
Laws provides: ``[T]he number of Non-Industry Directors, including at 
least one Public Director \4\ and at least one issuer representative 
(or if the Board consists of ten or more Directors, at least two issuer 
representatives), shall equal or exceed the sum of the number of 
Industry Directors \5\ and Member

[[Page 54272]]

Representative Directors \6\ to be elected under the terms of the LLC 
Agreement.'' \7\ The Exchange recently adopted this provision when it 
conformed its By-Laws to those of NASDAQ.\8\ According to the Exchange, 
however, it does not have a significant number of original listings as 
does NASDAQ,\9\ and therefore has less available issuer representatives 
to serve on the Board. Consequently, the Exchange now proposes to 
change the requirement by broadening it to require a director 
representative of issuers and investors instead of a director that is 
representative only of issuers. The Exchange believes that the 
expansion of the director position from one that is representative of 
issuers to one that is representative of issuers and investors is more 
appropriate for Phlx.\10\ The nomination and election process for such 
directors would remain the same. The director representative of issuers 
and investors would be nominated by the Nominating Committee and 
elected by the sole shareholder, The NASDAQ OMX Group, Inc.\11\
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    \4\ A Public Director is ``a Director who has no material 
business relationship with a broker or dealer, the Exchange or its 
affiliates, or FINRA.'' See Exchange By-Law Article I(gg).
    \5\ An Industry Director is ``a Director (excluding any two 
officers of the Exchange, selected at the sole discretion of the 
Board, amongst those officers who may be serving as Directors (the 
`Staff Directors')), who (i) is or has served in the prior three 
years as an officer, director, or employee of a broker or dealer, 
excluding an outside director or a director not engaged in the day-
to-day management of a broker or dealer; (ii) is an officer, 
director (excluding an outside director), or employee of an entity 
that owns more than ten percent of the equity of a broker or dealer, 
and the broker or dealer accounts for more than five percent of the 
gross revenues received by the consolidated entity; (iii) owns more 
than five percent of the equity securities of any broker or dealer, 
whose investments in brokers or dealers exceed ten percent of his or 
her net worth, or whose ownership interest otherwise permits him or 
her to be engaged in the day-to-day management of a broker or 
dealer; (iv) provides professional services to brokers or dealers, 
and such services constitute 20 percent or more of the professional 
revenues received by the Director or 20 percent or more of the gross 
revenues received by the Director's firm or partnership; (v) 
provides professional services to a director, officer, or employee 
of a broker, dealer, or corporation that owns 50 percent or more of 
the voting stock of a broker or dealer, and such services relate to 
the director's, officer's, or employee's professional capacity and 
constitute 20 percent or more of the professional revenues received 
by the Director or member or 20 percent or more of the gross 
revenues received by the Director's or member's firm or partnership; 
or (vi) has a consulting or employment relationship with or provides 
professional services to the Exchange or any affiliate thereof or to 
FINRA (or any predecessor) or has had any such relationship or 
provided any such services at any time within the prior three 
years.'' See Exchange By-Law Article I(p).
    \6\ A Member Representative Director is ``a Director who has 
been elected or appointed after having been nominated by the Member 
Nominating Committee or by a Member pursuant to [the] By-Laws. A 
Member Representative Director may, but is not required to be, an 
officer, director, employee, or agent of a Member. See Exchange By-
Law Article I(w).
    \7\ The Exchange recently adopted this provision to its By-Laws. 
See Securities Exchange Act Release No. 64338 (April 25, 2011), 76 
FR 24069 (April 29, 2011) (SR-Phlx-2011-13) (conforming some of the 
Exchange By-Laws to the By-Laws of The NASDAQ Stock Market LLC 
(``NASDAQ'')).
    \8\ See id.
    \9\ See Notice, supra note 3, 76 FR at 41550 n.9.
    \10\ Id.
    \11\ See Exchange By-Law Article V, Section 5-3 and Article II, 
Section 2-1.
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    The Exchange also proposes to eliminate the requirement that there 
be at least two of these director positions representative of issuers 
if the Board consists of ten or more directors. In its proposal, the 
Exchange notes that Section 6(b)(3) of the Act \12\ only requires that 
one Director representative represents issuers and investors.\13\
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    \12\ 15 U.S.C. 78f(b)(3).
    \13\ See Notice, supra note 3, 76 FR at 41550.
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III. Discussion

    After careful review of the proposal, 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.\14\ In particular, the Commission finds that the 
proposal is consistent with Section 6(b)(5) of the Act,\15\ which 
requires, among other things, that the rules of an exchange be 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. The Commission further finds that the proposal is 
consistent with Section 6(b)(3) of the Act,\16\ which requires that one 
or more directors be representative of issuers and investors and not be 
associated with a member of the exchange, broker, or dealer.
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    \14\ 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).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ 15 U.S.C. 78f(b)(3).
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    The Commission believes that the proposed expansion from an issuer 
representative to a representative of issuers and investors, and 
elimination of the requirement that the Board have two such 
representatives if the Board consists of ten or more directors are 
consistent with the Act. The fair representation requirement in Section 
6(b)(3) of the Act \17\ is intended to give members a voice in the 
selection of an exchange's directors and the administration of its 
affairs. The Commission notes that this change tracks the statutory 
language included in Section 6(b)(3) of the Act,\18\ which requires one 
or more directors to be ``representative of issuers and investors.'' 
The Commission also notes that the elimination of the requirement to 
have at least two director positions representative of issuers if the 
Board consists of ten or more directors is consistent with Section 
6(b)(3) of the Act,\19\ which only requires the Board to have one such 
representative. Further, the proposed rule change is consistent with 
the Act in that it is designed to ensure that the Board continues to 
satisfy compositional requirements, particularly those concerning fair 
representation. The Exchange will continue to require the Board 
composition to include the requisite Public Directors, Industry 
Directors, and Member Representative Directors (the latter will 
continue to constitute twenty percent of the Board). In addition, the 
proposed change will not impact the procedures to nominate and elect 
any director to the Board that are currently in place. Accordingly, the 
Commission finds that Phlx's revised By-Laws, as proposed, will 
continue to provide board qualification requirements that are 
consistent with the Act.
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    \17\ Id.
    \18\ Id.
    \19\ Id.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\20\ that the proposed rule change (SR-Phlx-2011-90) be, and hereby 
is, approved.
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    \20\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-22307 Filed 8-30-11; 8:45 am]
BILLING CODE 8011-01-P