Self-Regulatory Organizations: Miami International Securities Exchange LLC; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Adopt MIAX Rule 319 Relating to Proxy Voting, 6365-6368 [2013-01970]
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Federal Register / Vol. 78, No. 20 / Wednesday, January 30, 2013 / Notices
procedures must provide for the
preparation of a report by an
independent evaluator that sets forth the
fair value of each such asset for which
market quotations are not readily
available. The rule also requires a fund
being acquired to obtain approval of the
merger transaction by a majority of its
outstanding voting securities, except in
certain situations, and requires any
surviving fund to preserve written
records describing the merger and its
terms for six years after the merger (the
first two in an easily accessible place).
The average annual burden of meeting
the requirements of rule 17a–8 is
estimated to be 7 hours for each fund.
The Commission staff estimates that
each year approximately 736 funds rely
on the rule. The estimated total average
annual burden for all respondents
therefore is 5,152 hours.
This estimate represents an increase
of 882 hours from the prior estimate of
4,270 hours. This increase reflects a
change in the estimated number of
funds relying on rule 17a–8.
The average cost burden of preparing
a report by an independent evaluator in
a merger with an unregistered entity is
estimated to be $15,000. The average net
cost burden of obtaining approval of a
merger transaction by a majority of a
fund’s outstanding voting securities is
estimated to be $100,000. The
Commission staff estimates that each
year approximately 0 mergers with
unregistered entities occur and
approximately 15 funds hold
shareholder votes that would not
otherwise have held a shareholder vote.
The total annual cost burden of meeting
these requirements is estimated to be
$1,500,000.
The estimates of average burden hours
and average cost burdens are made
solely for the purposes of the Paperwork
Reduction Act, and are not derived from
a comprehensive or even a
representative survey or study. An
agency may not conduct or sponsor, and
a person is not required to respond to,
a collection of information unless it
displays a currently valid OMB control
number.
Written comments are requested on:
(a) Whether the collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information has practical utility; (b) the
accuracy of the Commission’s estimate
of the burdens of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
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techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to Thomas Bayer, Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
6432 General Green Way, Alexandria,
VA 22312; or send an email to:
PRA_Mailbox@sec.gov.
Dated: January 24, 2013.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–01934 Filed 1–29–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68723; File No. SR–MIAX–
2013–02]
Self-Regulatory Organizations: Miami
International Securities Exchange LLC;
Notice of Filing and Order Granting
Accelerated Approval of Proposed
Rule Change To Adopt MIAX Rule 319
Relating to Proxy Voting
January 24, 2013.
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on January 16, 2013, Miami
International Securities Exchange LLC
(‘‘MIAX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
adopt Rule 319 (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 provided in Exhibit 5. The text of the
proposed rule change is also available
on the Exchange’s Web site at https://
www.miaxoptions.com/filter/wotitle/
rule_filing, at MIAX’s principal office,
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00077
Fmt 4703
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
The Exchange is proposing to adopt
MIAX Rule 319 (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
Commission, by rule.
Section 957 of the Dodd-Frank Act
amends Section 6(b) 3 of the Act to
require the rules of each national
securities exchange to prohibit any
member organization that is not the
beneficial owner of a security registered
under Section 12 4 of the 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
4 15
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U.S.C. 78(f)(b).
U.S.C. 781.
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Accordingly, in order to carry out the
requirements of Section 957 of the
Dodd-Frank Act, the Exchange proposes
to adopt proposed MIAX Rule 319 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 forgoing, a
Member that is not the beneficial owner
of a security registered under Section 12
of the 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.
The Exchange notes that proposed
MIAX Rule 319 is identical to
International Securities Exchange
(‘‘ISE’’) Rule 421; and proposed MIAX
Rule 319(a) is based on NYSE Arca, Inc.
(‘‘NYSE Arca’’) Rule 9.4, Financial
Industry Regulatory Authority
(‘‘FINRA’’) Rule 2251; and proposed
MIAX Rule 319(b) is based on Nasdaq
Rule 2251(d).
2. Statutory Basis
MIAX believes that its proposed rule
change is consistent with Section 6(b) of
the Act 5 in general, and furthers the
objectives of Section 6(b)(5) of the Act 6
in particular. The Exchange believes
5 15
U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(5).
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20:43 Jan 29, 2013
that proposed Rule 319(a) will provide
clarity to MIAX members going forward
on whether broker discretionary voting
is permitted by MIAX members under
limited circumstances when the MIAX
member is also a member of another
national securities exchange that
permits broker discretionary voting.
The Exchange believes that proposed
Rule 319(b) is consistent with Section
6(b)(10) 7 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 Exchange
believes that proposed Rule 319(b) is
consistent with Section 6(b)(10) of the
Act because it adopts provisions that
comply with that section.
The Exchange also believes that
proposed Rule 319(b) is consistent with
Section 6(b)(5) 8 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
Exchange is adopting this proposed rule
to comply with the requirements of
Section 957 of the Dodd-Frank Act, and
therefore believes the proposed rule to
be consistent with the Exchange Act,
particularly with respect to the
protection of investors and the public
interest.
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. The propose
(sic) rule would allow the Exchange to
implement Section 957 of the DoddFrank Act and adopt rules consistent
with Section 6(b)(10) of the Act, which
is applicable to all national securities
exchanges and national securities
U.S.C. 78f(b)(10)
8 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00078
Fmt 4703
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
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 email to rulecomments@sec.gov. Please include File
Number SR–MIAX–2013–02 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–MIAX–2013–02. This file
number should be included on the
subject line if email 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
9 The Commission notes that Section 6(b)(10) of
the Act, 15 U.S.C. 78f(b)(10), does not apply to
national securities associations.
7 15
Jkt 229001
association (sic).9 The Exchange notes
this proposed rule does not go outside
of the scope of the rules of other
national securities (sic). Additionally,
consistency among the various proxy
voting rules governing national
securities exchanges reduces the
possibility of any regulatory arbitrage on
the part of a market participant seeking
a forum with a lower regulatory
requirement.
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printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
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–MIAX–2013–02 and should
be submitted on or before February 20,
2013.
mstockstill on DSK4VPTVN1PROD with
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, among
others, ISE Rule 421.10 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.11
The Commission believes that
proposed Rule 319(a) is consistent with
Section 6(b)(5) 12 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 319(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
10 See Securities Exchange Act Release No. 63139
(October 20, 2010), 75 FR 65680 (October 26, 2010)
(SR–ISE–2010–99).
11 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).
12 15 U.S.C. 78f(b)(5).
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provision is based on ISE Rule 421,
which was previously approved by the
Commission.13 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 319(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 under Section 6(b)(5) of the
Act.14
The Commission believes that
proposed Rule 319(b) is consistent with
Section 6(b)(10) 15 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 319(b) is consistent with
Section 6(b)(10) of the Act because it
adopts new language that complies 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.’’ 16 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
13 See
supra note 10.
U.S.C. 78f(b)(5).
15 15 U.S.C. 78f(b)(10).
16 See S. Rep. No. 111–176, at 136 (2010).
14 15
PO 00000
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6367
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.17
The Commission also believes that
proposed Rule 319(b) is consistent with
Section 6(b)(5) 18 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.19
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,20 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
319(a), because this proposed rule will
conform the Exchange rule to ISE Rule
17 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.
18 15 U.S.C. 78f(b)(5).
19 As the Commission stated in approving New
York Stock Exchange (‘‘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).
20 15 U.S.C. 78s(b)(2).
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Federal Register / Vol. 78, No. 20 / Wednesday, January 30, 2013 / Notices
421, which was published for public
comment in the Federal Register and
approved by the Commission, and for
which no comments were received.21
Because proposed Rule 319(a) is
identical to the ISE rule, it raises no new
regulatory issues.
The Commission also believes that
good cause exists to grant accelerated
approval to proposed Rule 319(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 319(b) is identical to ISE
Rule 421.22
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,23 that the
proposed rule change (SR–MIAX–2013–
02) be, and it hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–01970 Filed 1–29–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68717; File No. SR–BX–
2013–005]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change Relating To
Routing Fees
January 24, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
16, 2013, NASDAQ OMX BX, Inc. (‘‘BX’’
or ‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Chapter XV, Section 2 entitled ‘‘BX
Options Market—Fees and Rebates’’ to
amend various fees for routing options
to away markets.
While these amendments are effective
upon filing, the Exchange has
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Exchange
22 See
supra note 10.
supra note 10.
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23 15
24 17
Jkt 229001
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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to amend
the Routing Fees in Section 2(4) of
Chapter XV in order to recoup costs the
Exchange incurs for routing and
executing certain orders in equity
options to away markets.
Currently, the fees for routing
Customer, Firm, Market Maker, BrokerDealer and Professional orders are as
follows:
Firm/market
maker/brokerdealer
Customer
BATS (Penny Pilot) ....................................................................................................
BATS (Non-Penny Pilot) ............................................................................................
BOX ...........................................................................................................................
CBOE .........................................................................................................................
CBOE orders greater than 99 contracts in ETFs and ETNs) ...................................
C2 ..............................................................................................................................
ISE (Standard) ...........................................................................................................
ISE (Select Symbols)* ...............................................................................................
MIAX ..........................................................................................................................
NOM (Penny Pilot) .....................................................................................................
NOM (Non-Penny Pilot) .............................................................................................
NYSE Arca (Penny Pilot) ...........................................................................................
NYSE Arca (Non-Penny Pilot) ...................................................................................
NYSE Amex ...............................................................................................................
PHLX (for all options other than PHLX Select Symbols) ..........................................
PHLX Select Symbols ** ...........................................................................................
21 See
designated the proposed amendments to
be operative on February 1, 2013.
The text of the proposed rule change
is provided in Exhibit 5. The text of the
proposed rule change is also available
on the Exchange’s Web site at https://
nasdaqomxbx.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
PO 00000
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 78, Number 20 (Wednesday, January 30, 2013)]
[Notices]
[Pages 6365-6368]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01970]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68723; File No. SR-MIAX-2013-02]
Self-Regulatory Organizations: Miami International Securities
Exchange LLC; Notice of Filing and Order Granting Accelerated Approval
of Proposed Rule Change To Adopt MIAX Rule 319 Relating to Proxy Voting
January 24, 2013.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on January 16, 2013, Miami International
Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') a 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to adopt Rule 319 (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 provided in Exhibit 5. The
text of the proposed rule change is also available on the Exchange's
Web site at https://www.miaxoptions.com/filter/wotitle/rule_filing, at
MIAX's principal office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the 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
The Exchange is proposing to adopt MIAX Rule 319 (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 Commission, by
rule.
Section 957 of the Dodd-Frank Act amends Section 6(b) \3\ of the
Act to require the rules of each national securities exchange to
prohibit any member organization that is not the beneficial owner of a
security registered under Section 12 \4\ of the 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.
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\3\ 15 U.S.C. 78(f)(b).
\4\ 15 U.S.C. 781.
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[[Page 6366]]
Accordingly, in order to carry out the requirements of Section 957
of the Dodd-Frank Act, the Exchange proposes to adopt proposed MIAX
Rule 319 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 forgoing, a Member that is not the beneficial
owner of a security registered under Section 12 of the 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.
The Exchange notes that proposed MIAX Rule 319 is identical to
International Securities Exchange (``ISE'') Rule 421; and proposed MIAX
Rule 319(a) is based on NYSE Arca, Inc. (``NYSE Arca'') Rule 9.4,
Financial Industry Regulatory Authority (``FINRA'') Rule 2251; and
proposed MIAX Rule 319(b) is based on Nasdaq Rule 2251(d).
2. Statutory Basis
MIAX believes that its proposed rule change is consistent with
Section 6(b) of the Act \5\ in general, and furthers the objectives of
Section 6(b)(5) of the Act \6\ in particular. The Exchange believes
that proposed Rule 319(a) will provide clarity to MIAX members going
forward on whether broker discretionary voting is permitted by MIAX
members under limited circumstances when the MIAX member is also a
member of another national securities exchange that permits broker
discretionary voting.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that proposed Rule 319(b) is consistent with
Section 6(b)(10) \7\ 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 Exchange believes that proposed Rule 319(b) is consistent
with Section 6(b)(10) of the Act because it adopts provisions that
comply with that section.
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\7\ 15 U.S.C. 78f(b)(10)
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The Exchange also believes that proposed Rule 319(b) is consistent
with Section 6(b)(5) \8\ 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 Exchange is adopting this proposed
rule to comply with the requirements of Section 957 of the Dodd-Frank
Act, and therefore believes the proposed rule to be consistent with the
Exchange Act, particularly with respect to the protection of investors
and the public interest.
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\8\ 15 U.S.C. 78f(b)(5).
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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. The propose (sic) rule would
allow the Exchange to implement Section 957 of the Dodd-Frank Act and
adopt rules consistent with Section 6(b)(10) of the Act, which is
applicable to all national securities exchanges and national securities
association (sic).\9\ The Exchange notes this proposed rule does not go
outside of the scope of the rules of other national securities (sic).
Additionally, consistency among the various proxy voting rules
governing national securities exchanges reduces the possibility of any
regulatory arbitrage on the part of a market participant seeking a
forum with a lower regulatory requirement.
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\9\ The Commission notes that Section 6(b)(10) of the Act, 15
U.S.C. 78f(b)(10), does not apply to national securities
associations.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
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 email to rule-comments@sec.gov. Please include
File Number SR-MIAX-2013-02 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-MIAX-2013-02. This file
number should be included on the subject line if email 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
[[Page 6367]]
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the 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-MIAX-2013-02 and
should be submitted on or before February 20, 2013.
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, among others, ISE
Rule 421.\10\ 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.\11\
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\10\ See Securities Exchange Act Release No. 63139 (October 20,
2010), 75 FR 65680 (October 26, 2010) (SR-ISE-2010-99).
\11\ 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 319(a) is consistent
with Section 6(b)(5) \12\ 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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\12\ 15 U.S.C. 78f(b)(5).
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Under proposed Rule 319(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, which was
previously approved by the Commission.\13\ 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 319(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 under Section 6(b)(5) of the Act.\14\
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\13\ See supra note 10.
\14\ 15 U.S.C. 78f(b)(5).
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The Commission believes that proposed Rule 319(b) is consistent
with Section 6(b)(10) \15\ 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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\15\ 15 U.S.C. 78f(b)(10).
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The Commission believes that proposed Rule 319(b) is consistent
with Section 6(b)(10) of the Act because it adopts new language that
complies 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.'' \16\ 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.\17\
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\16\ See S. Rep. No. 111-176, at 136 (2010).
\17\ 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 319(b) is
consistent with Section 6(b)(5) \18\ 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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\18\ 15 U.S.C. 78f(b)(5).
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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.\19\
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\19\ As the Commission stated in approving New York Stock
Exchange (``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,\20\ 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 319(a), because this proposed
rule will conform the Exchange rule to ISE Rule
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421, which was published for public comment in the Federal Register and
approved by the Commission, and for which no comments were
received.\21\ Because proposed Rule 319(a) is identical to the ISE
rule, it raises no new regulatory issues.
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\20\ 15 U.S.C. 78s(b)(2).
\21\ See supra note 10.
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The Commission also believes that good cause exists to grant
accelerated approval to proposed Rule 319(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 319(b) is identical to ISE Rule 421.\22\
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\22\ See supra note 10.
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\23\ that the proposed rule change (SR-MIAX-2013-02) be, and it
hereby is, approved on an accelerated basis.
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\23\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01970 Filed 1-29-13; 8:45 am]
BILLING CODE 8011-01-P
