Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of Proposed Rule Change Relating to Board of Director Qualifications, 20971-20973 [2013-08099]
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Federal Register / Vol. 78, No. 67 / Monday, April 8, 2013 / Notices
designates the proposed rule change to
be operative upon filing.19
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
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–
NYSEMKT–2013–30 and should be
submitted on or before April 29, 2013.
IV. Solicitation of Comments
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Kevin M. O’Neill,
Deputy Secretary.
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–NYSEMKT–2013–30 on the
subject line.
mstockstill on DSK4VPTVN1PROD with NOTICES
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–NYSEMKT–2013–30. 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
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
19 For the purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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[FR Doc. 2013–08095 Filed 4–5–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69280; File No. SR–BX–
2013–029]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
of Proposed Rule Change Relating to
Board of Director Qualifications
April 2, 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 March 27,
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 ByLaw Article IV, Section 4.3 to amend the
calculation of Non-Industry Directors in
the Exchange’s By-Laws with respect to
Qualification of Board Members.
The text of the proposed rule change
is 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.
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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20971
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 purpose of this filing is to amend
BX By-Law Article IV, Section 4.3
entitled ‘‘Qualifications’’ to amend the
number of Public Directors 3 required to
be included in the calculation of NonIndustry Directors 4 from three Public
Directors to one Public Director for
purposes of determining the number of
Non-Industry Directors that may serve
on the Exchange board. The Exchange
recently filed to amend its By-Laws
because the Boston Options Exchange
LLC (‘‘BOX’’) ceased to operate as an
options trading facility of the Exchange 5
and terminated the Regulatory Services
Agreement (‘‘RSA’’) between BX and
BOX effective June 1, 2012.6 In that
filing the Exchange noted that the BOX
Trading Rules will no longer be
operative to permit options trading on
3 Pursuant to BX By-Law Article I(gg) a Public
Director is a Director who has no material business
relationship with a broker or dealer, the
Corporation or its affiliates, or FINRA.
4 Pursuant to BX By-Law Article I(bb) a NonIndustry Director is a Director (excluding Staff
Directors) who is (i) a Public Director; (ii) an officer
or employee of an issuer of securities listed on the
Exchange; or (iii) any other individual who would
not be an Industry Director.
5 BOX was a facility of the Exchange under
Section 39(a)(2) of the Act. See Securities Exchange
Act Release Nos. 49066 (January 13, 2004), 69 FR
2773 (January 20, 2004) (SR–BSE–2003–17); 49065
(January 13, 2004), 69 FR 2768 (January 20, 2004)
(SR–BSE–2003–04) (‘‘BOXR Order’’); and 49068
(January 13, 2004), 69 FR 2775 (January 20, 2004)
(SR–BSE–2002–15). See also Release No. 58324; 73
FR 46936 (August 7, 2008) (File Nos. SR–BSE–
2008–02; SR–BSE–2008–23; SR–BSE–2008–25; SR–
BSECC–2008–01) (‘‘Order Approving the
Acquisition of the Boston Stock Exchange,
Incorporated by The NASDAQ OMX Group, Inc.’’).
6 The RSA specified, among other matters, that
BX would terminate its responsibility for fulfilling
certain obligations and cease performing certain
regulatory functions as of the effective date of June
1, 2012, or sooner if BOX satisfies all of the
conditions required for BOX to operate as a national
securities exchange (‘‘the facility termination
effective date’’).
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BX as of the facility termination
effective date.7 At that time, the
Exchange filed to amend its By-Laws to
remove references to BOX which were
no longer necessary.8 Specifically,
Article I of the BX By-Laws was
amended to reflect that BOX will no
longer be a facility of the Exchange and
Article IV, Section 4.3(a) regarding
qualifications for the Board of Directors
was amended to remove the
requirement that one Industry Director
shall represent BOX Participants,
because the Exchange explained those
provisions were no longer needed.9 The
Exchange also separately filed to
dissolve the BOX Committee of the BX
Board of Directors.10
At the time the Exchange filed to
remove BOX references from its ByLaws and dissolve the BOX Committee,
the Exchange inadvertently did not
amend its By-Laws to correct the
number of Public Directors required to
be included in the calculation of NonIndustry Directors for purposes of
determining the number of NonIndustry Directors that may serve on the
Exchange board. Section 4.3 currently
states, ‘‘* * * The number of nonIndustry Directors, including at least
three Public Directors and at least one
Director representative of issuers and
investors shall equal or exceed the sum
of the number of Industry Directors 11
7 See Securities Exchange Act Release No. 67009
(May 17, 2012), 77 FR 30566 (May 23, 2012) (SR–
BX–2012–036).
8 Id.
9 Id. In addition, By-Law Article IV, Section 4.14,
entitled Committees Not Composed Solely of
Directors, was amended to remove the manner in
which an Industry Director who is a representative
of BOX Participants is nominated to the Board as
it is no longer needed.
10 See Securities Exchange Act Release No. 67102
(June 4, 2012), 77 FR 34107 (June 8, 2012) (SR–BX–
2012–039). After The NASDAQ OMX Group, Inc.
acquired the Boston Stock Exchange, Inc., the
Exchange adopted resolutions to establish a
committee of its Board of Directors, referred to as
the BOX Committee. See Securities Exchange Act
Release No. 58324 (August 7, 2008); 73 FR 46936
(August 12, 2008) (File Nos. SR–BSE–2008–02; SR–
BSE–2008–23; SR–BSE–2008–25; SR–BSECC–2008–
01) (‘‘Order approving the Acquisition of the Boston
Stock Exchange, Incorporated by The NASDAQ
OMX Group, Inc.’’).
11 Pursuant to BX By-Law Article I(t) an Industry
Director is a Director (excluding any two officers of
the Corporation, 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
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and Member Representative
Directors.’’ 12 The number of Public
Directors was set at three directors to
accommodate the additional interests of
the BOX Industry Director and the BOX
Committee 13 that were also proposed to
be part of the new Boston Stock
Exchange board at that time.
The Exchange proposes to amend its
By-Laws similar to the By-Laws of
NASDAQ OMX PHLX LLC (‘‘Phlx’’)
which requires the number of NonIndustry Directors, including at least
one Public Director and at least one
Director representative of issuers and
investors shall equal or exceed the sum
of the number of Industry Directors and
Member Representative Directors
* * *’’ 14 Also, The NASDAQ Stock
Market LLC (‘‘NASDAQ’’) requires the
number of Non-Industry Directors,
including at least one Public Director
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 and Member Representative
Directors.15 The amendment reflects the
recent elimination of BOX
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 twenty percent or more of the
professional revenues received by the Director or
twenty 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 fifty 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 twenty percent or more of
the professional revenues received by the Director
or twenty percent or more of the gross revenues
received by the Director’s firm or partnership; or
(vi) has a consulting or employment relationship
with or provides professional services to the
Corporation or any affiliate thereof or to FINRA or
has had any such relationship or provided any such
services at any time within the prior three years.
12 Pursuant to BX By-Law Article I(x) a Member
Representative Director is a Director who has been
elected by the stockholders after having been
nominated by the Member Nominating Committee
or voted upon by Exchange Members pursuant to
these By-Laws (or elected by the stockholders
without such nomination or voting in the case of
the Member Representative Directors elected
pursuant to Section 4.3(b)). A Member
Representative Director may, but is not required to
be, an officer, director, employee, or agent of an
Exchange Member.
13 An independent committee of the Exchange’s
Board of Governors that reviewed BOX rule changes
and certain other BOX-related regulatory matters.
See Securities Exchange Act Release No. 34–58324
(August 7, 2008); 73 FR 46936 (August 12, 2008)
(File Nos. SR–BSE–2008–02; SR–BSE–2008–23; SR–
BSE–2008–25; SR–BSECC–2008–01. See also
Securities Exchange Act Release No. 67102 (June 4,
2012), 77 FR 34107 (June 8, 2012) (SR–BX–2012–
039).
14 See Phlx By-Law Article III, Section 3–2(a).
15 See NASDAQ By-Law Article III, Section 2(a).
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representatives from the Board and the
reduction of the number of Public
Directors from the computation of
qualifying Non-Industry Directors is
consistent with the removal of the BOX
representatives from the Board. Today,
notwithstanding the increased number
of Public Directors in the Non-Industry
director calculation, the Exchange meets
the requirements of the Non-Industry
Director requirement in By-Law Article
IV, Section 4.13.
The Exchange’s annual meeting will
take place on or around the end of May
2013. The Exchange anticipates utilizing
the revised Non-Industry Director
calculation for the upcoming election of
directors. The Exchange does not
believe that this calculation will impact
the board composition as twenty
percent of the Directors will continue to
be Member Representative Directors as
required in By-Law Article IV, Section
4.3(a). Also, the Board will continue to
have three Public Directors serving on
the Regulatory Oversight Committee as
required by By-Law Article IV, Section
4.13. The requirement that the number
of Non-Industry Directors equal or
exceed the sum of Industry Directors
and Member Representative Directors
will continue to be met, but only one
Public Director will be included in the
calculation similar to Phlx and
NASDAQ.16
2. Statutory Basis
BX believes that its proposal to amend
BX Article IV, Section 4.3 entitled
‘‘Qualifications’’ to correct the number
of Public Directors required to be
included in the calculation of NonIndustry Directors that are permitted to
serve on the Exchange Board is
consistent with Section 6 of the Act,17
in general, and with Sections 6(b)(1) and
(b)(5) of the Act,18 in particular, in that
the proposal enable BX to be so
organized and to have the capacity to be
able to carry out the purposes of the Act
and to comply with and enforce
compliance by members with provisions
of the Act, the rules and regulations
thereunder, BX rules, and is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
16 BX confirmed that BX will continue to have at
least three Public Directors on its Board of
Directors, as required by its By-Laws, because the
BX Regulatory Oversight Committee must consist of
three Public Directors. See email from Angela
Dunn, BX, to Adam Moore, Special Counsel, and
Dhawal Sharma, Attorney Advisor, Division of
Trading and Markets, Commission, dated March 29,
2013.
17 15 U.S.C. 78f.
18 15 U.S.C. 78f(b)(1), (5).
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settling, processing information with
respect to, and facilitating transactions
in securities, 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 composition and selection of the
BX Board of Directors will continue to
satisfy the requirement in Section
6(b)(3) of the Act 19 that the rules of the
Exchange provide for the fair
representation of members in the
selection of directors and administration
of the Exchange. The Exchange believes
that its By-Laws continue to assure fair
representation of the Exchange’s
members in the selection of its directors
and administration of its affairs and
provide that, among other things, one or
more directors shall be representative of
investors and not be associated with the
exchange, or with a broker or dealer.
Twenty percent of the Directors will
continue to be Member Representative
Directors as required by BX Article IV,
Section 4.3(a).
The number of Public Directors that
are required to be included in the
calculation of Non-Industry Directors
will be the same as the number required
on the Phlx and NASDAQ Boards.20 The
BX board requirements today are
otherwise similar to the requirements at
Phlx and NASDAQ. The Exchange
believes that this proposal is consistent
with the previous filing which
eliminated BOX related references from
its By-Laws.21 The number of Public
Directors in the Non-Industry Director
calculation was directly related to the
BX Board composition with BOX
representation and the elimination of
the BOX representation from the BX
Board no longer necessitates the
increased number of Public Directors.
The Exchange believes that amending
the By-Laws to reflect a similar board
composition to NASDAQ and Phlx
would continue to assure fair
representation of the Exchange’s
members in the selection of its directors
and administration of its affairs.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
BX 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. This proposal will
continue to provide for the fair
representation of members in the
selection of directors and administration
19 15
U.S.C. 78f(b)(3).
Phlx By-Law Article III, Section 3–2(a) and
NASDAQ By-Law Article III, Section 2(a).
21 See note 7.
of the Exchange. The amendment to
amend By-Law Article IV, Section 4.3 to
modify the number of Public Directors
in the Non-Industry calculation is
similar to by-laws on other exchanges.22
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission shall: (a) by order
approve or disapprove such proposed
rule change, or (b) institute proceedings
to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–BX–2013–029 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–BX–2013–029. 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
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20:02 Apr 05, 2013
Jkt 229001
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
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
offices 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–BX–
2013–029, and should be submitted on
or before April 29, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–08099 Filed 4–5–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69278; File No. SR–NYSE–
2013–25]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Establish
Non-Display Usage Fees for NYSE
OpenBook, NYSE Trades, and NYSE
BBO and a Redistribution Fee for
NYSE OpenBook
April 2, 2013.
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 March
21, 2013, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
20 See
22 See Phlx By-Law Article III, Section 3–2(a) and
NASDAQ By-Law Article III, Section 2(a).
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]]>Agencies
[Federal Register Volume 78, Number 67 (Monday, April 8, 2013)]
[Notices]
[Pages 20971-20973]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08099]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69280; File No. SR-BX-2013-029]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing of Proposed Rule Change Relating to Board of Director
Qualifications
April 2, 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 March 27, 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.
---------------------------------------------------------------------------
\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 amend By-Law Article IV, Section 4.3 to
amend the calculation of Non-Industry Directors in the Exchange's By-
Laws with respect to Qualification of Board Members.
The text of the proposed rule change is 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.
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 purpose of this filing is to amend BX By-Law Article IV,
Section 4.3 entitled ``Qualifications'' to amend the number of Public
Directors \3\ required to be included in the calculation of Non-
Industry Directors \4\ from three Public Directors to one Public
Director for purposes of determining the number of Non-Industry
Directors that may serve on the Exchange board. The Exchange recently
filed to amend its By-Laws because the Boston Options Exchange LLC
(``BOX'') ceased to operate as an options trading facility of the
Exchange \5\ and terminated the Regulatory Services Agreement (``RSA'')
between BX and BOX effective June 1, 2012.\6\ In that filing the
Exchange noted that the BOX Trading Rules will no longer be operative
to permit options trading on
[[Page 20972]]
BX as of the facility termination effective date.\7\ At that time, the
Exchange filed to amend its By-Laws to remove references to BOX which
were no longer necessary.\8\ Specifically, Article I of the BX By-Laws
was amended to reflect that BOX will no longer be a facility of the
Exchange and Article IV, Section 4.3(a) regarding qualifications for
the Board of Directors was amended to remove the requirement that one
Industry Director shall represent BOX Participants, because the
Exchange explained those provisions were no longer needed.\9\ The
Exchange also separately filed to dissolve the BOX Committee of the BX
Board of Directors.\10\
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\3\ Pursuant to BX By-Law Article I(gg) a Public Director is a
Director who has no material business relationship with a broker or
dealer, the Corporation or its affiliates, or FINRA.
\4\ Pursuant to BX By-Law Article I(bb) a Non-Industry Director
is a Director (excluding Staff Directors) who is (i) a Public
Director; (ii) an officer or employee of an issuer of securities
listed on the Exchange; or (iii) any other individual who would not
be an Industry Director.
\5\ BOX was a facility of the Exchange under Section 39(a)(2) of
the Act. See Securities Exchange Act Release Nos. 49066 (January 13,
2004), 69 FR 2773 (January 20, 2004) (SR-BSE-2003-17); 49065
(January 13, 2004), 69 FR 2768 (January 20, 2004) (SR-BSE-2003-04)
(``BOXR Order''); and 49068 (January 13, 2004), 69 FR 2775 (January
20, 2004) (SR-BSE-2002-15). See also Release No. 58324; 73 FR 46936
(August 7, 2008) (File Nos. SR-BSE-2008-02; SR-BSE-2008-23; SR-BSE-
2008-25; SR-BSECC-2008-01) (``Order Approving the Acquisition of the
Boston Stock Exchange, Incorporated by The NASDAQ OMX Group,
Inc.'').
\6\ The RSA specified, among other matters, that BX would
terminate its responsibility for fulfilling certain obligations and
cease performing certain regulatory functions as of the effective
date of June 1, 2012, or sooner if BOX satisfies all of the
conditions required for BOX to operate as a national securities
exchange (``the facility termination effective date'').
\7\ See Securities Exchange Act Release No. 67009 (May 17,
2012), 77 FR 30566 (May 23, 2012) (SR-BX-2012-036).
\8\ Id.
\9\ Id. In addition, By-Law Article IV, Section 4.14, entitled
Committees Not Composed Solely of Directors, was amended to remove
the manner in which an Industry Director who is a representative of
BOX Participants is nominated to the Board as it is no longer
needed.
\10\ See Securities Exchange Act Release No. 67102 (June 4,
2012), 77 FR 34107 (June 8, 2012) (SR-BX-2012-039). After The NASDAQ
OMX Group, Inc. acquired the Boston Stock Exchange, Inc., the
Exchange adopted resolutions to establish a committee of its Board
of Directors, referred to as the BOX Committee. See Securities
Exchange Act Release No. 58324 (August 7, 2008); 73 FR 46936 (August
12, 2008) (File Nos. SR-BSE-2008-02; SR-BSE-2008-23; SR-BSE-2008-25;
SR-BSECC-2008-01) (``Order approving the Acquisition of the Boston
Stock Exchange, Incorporated by The NASDAQ OMX Group, Inc.'').
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At the time the Exchange filed to remove BOX references from its
By-Laws and dissolve the BOX Committee, the Exchange inadvertently did
not amend its By-Laws to correct the number of Public Directors
required to be included in the calculation of Non-Industry Directors
for purposes of determining the number of Non-Industry Directors that
may serve on the Exchange board. Section 4.3 currently states, ``* * *
The number of non-Industry Directors, including at least three Public
Directors and at least one Director representative of issuers and
investors shall equal or exceed the sum of the number of Industry
Directors \11\ and Member Representative Directors.'' \12\ The number
of Public Directors was set at three directors to accommodate the
additional interests of the BOX Industry Director and the BOX Committee
\13\ that were also proposed to be part of the new Boston Stock
Exchange board at that time.
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\11\ Pursuant to BX By-Law Article I(t) an Industry Director is
a Director (excluding any two officers of the Corporation, 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 twenty percent or more of the professional revenues
received by the Director or twenty 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 fifty 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 twenty percent or more of the professional revenues
received by the Director or twenty percent or more of the gross
revenues received by the Director's firm or partnership; or (vi) has
a consulting or employment relationship with or provides
professional services to the Corporation or any affiliate thereof or
to FINRA or has had any such relationship or provided any such
services at any time within the prior three years.
\12\ Pursuant to BX By-Law Article I(x) a Member Representative
Director is a Director who has been elected by the stockholders
after having been nominated by the Member Nominating Committee or
voted upon by Exchange Members pursuant to these By-Laws (or elected
by the stockholders without such nomination or voting in the case of
the Member Representative Directors elected pursuant to Section
4.3(b)). A Member Representative Director may, but is not required
to be, an officer, director, employee, or agent of an Exchange
Member.
\13\ An independent committee of the Exchange's Board of
Governors that reviewed BOX rule changes and certain other BOX-
related regulatory matters. See Securities Exchange Act Release No.
34-58324 (August 7, 2008); 73 FR 46936 (August 12, 2008) (File Nos.
SR-BSE-2008-02; SR-BSE-2008-23; SR-BSE-2008-25; SR-BSECC-2008-01.
See also Securities Exchange Act Release No. 67102 (June 4, 2012),
77 FR 34107 (June 8, 2012) (SR-BX-2012-039).
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The Exchange proposes to amend its By-Laws similar to the By-Laws
of NASDAQ OMX PHLX LLC (``Phlx'') which requires the number of Non-
Industry Directors, including at least one Public Director and at least
one Director representative of issuers and investors shall equal or
exceed the sum of the number of Industry Directors and Member
Representative Directors * * *'' \14\ Also, The NASDAQ Stock Market LLC
(``NASDAQ'') requires the number of Non-Industry Directors, including
at least one Public Director 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 and Member Representative Directors.\15\ The
amendment reflects the recent elimination of BOX representatives from
the Board and the reduction of the number of Public Directors from the
computation of qualifying Non-Industry Directors is consistent with the
removal of the BOX representatives from the Board. Today,
notwithstanding the increased number of Public Directors in the Non-
Industry director calculation, the Exchange meets the requirements of
the Non-Industry Director requirement in By-Law Article IV, Section
4.13.
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\14\ See Phlx By-Law Article III, Section 3-2(a).
\15\ See NASDAQ By-Law Article III, Section 2(a).
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The Exchange's annual meeting will take place on or around the end
of May 2013. The Exchange anticipates utilizing the revised Non-
Industry Director calculation for the upcoming election of directors.
The Exchange does not believe that this calculation will impact the
board composition as twenty percent of the Directors will continue to
be Member Representative Directors as required in By-Law Article IV,
Section 4.3(a). Also, the Board will continue to have three Public
Directors serving on the Regulatory Oversight Committee as required by
By-Law Article IV, Section 4.13. The requirement that the number of
Non-Industry Directors equal or exceed the sum of Industry Directors
and Member Representative Directors will continue to be met, but only
one Public Director will be included in the calculation similar to Phlx
and NASDAQ.\16\
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\16\ BX confirmed that BX will continue to have at least three
Public Directors on its Board of Directors, as required by its By-
Laws, because the BX Regulatory Oversight Committee must consist of
three Public Directors. See email from Angela Dunn, BX, to Adam
Moore, Special Counsel, and Dhawal Sharma, Attorney Advisor,
Division of Trading and Markets, Commission, dated March 29, 2013.
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2. Statutory Basis
BX believes that its proposal to amend BX Article IV, Section 4.3
entitled ``Qualifications'' to correct the number of Public Directors
required to be included in the calculation of Non-Industry Directors
that are permitted to serve on the Exchange Board is consistent with
Section 6 of the Act,\17\ in general, and with Sections 6(b)(1) and
(b)(5) of the Act,\18\ in particular, in that the proposal enable BX to
be so organized and to have the capacity to be able to carry out the
purposes of the Act and to comply with and enforce compliance by
members with provisions of the Act, the rules and regulations
thereunder, BX rules, and is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in regulating, clearing,
[[Page 20973]]
settling, processing information with respect to, and facilitating
transactions in securities, 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.
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\17\ 15 U.S.C. 78f.
\18\ 15 U.S.C. 78f(b)(1), (5).
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The composition and selection of the BX Board of Directors will
continue to satisfy the requirement in Section 6(b)(3) of the Act \19\
that the rules of the Exchange provide for the fair representation of
members in the selection of directors and administration of the
Exchange. The Exchange believes that its By-Laws continue to assure
fair representation of the Exchange's members in the selection of its
directors and administration of its affairs and provide that, among
other things, one or more directors shall be representative of
investors and not be associated with the exchange, or with a broker or
dealer. Twenty percent of the Directors will continue to be Member
Representative Directors as required by BX Article IV, Section 4.3(a).
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\19\ 15 U.S.C. 78f(b)(3).
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The number of Public Directors that are required to be included in
the calculation of Non-Industry Directors will be the same as the
number required on the Phlx and NASDAQ Boards.\20\ The BX board
requirements today are otherwise similar to the requirements at Phlx
and NASDAQ. The Exchange believes that this proposal is consistent with
the previous filing which eliminated BOX related references from its
By-Laws.\21\ The number of Public Directors in the Non-Industry
Director calculation was directly related to the BX Board composition
with BOX representation and the elimination of the BOX representation
from the BX Board no longer necessitates the increased number of Public
Directors. The Exchange believes that amending the By-Laws to reflect a
similar board composition to NASDAQ and Phlx would continue to assure
fair representation of the Exchange's members in the selection of its
directors and administration of its affairs.
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\20\ See Phlx By-Law Article III, Section 3-2(a) and NASDAQ By-
Law Article III, Section 2(a).
\21\ See note 7.
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B. Self-Regulatory Organization's Statement on Burden on Competition
BX 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. This proposal will continue to provide for the
fair representation of members in the selection of directors and
administration of the Exchange. The amendment to amend By-Law Article
IV, Section 4.3 to modify the number of Public Directors in the Non-
Industry calculation is similar to by-laws on other exchanges.\22\
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\22\ See Phlx By-Law Article III, Section 3-2(a) and NASDAQ By-
Law Article III, Section 2(a).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) by order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BX-2013-029 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-BX-2013-029. 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
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 such filing also will be available
for inspection and copying at the principal offices 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-BX-2013-029,
and should be submitted on or before April 29, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08099 Filed 4-5-13; 8:45 am]
BILLING CODE 8011-01-P
