Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to a Stockholders' Agreement by and Among Nasdaq, Inc., Adenza Parent, LP, and the Other Parties Thereto, 55104-55107 [2023-17307]
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Federal Register / Vol. 88, No. 155 / Monday, August 14, 2023 / Notices
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broader coverage for idiosyncratic risk
scenarios, and could help address the
potential increased risks NSCC may face
related to its ability to liquidate a
portfolio that is susceptible to such risks
in the event of a member default.
Specifically, the Commission has
reviewed and analyzed NSCC’s analysis
of the improvements in its backtesting
coverage,53 and agrees that the analysis
demonstrates that the proposal would
result in better backtesting coverage
and, therefore, less credit exposure to its
members.
Accordingly, the Commission believes
that the proposal would enable NSCC to
better manage its credit risks by
allowing it to respond regularly and
more effectively to any material
deterioration of backtesting
performances, market events, market
structure changes, or model validation
findings, thereby helping to ensure that
NSCC can take steps to collect sufficient
margin to maintain sufficient financial
resources to cover its exposure to its
members. Therefore, the Commission
believes the Proposed Rule Change is
consistent with Rule 17Ad–22(e)(4)(i)
under the Exchange Act.
C. Consistency With Rule 17Ad–
22(e)(6)(i) Under the Exchange Act
Rule 17Ad–22(e)(6)(i) under the
Exchange Act requires that each covered
clearing agency that provides central
counterparty services establish,
implement, maintain and enforce
written policies and procedures
reasonably designed to cover its credit
exposures to its participants by
establishing a risk-based margin system
that, at a minimum, considers, and
produces margin levels commensurate
with, the risks and particular attributes
of each relevant product, portfolio, and
market.54
The Commission understands that, as
described above, the proposal as a
whole is designed to enable NSCC to
more effectively address the risks
presented by members’ concentrated
positions in securities more prone to
gap risk events and to produce margin
levels that are more commensurate with
the particular risk attributes of these
concentrated holdings, including the
market price risk of liquidating large
positions in securities that are more
prone to gap risk events. The
Commission believes that the proposal
would improve NSCC’s ability to
consider, and produce margin levels
commensurate with, the risks and
particular attributes presented by a
portfolio that meets the concentration
53 See
54 17
supra note 49.
CFR 240.17Ad–22(e)(6)(i).
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threshold and, therefore, is more
susceptible to the impacts of
idiosyncratic risks.
First, the Commission believes that
broadening the gap risk charge to an
additive feature of the VaR Charge and
using the two largest non-diversified
positions would help NSCC to more
effectively manage the idiosyncratic
risks of portfolios with concentrated
holdings. Specifically, the proposed
changes should result in an overall
increase of margin for members that
have positions subject to the gap risk
charge.55
Second, given the proposed additive
nature of the gap risk charge, the
Commission believes the adjustments to
the gap risk charge calculation (i.e.,
establishing floors for the gap risk
haircuts applicable to the two largest
positions) are reasonably designed to
cover NSCC’s exposure to members
arising from gap risks. The Commission
believes the adjustments to the gap risk
charge calculation are reasonable
because the record shows the proposal
should improve NSCC’s ability to
mitigate against idiosyncratic risks that
NSCC may face when liquidating a
portfolio that contains a concentration
of positions, while balancing NSCC’s
consideration of the potential costs to
members that may be subject to the gap
risk charge.56 The Commission believes
that the established floors for the two
haircuts should also help ensure that
the gap risk charge collects margin
sufficient to cover the potential
exposure in a gap risk event.
Third, by providing additional
specific objective criteria to determine
which positions would be subject to the
gap risk charge, the Commission
believes that NSCC should be able to
better identify those securities that may
be more prone to idiosyncratic risks.
Specifically, the proposal should ensure
that ETFs identified as non-diversified
(whether index-based or not) and
therefore more prone to idiosyncratic
risks will be subject to the gap risk
charge.
55 The
impact study indicated that the proposed
changes would have resulted in a 10.88% increase
for the daily total VaR Charge on average and would
have resulted in a 4.89% increase in the daily total
clearing fund on average during that period. See
Notice of Filing, supra note 3, 87 FR at 78158. In
addition, the Commission reviewed confidential
materials submitted to the Commission, which
included more granular information, at a member
level, of the impacts of this proposal as compared
to the current methodology. See note 49 supra.
56 As part of the confidential materials submitted
to the Commission, NSCC provided analysis of
alternative potential haircuts and thresholds that it
considered when developing the proposal. See note
49 supra. The Commission’s review of those
materials further supports its belief as to the
reasonableness of this aspect of the proposal.
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Taken together, the Commission
believes that the proposal should permit
NSCC to calculate a gap risk charge that
is more appropriately designed to
address the gap risks presented by
concentrated positions in portfolios.
Accordingly, the Commission believes
the proposal is consistent with Rule
17Ad–22(e)(6)(i) under the Exchange
Act because it is designed to assist
NSCC in maintaining a risk-based
margin system that considers, and
produces margin levels commensurate
with, the risks and particular attributes
of portfolios with identified
concentration risks.57
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the Proposed
Rule Change is consistent with the
requirements of the Act and in
particular with the requirements of
section 17A of the Act 58 and the rules
and regulations promulgated
thereunder.
It is therefore ordered, pursuant to
section 19(b)(2) of the Act 59 that
proposed rule change SR–NSCC–2022–
015, be, and hereby is, approved.60
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.61
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–17302 Filed 8–11–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98091; File No. SR–ISE–
2023–15]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to a
Stockholders’ Agreement by and
Among Nasdaq, Inc., Adenza Parent,
LP, and the Other Parties Thereto
August 8, 2023.
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 July 28,
2023, Nasdaq ISE, LLC (the ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
57 17
CFR 240.17Ad–22(e)(6)(i).
U.S.C. 78q–1.
59 15 U.S.C. 78s(b)(2).
60 In approving the Proposed Rule Change, the
Commission considered its impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
61 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
58 15
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Federal Register / Vol. 88, No. 155 / Monday, August 14, 2023 / Notices
the proposed rule change as described
in Items I and II, below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposed rule
change regarding a stockholders’
agreement by and among the Exchange’s
parent corporation, Nasdaq, Inc.
(‘‘Nasdaq’’), Adenza Parent, LP, a
Delaware limited partnership (‘‘Seller’’),
and the other parties thereto
(‘‘Stockholders’ Agreement’’). The
Stockholders’ Agreement will be
implemented upon closing under the
Merger Agreement (as defined below).
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/ise/rules, 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
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1. Purpose
On June 10, 2023, Nasdaq entered into
an Agreement and Plan of Merger (the
‘‘Merger Agreement’’) by and among
Nasdaq, Argus Merger Sub 1, Inc., a
Delaware corporation and a direct
wholly owned subsidiary of Nasdaq,
Argus Merger Sub 2, LLC, a Delaware
limited liability company and a direct
wholly owned subsidiary of Nasdaq,
Adenza Holdings, Inc., a Delaware
corporation (‘‘Adenza’’), and Seller.
Pursuant to the Merger Agreement, and
upon the terms and subject to the
conditions therein, Nasdaq will acquire
100% of the stock of Adenza (the
‘‘Transaction’’). As a result of the
Transaction, Seller is expected to hold,
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at closing, approximately 15% of the
outstanding Nasdaq common stock
based upon the outstanding shares of
Nasdaq common stock as of June 9,
2023.3 The shares to be held by Seller
will be subject to Article Fourth of
Nasdaq’s Amended and Restated
Certificate of Incorporation, which
provides that no person who
beneficially owns shares of common
stock or preferred stock of Nasdaq in
excess of 5% of the then-outstanding
securities generally entitled to vote may
vote the shares in excess of 5%. This
limitation mitigates the potential for any
Nasdaq shareholder to exercise undue
control over the operations of Nasdaq’s
self-regulatory subsidiaries (including
the Exchange), and facilitates the selfregulatory subsidiaries’ and the
Commission’s ability to carry out their
regulatory obligations under the Act.
Adenza and Seller are affiliates of
certain funds managed by Thoma Bravo,
L.P., a Delaware limited partnership
(‘‘Thoma Bravo’’).4 The Merger
Agreement contemplates that, at the
closing, Nasdaq, Seller and Thoma
Bravo will enter into the Stockholders’
Agreement. The Stockholders’
Agreement provides that, among other
things, Thoma Bravo will be entitled to
propose one individual reasonably
acceptable to Nasdaq’s Nominating &
Governance Committee for nomination
as director for election to the Nasdaq
Board (‘‘Board Designee’’), and such
right will exist for so long as Thoma
Bravo, together with its controlled
affiliates (including Seller), continue to
beneficially own at least 10% of the
shares of Nasdaq common stock
outstanding as of the closing date.
Nasdaq will: (i) include the Board
Designee as a nominee to the Nasdaq
Board on each slate of nominees for
election to the Nasdaq Board proposed
by management of Nasdaq, (ii)
recommend the election of the Board
Designee to the stockholders of Nasdaq
and (iii) without limiting the foregoing,
otherwise use its reasonable best efforts
(which shall include the solicitation of
proxies) to cause the Board Designee to
be elected to the Nasdaq Board.
The Stockholders’ Agreement relates
solely to the Nasdaq Board, and not to
the boards of any of its subsidiaries,
including the Exchange Board.
Nevertheless, the provisions of the
3 A copy of the Merger Agreement and a
description of its terms were filed by Nasdaq on
Form 8–K on June 12, 2023 and are available at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/
0001120193/000119312523164839/
d476077d8k.htm.
4 Seller owns all of the issued and outstanding
capital stock of Adenza. Both Seller and Adenza are
owned by Thoma Bravo.
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55105
Stockholders’ Agreement described
above could be considered a proposed
rule change of a subsidiary that is a selfregulatory organization (‘‘SRO’’), if the
provisions were viewed as potentially
impacting the governance of an SRO in
its capacity as wholly-owned subsidiary
of Nasdaq. Accordingly, the governing
boards of directors of the Exchange and
its affiliated SROs have each reviewed
the proposed change and determined
that it should be filed with the
Commission.5
It is expected that the Board Designee,
like the other directors of the Nasdaq
Board, would be nominated by the
Nominating & Governance Committee,
the composition of which is subject to
the independence requirements of the
Nasdaq By-Laws and NSM Rule 5605.6
The Board Designee must then be
elected by the stockholders of Nasdaq,
like the other directors of the Nasdaq
Board. The Nasdaq Board is currently
composed of 11 directors and is
expected to increase to 12 directors
upon the closing of the Transaction.
Thus, the Board Designee would
represent a small percentage
(approximately 8.3%) of the Nasdaq
Board.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with section 6(b)
of the Act,7 in general, and furthers the
objectives of section 6(b)(1) of the Act,8
in that it enables the Exchange to be so
organized as to have the capacity to be
able to carry out the purposes of the Act
and to comply, and to enforce
compliance by its participants, with the
provisions of the Act, the rules and
5 The Exchange, Nasdaq BX, Inc. (‘‘BX’’), Nasdaq
GEMX, LLC (‘‘GEMX’’), Nasdaq MRX, LLC
(‘‘MRX’’), The Nasdaq Stock Market LLC (‘‘NSM’’),
Nasdaq PHLX LLC (‘‘Phlx’’), Boston Stock Exchange
Clearing Corporation (‘‘BSECC’’), and Stock
Clearing Corporation of Philadelphia (‘‘SCCP’’) are
each submitting this filing pursuant to section
19(b)(3)(A) of the Act, 15 U.S.C. 78s(b)(3)(A)(iii).
6 Section 4.13 of the Nasdaq By-Laws provide that
the Nominating & Governance Committee shall be
appointed annually by the Nasdaq Board and shall
consist of two or more directors, each of whom
shall be an independent director within the
meaning of the rules of NSM. The number of NonIndustry Directors (i.e., directors without material
ties to the securities industry) on the Nominating
& Governance Committee shall equal or exceed the
number of Industry Directors and at least two
members of the committee shall be Public Directors
(i.e., directors who have no material business
relationship with a broker or dealer, Nasdaq or its
affiliates, or FINRA). NSM Rule 5605, which
governs Nasdaq as a company whose securities are
listed on NSM, requires Nominating & Governance
Committee members to satisfy the definition of
‘‘independence’’ in NSM Rule 5605 and IM–5605
and to otherwise be deemed independent by the
Nasdaq Board.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(1).
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Federal Register / Vol. 88, No. 155 / Monday, August 14, 2023 / Notices
regulations thereunder, and the rules of
the Exchange.
The proposal related to the
Stockholders’ Agreement would not
impact the Exchange’s ability to be so
organized as to have the capacity to be
able to carry out the purposes of the Act.
In particular, the proposed changes
would not alter the limitations on voting
and ownership set forth in Article
Fourth of Nasdaq’s Amended and
Restated Certificate of Incorporation,
and so the proposed changes would not
enable a person to exercise undue
control over the operations of Nasdaq’s
self-regulatory subsidiaries or to restrict
the ability of the Commission or the
Exchange to effectively carry out their
regulatory oversight responsibilities
under the Act. Further, as discussed
above, it is expected that the Board
Designee, like the other directors of the
Nasdaq Board, would be nominated by
the Nominating & Governance
Committee, whose members are subject
to the independence requirements of the
Nasdaq By-Laws and NSM Rule 5605.
Further, the Board Designee must then
be elected by the stockholders of
Nasdaq, like the other directors of the
Nasdaq Board. The Nasdaq Board is
currently composed of 11 directors and
is expected to increase to 12 directors
upon the closing of the Transaction.
Thus, the Board Designee would
represent a small percentage
(approximately 8.3%) of the Nasdaq
Board.
The Exchange also notes that the
proposed rule change is substantially
similar to prior proposals by the
Exchange’s affiliated SROs related to
Nasdaq stockholders’ agreements that
gave similar rights to recommend
Nasdaq Board designees.9 As such, the
Exchange does not believe that its
proposal raises any new or novel issues
not already considered by the
Commission.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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Because the proposed rule change is
related solely to Thoma Bravo’s right to
nominate the Board Designee to the
Nasdaq Board pursuant to the
9 See Securities Exchange Act Release No. 57099
(January 4, 2008), 73 FR 1901 (January 10, 2008)
(SR–NASDAQ–2008–002) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
Relating to Nasdaq Stockholders’ Agreement
Between the Nasdaq Stock Market, Inc. and Borse
Dubai Limited). See also Securities Exchange Act
Release No. 63786 (January 27, 2011), 76 FR 6168
(February 3, 2011) (SR–NASDAQ–2011–013, SR–
PHLX–2011–08, SR–BX–2011–004) (Notice of
Filing and Immediate Effectiveness of Proposed
Rule Changes Relating to a Stockholders’
Agreement Between the NASDAQ OMX Group, Inc.
and Investor AB).
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Stockholders’ Agreement and not to the
operations of the Exchange, the
Exchange does not believe that the
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to section
19(b)(3)(A)(iii) of the Act 10 and
subparagraph (f)(6) of Rule 19b–4
thereunder.11
A proposed rule change filed under
Rule 19b–4(f)(6) 12 of the Act normally
does not become operative prior to 30
days after the date of filing. However,
Rule 19b–4(f)(6)(iii) 13 permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay contained in Rule 19b–
4(f)(6)(iii).14 The Commission believes
that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest as
the proposal raises no new or novel
issues. Accordingly, the Commission
hereby waives the 30-day operative
delay and designates the proposal
operative upon filing.15
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
10 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
12 17 CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6)(iii).
14 17 CFR 240.19b–4(f)(6)(iii).
15 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule change’s impact on efficiency,
competition, and capital formation. See 15 U.S.C.
78c(f).
11 17
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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. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or 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–
ISE–2023–15 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–ISE–2023–15. 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 website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection.
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Federal Register / Vol. 88, No. 155 / Monday, August 14, 2023 / Notices
All submissions should refer to file
number SR–ISE–2023–15 and should be
submitted on or before September 5,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–17307 Filed 8–11–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[[Release No. 34–98089; File No. SR–
PEARL–2023–34]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rules 2614,
2617, and 2626 of the MIAX Pearl
Equities Rulebook
August 8, 2023.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 31,
2023, MIAX PEARL, LLC (‘‘MIAX Pearl’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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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
amend Exchange Rules 2614, Orders
and Order Instructions, 2617, Order
Execution and Routing and 2626, Retail
Order Attribution Program, to make
minor, non-substantive edits and
clarifying changes to the rule text
applicable to MIAX Pearl Equities
(‘‘MIAX Pearl Equities’’),3 an equities
trading facility of the Exchange.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxglobal.com/markets/
us-equities/pearl-equities/rule-filings, at
MIAX Pearl’s principal office, and at the
Commission’s Public Reference Room.
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The term ‘‘MIAX Pearl Equities’’ shall mean
MIAX Pearl Equities, a facility of MIAX PEARL,
LLC. See Exchange Rule 1901.
1 15
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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 proposes to amend the
hierarchical headings in Exchange Rule
2617 as follows: subparagraph (a)(2)(A)
will be renumbered as (a)(2)(i);
subparagraphs (a)(4)(A)–(D) will be
renumbered as (a)(4)(i)–(iv);
subparagraph (b)(1)(A) will be
renumbered as (b)(1)(i); subparagraphs
(b)(1)(A)(i)–(vi) will be renumbered as
(b)(1)(i)(A)–(F); subparagraphs (b)(4)(A)–
(C) will be renumbered as (b)(4)(i)–(iii);
subparagraphs (b)(4)(B)(i)–(iii) will be
renumbered as (b)(4)(ii)(A)–(C);
subparagraphs (b)(5)(A)–(C) will be
renumbered as (b)(5)(i)–(iii);
subparagraphs (b)(5)(B)(1)–(2) will be
renumbered as (b)(5)(ii)(A)–(B);
subparagraphs (b)(5)(B)(1)(i)–(iii) will be
renumbered as (b)(5)(ii)(A)1.–3.;
subparagraphs (b)(5)(B)(1)(i)(a)–(b) will
be renumbered as (b)(5)(ii)(A)1. a.–b.;
subparagraphs (b)(5)(B)(1)(ii)(a)–(b) will
be renumbered as (b)(5)(ii)(A)2. a.–b.;
subparagraphs (b)(5)(B)(2)(i)–(iv) will be
renumbered as (b)(5)(ii)(B)1.–4.;
subparagraph (b)(5)(B)(2)(i)(a) will be
renumbered as (b)(5)(ii)(B)1. a.;
subparagraph (b)(5)(B)(2)(ii)(a) will be
renumbered as (b)(5)(ii)(B)2. a.;
subparagraphs (b)(5)(C)(1)–(2) will be
renumbered as (b)(5)(iii)(A)–(B); and
subparagraphs (b)(6)(A)–(E) will be
renumbered as (b)(6)(i)–(v).
Next, the Exchange proposes to
amend proposed renumbered
subparagraph (a)(4)(iii) of Exchange
Rule 2617 to replace certain internal
cross references to other subparagraphs
of Exchange Rule 2617 in light of the
proposed hierarchical heading changes
described above. In particular, the
Exchange proposes to amend the cross
references contained in proposed
renumbered Exchange Rule
2617(a)(4)(iii), that are to subparagraphs
(D), (A), and (B), to now be to proposed
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
55107
renumbered subparagraphs (iv), (i), and
(ii), respectively. Accordingly, with all
the proposed changes, Exchange Rule
2617(a)(4)(iii) will provide as follows:
(iii) Consistent with Exchange Rule 2614,
based on User instructions, certain orders are
permitted to post and rest on the MIAX Pearl
Equities Book at prices that lock or cross
contra-side liquidity, provided, however, that
the System will never display a locked or
crossed market. Subject to sub-paragraph (iv)
below, if an Aggressing Order or an incoming
order to buy (sell), pursuant to paragraph (i)
or (ii) above, would execute upon entry
against a resting order to sell (buy) at the
same or a worse price as a resting displayed
order to buy (sell), the Aggressing Order or
incoming order to buy (sell) will be cancelled
or posted to the MIAX Pearl Equities Book
and ranked in accordance with Exchange
Rule 2616.
Next, the Exchange proposes to
amend proposed renumbered
subparagraph (a)(4)(iv) of Exchange Rule
2617 to replace certain internal cross
references to other subparagraphs of
Exchange Rule 2617 in light of the
hierarchical heading changes described
above. In particular, the Exchange
proposes to amend the cross references
contained in proposed renumbered
Exchange Rule 2617(a)(4)(iv) that are to
subparagraphs (C), (A), and (B), to now
be to subparagraphs (iii), (i), and (ii),
respectively. Accordingly, with all the
proposed changes, Exchange Rule
2617(a)(4)(iv) will provide as follows:
(iv) For securities priced equal to or greater
than $1.00 per share, in the case where a
non-displayed order to sell (buy) is posted on
the MIAX Pearl Equities Book at a price that
locks or crosses a displayed order to buy
(sell) pursuant to sub-paragraph (iii) above,
an Aggressing Order or an incoming order to
buy (sell) described in sub-paragraphs (i) and
(ii) above that is a Market Order or a Limit
Order priced more aggressively than the
order to buy (sell) displayed on the MIAX
Pearl Equities Book will execute against the
non-displayed order to sell (buy) resting on
the MIAX Pearl Equities Book at one-half
minimum price variation greater (less) than
the price of the resting displayed order to buy
(sell). For bids or offers under $1.00 per
share, this sub-paragraph is inapplicable.
Next, the Exchange proposes to
amend proposed renumbered
subparagraph (b)(5)(ii) of Exchange Rule
2617 to replace a certain internal cross
reference to another subparagraph of
Exchange Rule 2617 in light of the
hierarchical heading changes described
above. In particular, the Exchange
proposes to amend the cross references
contained in proposed renumbered
Exchange Rule 2617(b)(5)(ii) that is to
subparagraph (b)(5)(C), to now be to
subparagraph (b)(5)(iii). Accordingly,
with the proposed change, Exchange
Rule 2617 (b)(5)(ii) will provide as
follows:
E:\FR\FM\14AUN1.SGM
14AUN1
]]>Agencies
[Federal Register Volume 88, Number 155 (Monday, August 14, 2023)]
[Notices]
[Pages 55104-55107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17307]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98091; File No. SR-ISE-2023-15]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to a
Stockholders' Agreement by and Among Nasdaq, Inc., Adenza Parent, LP,
and the Other Parties Thereto
August 8, 2023.
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 July 28, 2023, Nasdaq ISE, LLC (the ``Exchange'') filed with the
Securities and Exchange Commission (``SEC'' or ``Commission'')
[[Page 55105]]
the proposed rule change as described in Items I and II, below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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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 proposed rule change regarding a
stockholders' agreement by and among the Exchange's parent corporation,
Nasdaq, Inc. (``Nasdaq''), Adenza Parent, LP, a Delaware limited
partnership (``Seller''), and the other parties thereto
(``Stockholders' Agreement''). The Stockholders' Agreement will be
implemented upon closing under the Merger Agreement (as defined below).
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/ise/rules, 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
On June 10, 2023, Nasdaq entered into an Agreement and Plan of
Merger (the ``Merger Agreement'') by and among Nasdaq, Argus Merger Sub
1, Inc., a Delaware corporation and a direct wholly owned subsidiary of
Nasdaq, Argus Merger Sub 2, LLC, a Delaware limited liability company
and a direct wholly owned subsidiary of Nasdaq, Adenza Holdings, Inc.,
a Delaware corporation (``Adenza''), and Seller. Pursuant to the Merger
Agreement, and upon the terms and subject to the conditions therein,
Nasdaq will acquire 100% of the stock of Adenza (the ``Transaction'').
As a result of the Transaction, Seller is expected to hold, at closing,
approximately 15% of the outstanding Nasdaq common stock based upon the
outstanding shares of Nasdaq common stock as of June 9, 2023.\3\ The
shares to be held by Seller will be subject to Article Fourth of
Nasdaq's Amended and Restated Certificate of Incorporation, which
provides that no person who beneficially owns shares of common stock or
preferred stock of Nasdaq in excess of 5% of the then-outstanding
securities generally entitled to vote may vote the shares in excess of
5%. This limitation mitigates the potential for any Nasdaq shareholder
to exercise undue control over the operations of Nasdaq's self-
regulatory subsidiaries (including the Exchange), and facilitates the
self-regulatory subsidiaries' and the Commission's ability to carry out
their regulatory obligations under the Act.
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\3\ A copy of the Merger Agreement and a description of its
terms were filed by Nasdaq on Form 8-K on June 12, 2023 and are
available at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001120193/000119312523164839/d476077d8k.htm.
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Adenza and Seller are affiliates of certain funds managed by Thoma
Bravo, L.P., a Delaware limited partnership (``Thoma Bravo'').\4\ The
Merger Agreement contemplates that, at the closing, Nasdaq, Seller and
Thoma Bravo will enter into the Stockholders' Agreement. The
Stockholders' Agreement provides that, among other things, Thoma Bravo
will be entitled to propose one individual reasonably acceptable to
Nasdaq's Nominating & Governance Committee for nomination as director
for election to the Nasdaq Board (``Board Designee''), and such right
will exist for so long as Thoma Bravo, together with its controlled
affiliates (including Seller), continue to beneficially own at least
10% of the shares of Nasdaq common stock outstanding as of the closing
date. Nasdaq will: (i) include the Board Designee as a nominee to the
Nasdaq Board on each slate of nominees for election to the Nasdaq Board
proposed by management of Nasdaq, (ii) recommend the election of the
Board Designee to the stockholders of Nasdaq and (iii) without limiting
the foregoing, otherwise use its reasonable best efforts (which shall
include the solicitation of proxies) to cause the Board Designee to be
elected to the Nasdaq Board.
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\4\ Seller owns all of the issued and outstanding capital stock
of Adenza. Both Seller and Adenza are owned by Thoma Bravo.
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The Stockholders' Agreement relates solely to the Nasdaq Board, and
not to the boards of any of its subsidiaries, including the Exchange
Board. Nevertheless, the provisions of the Stockholders' Agreement
described above could be considered a proposed rule change of a
subsidiary that is a self-regulatory organization (``SRO''), if the
provisions were viewed as potentially impacting the governance of an
SRO in its capacity as wholly-owned subsidiary of Nasdaq. Accordingly,
the governing boards of directors of the Exchange and its affiliated
SROs have each reviewed the proposed change and determined that it
should be filed with the Commission.\5\
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\5\ The Exchange, Nasdaq BX, Inc. (``BX''), Nasdaq GEMX, LLC
(``GEMX''), Nasdaq MRX, LLC (``MRX''), The Nasdaq Stock Market LLC
(``NSM''), Nasdaq PHLX LLC (``Phlx''), Boston Stock Exchange
Clearing Corporation (``BSECC''), and Stock Clearing Corporation of
Philadelphia (``SCCP'') are each submitting this filing pursuant to
section 19(b)(3)(A) of the Act, 15 U.S.C. 78s(b)(3)(A)(iii).
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It is expected that the Board Designee, like the other directors of
the Nasdaq Board, would be nominated by the Nominating & Governance
Committee, the composition of which is subject to the independence
requirements of the Nasdaq By-Laws and NSM Rule 5605.\6\ The Board
Designee must then be elected by the stockholders of Nasdaq, like the
other directors of the Nasdaq Board. The Nasdaq Board is currently
composed of 11 directors and is expected to increase to 12 directors
upon the closing of the Transaction. Thus, the Board Designee would
represent a small percentage (approximately 8.3%) of the Nasdaq Board.
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\6\ Section 4.13 of the Nasdaq By-Laws provide that the
Nominating & Governance Committee shall be appointed annually by the
Nasdaq Board and shall consist of two or more directors, each of
whom shall be an independent director within the meaning of the
rules of NSM. The number of Non-Industry Directors (i.e., directors
without material ties to the securities industry) on the Nominating
& Governance Committee shall equal or exceed the number of Industry
Directors and at least two members of the committee shall be Public
Directors (i.e., directors who have no material business
relationship with a broker or dealer, Nasdaq or its affiliates, or
FINRA). NSM Rule 5605, which governs Nasdaq as a company whose
securities are listed on NSM, requires Nominating & Governance
Committee members to satisfy the definition of ``independence'' in
NSM Rule 5605 and IM-5605 and to otherwise be deemed independent by
the Nasdaq Board.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) of the Act,\7\ in general, and furthers the objectives of section
6(b)(1) of the Act,\8\ in that it enables the Exchange to be so
organized as to have the capacity to be able to carry out the purposes
of the Act and to comply, and to enforce compliance by its
participants, with the provisions of the Act, the rules and
[[Page 55106]]
regulations thereunder, and the rules of the Exchange.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(1).
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The proposal related to the Stockholders' Agreement would not
impact the Exchange's ability to be so organized as to have the
capacity to be able to carry out the purposes of the Act. In
particular, the proposed changes would not alter the limitations on
voting and ownership set forth in Article Fourth of Nasdaq's Amended
and Restated Certificate of Incorporation, and so the proposed changes
would not enable a person to exercise undue control over the operations
of Nasdaq's self-regulatory subsidiaries or to restrict the ability of
the Commission or the Exchange to effectively carry out their
regulatory oversight responsibilities under the Act. Further, as
discussed above, it is expected that the Board Designee, like the other
directors of the Nasdaq Board, would be nominated by the Nominating &
Governance Committee, whose members are subject to the independence
requirements of the Nasdaq By-Laws and NSM Rule 5605. Further, the
Board Designee must then be elected by the stockholders of Nasdaq, like
the other directors of the Nasdaq Board. The Nasdaq Board is currently
composed of 11 directors and is expected to increase to 12 directors
upon the closing of the Transaction. Thus, the Board Designee would
represent a small percentage (approximately 8.3%) of the Nasdaq Board.
The Exchange also notes that the proposed rule change is
substantially similar to prior proposals by the Exchange's affiliated
SROs related to Nasdaq stockholders' agreements that gave similar
rights to recommend Nasdaq Board designees.\9\ As such, the Exchange
does not believe that its proposal raises any new or novel issues not
already considered by the Commission.
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\9\ See Securities Exchange Act Release No. 57099 (January 4,
2008), 73 FR 1901 (January 10, 2008) (SR-NASDAQ-2008-002) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating
to Nasdaq Stockholders' Agreement Between the Nasdaq Stock Market,
Inc. and Borse Dubai Limited). See also Securities Exchange Act
Release No. 63786 (January 27, 2011), 76 FR 6168 (February 3, 2011)
(SR-NASDAQ-2011-013, SR-PHLX-2011-08, SR-BX-2011-004) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Changes Relating
to a Stockholders' Agreement Between the NASDAQ OMX Group, Inc. and
Investor AB).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Because the proposed rule change is related solely to Thoma Bravo's
right to nominate the Board Designee to the Nasdaq Board pursuant to
the Stockholders' Agreement and not to the operations of the Exchange,
the Exchange does not believe that the proposed rule change will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to section 19(b)(3)(A)(iii) of the Act \10\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \12\ of the Act
normally does not become operative prior to 30 days after the date of
filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay contained in Rule
19b-4(f)(6)(iii).\14\ The Commission believes that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest as the proposal raises no new or novel issues.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposal operative upon filing.\15\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or 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 [email protected]. Please include
file number SR-ISE-2023-15 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-ISE-2023-15. 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 website (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 website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection.
[[Page 55107]]
All submissions should refer to file number SR-ISE-2023-15 and
should be submitted on or before September 5, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17307 Filed 8-11-23; 8:45 am]
BILLING CODE 8011-01-P
