[Federal Register Volume 76, Number 209 (Friday, October 28, 2011)]
[Notices]
[Pages 67013-67015]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-27887]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65603; File No. SR-BX-2011-071]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing of Proposed Rule Change With Respect to an Amendment to the By-
Laws of The NASDAQ OMX Group, Inc.
October 21, 2011.
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 October 11, 2011, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III 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.
---------------------------------------------------------------------------
\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
BX is filing this proposed rule change with respect to an amendment
to the by-laws of its parent corporation, The NASDAQ OMX Group, Inc.
(``NASDAQ OMX''). The text of the proposed rule change is available on
the Exchange's Web site at http://nasdaqomxbx.cchwallstreet.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room. The proposed amendments will
[[Page 67014]]
be implemented upon approval by the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change. 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
NASDAQ OMX is proposing amendments to provisions of its by-laws
pertaining to the composition of committees of the NASDAQ OMX Board of
Directors. First, NASDAQ OMX is amending the compositional requirements
of its Audit Committee in Section 4.13(g) to provide that the committee
shall include three or more directors. Currently, the provision
provides that the Audit Committee shall be composed of either four or
five directors. The change will provide the NASDAQ OMX Board of
Directors, which has authority to establish the size of each committee
of the Board of Directors, with flexibility to increase or decrease the
size of the committee, as long as the committee includes at least three
directors. The listing standards of the NASDAQ Stock Market, which
apply to NASDAQ OMX as a listed company, require that NASDAQ OMX's
Audit Committee must have at least three members.\3\ The amendment
would not change any of the other compositional requirements of the
Audit Committee, including independence requirements.
---------------------------------------------------------------------------
\3\ NASDAQ IM-4605-3. [sic]
---------------------------------------------------------------------------
Similarly, NASDAQ OMX is proposing to amend the compositional
requirements of the Nominating & Governance Committee in Section
4.13(h) to replace a requirement that the committee comprise four or
five members with a requirement to include two or more members, thereby
creating flexibility to populate a larger or a smaller committee than
is currently the case. NASDAQ Stock Market listing standards do not
regulate the size of a listed company's nominating committee. The
amendment would not change any of the other compositional requirements
of the Nominating & Governance Committee, including independence
requirements.
BX expects that the NASDAQ OMX Board of Directors will, in the
immediate future, use the modified authority to increase the size of
the Nominating & Governance Committee to six directors, but will not
modify the size of the Audit Committee at this time. It is likely that
the authority would be used to reduce the size of these committees
below their current levels only in the event of a reduction in the
overall size of the NASDAQ OMX Board of Directors (which currently has
16 members). The Audit Committee supervises the audit function with
respect to NASDAQ OMX and all of its subsidiaries, including BX, but
the Nominating & Governance Committee does not perform a nominating
function with respect to NASDAQ OMX's subsidiaries.
Third, NASDAQ OMX proposes to delete a paragraph of the by-laws
(Section 4.13(k)) that pertains to the qualifications of committee
members who are not directors. This provision was originally adopted by
NASDAQ OMX's predecessor corporation, The Nasdaq Stock Market, Inc.,
when it was a subsidiary and facility of the National Association of
Securities Dealers, Inc. (``NASD''). In that capacity, The Nasdaq Stock
Market, Inc. appointed committees that included non-directors and that
exercised authority provided for under NASD rules. For example, at that
time, the Board of Directors of The Nasdaq Stock Market, Inc. appointed
the Nasdaq Listing and Hearing Review Council, a committee composed of
non-directors with authority to review listing decisions with respect
to companies with securities listed on The Nasdaq Stock Market, which
was then a facility of NASD.
In 2005, The NASDAQ Stock Market LLC (``NASDAQ'') was formed as a
subsidiary [sic] The Nasdaq Stock Market, Inc., and in 2006, NASDAQ was
registered as a national securities exchange. The Nasdaq Stock Market,
Inc., which had already issued stock to the public, became a holding
company, and in 2007, it ceased operating as a facility of NASD or
NASDAQ. Subsequently, following the acquisition of OMX AB, The Nasdaq
Stock Market, Inc. became NASDAQ OMX. As a public holding company,
NASDAQ OMX no longer appoints committees that include non-directors.
Accordingly, the provision with respect to the qualifications of non-
directors is obsolete and may appropriately be deleted.
Finally, NASDAQ OMX is correcting a typographical error in the
numbering of the provisions of Section 4.13(h) of the by-laws.
2. Statutory Basis
BX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\4\ in general, and with Sections
6(b)(1) and (b)(5) of the Act,\5\ in particular, in that the proposal
enables 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 and persons associated with members with
provisions of the Act, the rules and regulations thereunder, and 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, 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.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(1), (5).
---------------------------------------------------------------------------
BX believes that the proposed amendments are non-controversial. The
proposal to modify the compositional requirements of the NASDAQ OMX
Audit Committee and Nominating & Governance Committee will provide the
NASDAQ OMX Board of Directors with greater flexibility to determine the
appropriate size for these committees, while maintaining compliance
with applicable listing standards. BX expects that the NASDAQ OMX Board
of Directors will, in the immediate future, use the modified authority
to increase the size of the Nominating & Governance Committee to six
directors, but will not modify the size of the Audit Committee at this
time. The proposed changes also delete an obsolete provision from the
by-laws and correct a typographical error.
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.
[[Page 67015]]
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 self-regulatory organization 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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BX-2011-071 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-2011-071. 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 (http://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
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of BX. 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 publicly available. All
submissions should refer to File Number SR-BX-2011-071 and should be
submitted on or before November 18, 2011.
---------------------------------------------------------------------------
\6\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority. \6\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-27887 Filed 10-27-11; 8:45 am]
BILLING CODE 8011-01-P