[Federal Register Volume 76, Number 27 (Wednesday, February 9, 2011)]
[Notices]
[Pages 7236-7238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-2795]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63830; File Nos. SR-SCCP-2011-001; BSECC-2011-001]


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Boston Stock Exchange Clearing Corporation; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
a Stockholders' Agreement Between The NASDAQ OMX Group, Inc. and 
Investor AB

February 3, 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 January 19, 2011, Stock Clearing Corporation of Philadelphia, Inc. 
(``SCCP'') and Boston Stock Exchange Clearing Corporation (``BSECC'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule changes as described in Items I and II below, which Items 
have been prepared by SCCP and BSECC. The Commission is publishing this 
notice to solicit comments on the proposed rule changes 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 Organizations' Statement of the Terms of the 
Substance of the Proposed Rule Changes

    SCCP and BSECC are filing the proposed rule changes regarding a 
stockholders' agreement between SCCP's and BSECC's parent corporation, 
The NASDAQ OMX Group, Inc. (``NASDAQ OMX''), and Investor AB, a 
corporation organized under the laws of Sweden (``Investor 
Stockholders' Agreement''). SCCP and BSECC will implement these changes 
upon filing of these proposed rule changes with the Commission. There 
is no proposed rule text.

II. Self-Regulatory Organizations' Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Changes

    In its filing with the Commission, SCCP and BSECC included 
statements concerning the purpose of and basis for the proposed rule 
changes and discussed any comments they received on the proposed rule 
changes. The text of these statements may be examined at the places 
specified in Item IV below. SCCP and BSECC have prepared summaries, set 
forth in Sections A, B, and C below, of the most significant aspects of 
such statements.

A. Self-Regulatory Organizations' Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On December 16, 2010, NASDAQ OMX entered into an agreement to 
repurchase approximately 22.8 million shares of NASDAQ OMX common 
stock, $0.01 par value per share, for $21.82 per share (approximately 
$497 million in aggregate) from Borse Dubai Limited (``Borse Dubai'') 
(``Stock Repurchase''). Also on December 16, 2010, Nomura International 
plc (``Nomura'') agreed to purchase 8 million shares of NASDAQ OMX 
common stock from Borse Dubai (``Nomura Purchase''). The Stock 
Repurchase and Nomura Purchase closed on December 21, 2010.
    On December 16, 2010, NASDAQ OMX and Investor AB also entered into 
the Investor Stockholders' Agreement, relating to 8 million shares of 
NASDAQ OMX common stock that Investor AB may purchase pursuant to a 
forward share purchase agreement with Nomura. The Investor 
Stockholders' Agreement will generally become effective after all 
applicable regulatory reviews or consents have been completed or 
obtained and the purchase by Investor AB of 8 million shares of NASDAQ 
OMX common stock from Nomura has been completed (``Transaction''). 
After the completion of the Transaction, it is anticipated that 
Investor AB would be the beneficial owner of approximately 9.7% of the 
outstanding capital stock of NASDAQ OMX.
    The NASDAQ OMX shares to be acquired by Investor AB from Nomura are 
subject to Article Four of NASDAQ OMX's Restated Certificate of 
Incorporation,\3\ which provides that no person who is the beneficial 
owner of voting securities of NASDAQ OMX in excess of 5% of the then-
outstanding shares of stock generally entitled to vote (``Excess 
Securities'') may vote such Excess Securities.
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    \3\ As amended most recently on May 11, 2009. Securities 
Exchange Act Release No. 59858 (May 4, 2009), 74 FR 22191 (May 12, 
2009) (SR-NASDAQ-2009-039).
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    Prior to the closing of the Stock Repurchase and the Nomura 
Purchase, under the existing Stockholders' Agreement between NASDAQ OMX 
and Borse Dubai (``Borse Dubai Stockholders' Agreement'') Borse Dubai 
had the right to recommend two persons reasonably acceptable to the 
NASDAQ OMX Nominating Committee (or any successor committee serving 
such function) (``Nominating Committee'') to serve as directors of 
NASDAQ OMX (``Borse Dubai Designees''). In addition, under the Borse 
Dubai Stockholders' Agreement, NASDAQ OMX had agreed to use reasonable 
best efforts to cause appointment of one of the Borse Dubai Designees 
to the Audit, Executive, Finance, and Management Compensation 
committees of the Board and to cause the appointment of another person 
designated by Borse Dubai to serve on the Nominating Committee but in 
each case only if such designees met the requirements for service on 
such committee. By operation of the Borse Dubai Stockholders' 
Agreement, the sale of approximately 30.8 million shares of NASDAQ OMX 
common stock by Borse Dubai resulted in a reduction in the Borse Dubai 
Designees from two to one and in the forfeit of the right to designate 
a member to the specified Board committees.\4\ As a result, as of 
December 21, 2010, Borse Dubai is entitled to nominate one Borse Dubai 
Designee to serve as a director of NASDAQ OMX and has no rights with 
regard to Board committee membership.
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    \4\ The provisions relating to the Borse Dubai Designees 
remained in effect as long as Borse Dubai maintained at least 50% of 
42,901,148 shares of NASDAQ OMX common stock that had been acquired 
by Borse Dubai Limited. As long as Borse Dubai maintains at least 
25% of these shares, it will be entitled to propose one director for 
nomination, but will have no rights with regard to committees.
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    Under the Investor Stockholders' Agreement, among other things, 
Investor AB will have the right to recommend one person reasonably 
acceptable to the Nominating Committee to serve as a director of NASDAQ 
OMX (``Investor Board Designee''). NASDAQ OMX will: (i) Include the 
Investor Board Designee on each slate of nominees proposed by 
management of NASDAQ OMX; (ii) recommend the election of the Investor 
Board Designee to the stockholders of NASDAQ OMX; and (iii) otherwise 
use reasonable best efforts to cause the Investor Board Designee to be 
elected to the Board. NASDAQ OMX also has agreed to use reasonable best 
efforts to: (i) Cause the appointment of the Investor Board Designee to 
a committee of the Board reasonably agreed by Investor AB and NASDAQ 
OMX and (ii) cause the appointment of one person designated by Investor 
AB who shall not be an Investor Board Designee and who shall be 
reasonably acceptable to the

[[Page 7237]]

Nominating Committee to a committee of the Board reasonably agreed to 
by Investor AB and NASDAQ OMX (``Additional Committee Designee'') in 
each of the foregoing subject to applicable law, regulation, stock 
exchange listing standard, or committee composition standards. The 
provisions relating to the Investor Board Designee and committee 
membership remain in effect as long as Investor AB beneficially owns at 
least 5% of the outstanding capital stock of NASDAQ OMX.
    The Investor Stockholders' Agreement relates solely to the Board of 
NASDAQ OMX and not to the boards of any of its subsidiaries including 
the Board of Directors of SCCP and BSECC. Nevertheless, the provisions 
of the Investor 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 
affecting the influence that a significant stockholder of the parent 
corporation might be seen as exercising over the business and affairs 
of the SRO in its capacity as a wholly owned subsidiary of the parent 
corporation. Accordingly, senior management of The NASDAQ Stock Market 
LLC (``Exchange''), NASDAQ OMX PHLX LLC (``PHLX'') and NASDAQ OMX BX, 
Inc. (``BX''), through delegated authority of their governing boards, 
have determined that the proposed change should be filed with the 
Commission, and the governing boards of SCCP and BSECC have each 
reviewed the proposed change and determined that it should be filed 
with the Commission.\5\
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    \5\ The Exchange, PHLX, BX, BSECC and 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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    In general, directors of NASDAQ OMX, including the Investor Board 
Designee, must be nominated by a Nominating Committee,\6\ the 
composition of which is subject to the requirements of the NASDAQ OMX 
By-Laws and Exchange Rule 5605(e),\7\ and must then be elected by the 
stockholders of NASDAQ OMX. The NASDAQ OMX Board is currently composed 
of 15 members and is expected to increase to 16 members upon the 
closing of the Transaction. Thus, the Investor Board Designee would 
represent approximately 6% of the NASDAQ OMX Board.
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    \6\ An exception to the requirement of nomination by the 
Nominating Committee exists for nominations by a stockholder who is 
conducting a proxy contest and who complies with the strict 
requirements of the NASDAQ OMX By-Laws governing direct stockholder 
nomination. The Investor Board Designee would not be nominated by 
Investor AB under these provisions.
    \7\ The NASDAQ OMX By-Laws provide that the Nominating Committee 
shall be appointed annually by the Board of Directors and shall 
consist of four or five directors, each of whom shall be an 
independent director within the meaning of the rules of the 
Exchange. The number of Non-Industry Directors (i.e, directors 
without material ties to the securities industry) on the Nominating 
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 OMX or its affiliates, or FINRA). Exchange 
Rule 5605(e), which governs NASDAQ OMX as a company whose securities 
are listed on the Exchange, requires Nominating Committee members to 
satisfy the definition of ``independence'' in Exchange Rule 5605 and 
IM-5605 and to otherwise be deemed independent by the Board of 
Directors.
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    Board committees are subject to compositional requirements 
established by the NASDAQ OMX By-Laws; moreover, the Audit, Management 
Compensation, and Nominating Committees are subject to independence 
requirements established by Exchange Rule 5605 and in the case of the 
Audit Committee by SEC Section 10A and Rule 10A-3 of the Act.\8\ Thus, 
the affiliations of the Investor Board Designee and Additional 
Committee Designee and the judgment of the NASDAQ OMX Board of 
Directors with regard to his or her independence will be taken into 
account in considering eligibility for service on these committees.
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    \8\ 17 CFR 240.10A-3.
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2. Statutory Basis
    SCCP and BSECC believe that the proposed rule change is consistent 
with the provisions of Section 17A of the Act,\9\ in general, and with 
Section 17A(b)(3)(A) of the Act,\10\ in particular, in that they are 
designed to ensure that SCCP and BSECC are so organized and have the 
capacity to be able to facilitate the prompt and accurate clearance and 
settlement of securities transactions. SCCP and BSECC believe that the 
proposed rule changes will result in no substantive change to the 
corporate ownership structure of its parent NASDAQ OMX.
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    \9\ 15 U.S.C. 78q-1.
    \10\ 15 U.S.C. 78q-1(b)(3)(A).
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B. Self-Regulatory Organizations' Statement on Burden on Competition

    SCCP and BSECC do not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organizations' Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    SCCP and BSECC have not solicited or received written comments 
relating to the proposed rule change. SCCP and BSECC will notify the 
Commission of any written comments it receives.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule changes do 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 dates on which they were filed, 
or such shorter time as the Commission may designate, they have become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) may not become 
operative prior to 30 days after the date of filing unless the 
Commission designates a shorter time if such action is consistent with 
the protection of investors and the public interest.\13\ SCCP and BSECC 
have requested that the Commission waive the 30-day operative delay set 
forth in Rule 19b-4(f)(6)(iii) under the Act \14\ to ensure that the 
filing is effective and therefore does not delay the closing of the 
Transaction. The parties to the Transaction expect all regulatory 
actions necessary for the closing of the Transaction to be completed as 
early as January 2011. The Commission believes that the earlier 
operative date is consistent with the protection of investors and the 
public interest. Accordingly, the Commission designates the proposal to 
be operative upon filing with the Commission.\15\
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    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires that a SRO submit to the Commission written notice of its 
intent to file the proposed rule change, along with a brief 
description and text of 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 
Commission notes that SCCP and BSECC have satisfied the five-day 
pre-filing notice requirement.
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rules' 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the respective proposed 
rule change by SCCP and BSECC, 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.

[[Page 7238]]

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing including whether the proposed rule 
changes are 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 e-mail to [email protected]. Please include 
File No. SR-SCCP-2011-001 or SR-BSECC-2011-001 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 No. SR-SCCP-2011-001 or SR-BSECC-
2011-001. Either of these file numbers should be included on the 
subject line if e-mail 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 inspection and copying 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 offices of SCCP and BSECC's (http://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings/) and SCCP's Web 
sites (http://nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/Filings/). 
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 Nos. SR-SCCP-2011-001 or 
SR-BSECC-2011-001, and should be submitted on or before March 2, 2011.

    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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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-2795 Filed 2-8-11; 8:45 am]
BILLING CODE 8011-01-P