
[Federal Register Volume 77, Number 139 (Thursday, July 19, 2012)]
[Notices]
[Pages 42524-42525]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17548]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67434; File No. SR-Phlx-2012-95]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing of Proposed Rule Change With Respect to the Amendment of the By-
Laws of its Parent Corporation, The NASDAQ OMX Group, Inc. (``NASDAQ 
OMX'') July 13, 2012.

    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 11, 2012, NASDAQ OMX PHLX LLC (``Phlx'' or the ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items 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.
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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 proposes a rule change with respect to the amendment 
of the by-laws of its parent corporation, The NASDAQ OMX Group, Inc. 
(``NASDAQ OMX''). The text of the proposed rule change is available at 
the Exchange's Web site, at the Exchange's principal office, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

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

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

1. Purpose
    NASDAQ OMX is proposing amendments to provisions of its by-laws 
pertaining to the composition of the Management Compensation Committee 
of the NASDAQ OMX Board of Directors. Specifically, NASDAQ OMX is 
amending the compositional requirements of its Management Compensation 
Committee in Section 4.13 to replace a requirement that the committee 
be composed of a majority of Non-Industry Directors\3\ with a 
requirement that the number of Non-Industry Directors on the committee 
equal or exceed the number of Industry Directors. Thus, in the case of 
a committee composed of four Directors, the current by-law provides 
that only one Director may be an Industry Director, while the amended 
by-law would allow up to two Directors to be Industry Directors. The 
proposed compositional requirement for the committee with regard to the 
balance between Industry Directors and Non-Industry Directors would be 
the same as that already provided for in the by-laws with respect to 
the Executive Committee and the Nominating and Governance Committee, as 
well as the full Board of Directors.
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    \3\ An ``Industry Director'' means a Director (excluding any two 
officers of NASDAQ OMX, selected at the sole discretion of the 
Board, amongst those officers who may be serving as Directors (the 
``Staff Directors'')) who (1) 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; (2) 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; (3) 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; 
(4) provides professional services to brokers or dealers, and such 
services constitute 20 percent or more of the professional revenues 
received by the Director or 20 percent or more of the gross revenues 
received by the Director's firm or partnership; (5) provides 
professional services to a director, officer, or employee of a 
broker, dealer, or corporation that owns 50 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 20 percent or more of the professional revenues received 
by the Director or 20 percent or more of the gross revenues received 
by the Director's firm or partnership; or (6) has a consulting or 
employment relationship with or provides professional services to 
NASDAQ OMX or any affiliate thereof or to the Financial Industry 
Regulatory Authority (``FINRA'') or has had any such relationship or 
provided any such services at any time within the prior three years.
    A ``Non-Industry Director'' means a Director (excluding the 
Staff Directors) who is (1) A Public Director; (2) an officer, 
director, or employee of an issuer of securities listed on a 
national securities exchange operated by any subsidiary of NASDAQ 
OMX that is a self-regulatory organization; or (3) any other 
individual who would not be an Industry Director.
    A ``Public Director'' means a Director who has no material 
business relationship with a broker or dealer, NASDAQ OMX or its 
affiliates, or FINRA.
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    NASDAQ OMX and the Exchange believe that the change will provide 
greater flexibility to NASDAQ OMX with regard to populating a committee 
that includes Directors with relevant expertise and that is not 
excessively large in relation to the size of the full Board of 
Directors, while continuing to ensure that Directors associated with 
Exchange members and other broker-dealers do not exert disproportionate 
influence of the governance of NASDAQ OMX. As required by NASDAQ Stock 
Market Rule 5605(d), the committee would continue at all times to be 
composed solely of Directors who are independent within the meaning of 
that rule.
2. Statutory Basis
    Phlx 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 Phlx 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 Phlx 
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.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(1), (5).
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    Phlx believes that the change will provide greater flexibility to 
NASDAQ OMX with regard to populating a committee that includes 
Directors with relevant expertise and that is not excessively large in 
relation to the size of the full Board of Directors, while continuing 
to ensure that Directors associated with Exchange members and other 
broker-dealers do not exert disproportionate influence of the 
governance of NASDAQ OMX.

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

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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

    Written comments were neither solicited nor 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2012-95 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-Phlx-2012-95. 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 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2012-95 and should be 
submitted on or before August 9, 2012.
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    \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. 2012-17548 Filed 7-18-12; 8:45 am]
BILLING CODE 8011-01-P


