[Federal Register Volume 87, Number 99 (Monday, May 23, 2022)]
[Notices]
[Pages 31290-31292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10957]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94935; File No. SR-GEMX-2022-07]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the Nasdaq 
Amended and Restated Certificate of Incorporation

May 17, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on May 6, 2022, Nasdaq GEMX, LLC (``GEMX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule

[[Page 31291]]

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.
---------------------------------------------------------------------------

    \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 the Amended and Restated Certificate 
of Incorporation (``Certificate'') of its parent corporation, Nasdaq, 
Inc. (``Nasdaq'' or the ``Company''), to increase Nasdaq's authorized 
share capital.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/gemx/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
    The purpose of the proposed rule change is to amend the Nasdaq 
Certificate \3\ to increase the total number of authorized shares of 
Nasdaq common stock, par value $0.01 per share (``Common Stock''). 
Specifically, the Exchange proposes to amend Article Fourth, Section A 
such that the total number of shares of Stock (i.e., capital stock) 
that Nasdaq is authorized to issue would be increased from 330,000,000 
to 930,000,000 shares, and the portion of that total constituting 
Common Stock would be changed from 300,000,000 to 900,000,000 shares. 
As amended, Article Fourth, Section A of the Certificate would provide:
---------------------------------------------------------------------------

    \3\ Nasdaq owns 100% of the equity interest in U.S. Exchange 
Holdings, Inc., which in turn owns 100% of the equity interest in 
International Securities Exchange Holdings, Inc., which in turn owns 
100% of the equity interest in the Exchange. The Exchange's 
affiliates, Boston Stock Exchange Clearing Corporation, Nasdaq BX, 
Inc., Nasdaq MRX, LLC, Nasdaq ISE, LLC, The Nasdaq Stock Market LLC, 
Nasdaq PHLX LLC, and Stock Clearing Corporation of Philadelphia will 
each concurrently submit substantially the same rule filings to 
propose the changes described herein.

    The total number of shares of Stock which Nasdaq shall have the 
authority to issue is Nine Hundred Thirty Million (930,000,000), 
consisting of Thirty Million (30,000,000) shares of Preferred Stock, 
par value $.01 per share (hereinafter referred to as ``Preferred 
Stock''), and Nine Hundred Million (900,000,000) shares of Common 
Stock, par value $.01 per share (hereinafter referred to as ``Common 
Stock'').\4\
---------------------------------------------------------------------------

    \4\ Nasdaq currently has no Preferred Stock outstanding.

    As noted above, the proposed amendments to the Certificate were 
approved by the Nasdaq Board of Directors (``Nasdaq Board'') on March 
23, 2022. The proposed amendments to the Certificate would be effective 
when filed with the Secretary of State of Delaware, which would not 
occur until approval of the amendments by the stockholders of Nasdaq is 
obtained at the 2022 Annual Meeting of the Stockholders on June 22, 
2022 and until this proposed rule change becomes effective and 
operative.
    The trading price of Nasdaq's Common Stock has risen significantly 
over the past several years. Since Nasdaq first became a publicly 
traded company in 2002, the total number of authorized shares of Common 
Stock has remained constant at 300,000,000 shares. However, over the 
last five years, the trading price of Nasdaq's Common Stock has 
increased by approximately 162%.\5\ As the trading price of Nasdaq's 
Common Stock has risen, the Nasdaq Board has carefully evaluated the 
effect of the trading price of the Common Stock on the liquidity and 
marketability of the Common Stock. The Nasdaq Board believes that this 
price appreciation may be affecting the liquidity of the Common Stock, 
making it more difficult to efficiently trade and potentially less 
attractive to certain investors. Accordingly, the Nasdaq Board approved 
pursuing a 3-for-1 stock split by way of a stock dividend, pursuant to 
which the holders of record of shares of Common Stock would receive, by 
way of a dividend, two shares of Common Stock for each share of Common 
Stock held by such holder (the ``Stock Dividend''). The Nasdaq Board's 
approval of the Stock Dividend was contingent upon this proposed rule 
change becoming effective and operative, and Nasdaq stockholder 
approval of the proposed amendments to the Certificate.
---------------------------------------------------------------------------

    \5\ The price of one share of Common Stock on March 31, 2017 was 
$69.45 and the closing market price of one share of Common Stock on 
April 1, 2022 was $181.92 as reported on the Nasdaq Stock Market.
---------------------------------------------------------------------------

    The number of shares of Common Stock proposed to be issued in the 
Stock Dividend exceeds Nasdaq's authorized but unissued shares of 
Common Stock. The proposed rule change would increase Nasdaq's 
authorized shares of Common Stock and shares of capital stock 
sufficient to allow Nasdaq to effectuate the Stock Dividend.
    The proposed changes would not otherwise alter the Certificate, 
including the limitations on voting and ownership set forth in Article 
Fourth, Section C of the Certificate that generally provides 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, 
and facilitates the self-regulatory subsidiaries' and the Commission's 
ability to carry out their regulatory obligations under the Act.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(1) of the Act,\7\ 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 Exchange Act and to comply, and to enforce compliance by its 
members and persons associated with its members, with the provisions of 
the Exchange Act, the rules and regulations thereunder, and the rules 
of the Exchange.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    The proposal to increase Nasdaq's authorized shares of Common Stock 
and shares of capital stock sufficient to allow Nasdaq to effectuate 
the Stock Dividend 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 Exchange Act. In particular, the proposed changes would not 
alter the limitations on voting and ownership set forth in Article 
Fourth, Section C of the Certificate, 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.

[[Page 31292]]

    The Exchange also believes that the proposal is consistent with 
Section 6(b)(5) of the Act \8\ because it would not impact the 
Exchange's governance or regulatory structure, which would continue to 
be 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change would 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, because by increasing Nasdaq's authorized shares of 
Common Stock and shares of capital stock sufficient to allow Nasdaq to 
effectuate the Stock Dividend, the proposed rule change will facilitate 
broader ownership of Nasdaq.
    The Exchange also notes that the proposed rule change is 
substantially similar to a prior proposal by Intercontinental Exchange, 
Inc. (``ICE''), which is the holding company for three national 
securities exchanges, including the New York Stock Exchange. The ICE 
proposal amended ICE's Certificate of Incorporation to effectuate a 
similar stock split as proposed by the Exchange herein.\9\ As such, the 
Exchange does not believe that its proposal raises any new or novel 
issues not already considered by the Commission.
---------------------------------------------------------------------------

    \9\ In particular, the ICE proposal increased ICE's total number 
of authorized shares of ICE common stock in order to effectuate a 5-
for-1 stock split by way of a stock dividend. See Securities 
Exchange Act Release No. 78992 (September 29, 2016), 81 FR 69092 
(October 5, 2016) (SR-NYSE-2016-57, SR-NYSEArca-2016-119, and SR-
NYSEMKT-2016-80) (hereinafter, ``ICE Approval'').
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Because the proposed rule change relates solely to the number of 
authorized shares of Common Stock and shares of capital stock of the 
Company 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) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give 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 Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-GEMX-2022-07 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-GEMX-2022-07. 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 (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 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 10:00 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-GEMX-2022-07 and should be submitted on 
or before June 13, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-10957 Filed 5-20-22; 8:45 am]
BILLING CODE 8011-01-P


