
[Federal Register Volume 88, Number 155 (Monday, August 14, 2023)]
[Notices]
[Pages 55086-55088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17301]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98085; File No. SR-NASDAQ-2023-027]


Self-Regulatory Organizations; The Nasdaq Stock Market 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, The Nasdaq Stock Market LLC (the ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
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/nasdaq/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

[[Page 55087]]

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 ISE, LLC (``ISE''), Nasdaq MRX, LLC (``MRX''), 
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 Exchange 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 the Exchange. 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). Exchange Rule 5605, which governs Nasdaq as a 
company whose securities are listed on the Exchange, requires 
Nominating & Governance Committee members to satisfy the definition 
of ``independence'' in Exchange 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 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 Exchange 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

[[Page 55088]]

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 or its 
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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NASDAQ-2023-027 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-NASDAQ-2023-027. 
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.
    All submissions should refer to file number SR-NASDAQ-2023-027 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. 2023-17301 Filed 8-11-23; 8:45 am]
BILLING CODE 8011-01-P


