81 FR 841 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 2 Thereto, To Amend the By-Laws of Nasdaq, Inc.
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 4 (January 7, 2016)
Federal Register Volume 81, Issue 4 (January 7, 2016)
| Page Range | 841-844 | |
| FR Document | 2015-33309 |
[Federal Register Volume 81, Number 4 (Thursday, January 7, 2016)] [Notices] [Pages 841-844] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-33309] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76810; File No. SR-Phlx-2015-113] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 2 Thereto, To Amend the By-Laws of Nasdaq, Inc. December 31, 2015. 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 December 21, 2015, NASDAQ OMX PHLX LLC (``Phlx'' or ``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. On December 29, 2015, the Exchange filed Amendment No. 1 to the proposal.\3\ On December 30, 2015, the Exchange filed Amendment No. 2 to the proposal.\4\ The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 2, from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ On December 30, 2015, the Exchange withdrew Amendment No. 1. \4\ Amendment No. 2 amends and replaces the original filing in its entirety. In Amendment No. 2, the Exchange, among other things, clarified the operation of the current and proposed provisions of the By-Laws of Nasdaq, Inc. and how the proposed rule change would operate in conjunction with the Listing Rules of The NASDAQ Stock Market. See infra, note 7. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing this proposed rule change with respect to amendments of the By-Laws (the ``By-Laws'') of its parent corporation, Nasdaq, Inc. (``Nasdaq'' or the ``Company''), to revise the requirements regarding Director classifications. This Amendment No. 2 to SR-Phlx-2015-113 amends and replaces the original filing in its entirety.\5\ The proposed amendments will be implemented on a date designated by the Company following approval by the Commission. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqomxphlx.cchwallstreet.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. --------------------------------------------------------------------------- \5\ Amendment No. 1 to SR-Phlx-2015-113 was filed on December 29, 2015 and subsequently withdrawn on December 30, 2015. --------------------------------------------------------------------------- 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 Company is proposing amendments to certain provisions of its By-Laws that relate to Director \6\ classifications.\7\ Specifically, the Company proposes to revise Section 4.3 of the By-Laws to state that it may, rather than shall, include at least one, but no more than two, Issuer Directors on its Board. In addition, the Company proposes to revise Section 4.7 of the By-Laws to clarify the procedures when a Director's classification changes between annual meetings of stockholders. --------------------------------------------------------------------------- \6\ ``Director'' means a member of the Company's Board of Directors. See Article I(j) of the By-Laws. \7\ The provisions of the Company's By-Laws that relate to Director classifications are completely distinct from the Listing Rules of The NASDAQ Stock Market. Therefore, the proposed amendments do not affect in any way the Company's obligation, as an issuer listed on The NASDAQ Stock Market, to comply with the Listing Rules, and the Company will continue to comply with the Listing Rules, including provisions relating to corporate governance, following the effectiveness of the proposed By-Law amendments. --------------------------------------------------------------------------- i. Section 4.3 Currently, the Company's By-Laws require that all of the Company's Directors be classified as: (i) Industry [[Page 842]] Directors; \8\ (ii) Non-Industry Directors,\9\ which are further classified as either Issuer Directors \10\ or Public Directors; \11\ or (iii) Staff Directors.\12\ Section 4.3 of the By-Laws includes composition requirements for the Board based on these classifications. Specifically, the number of Non-Industry Directors on the Board must equal or exceed the number of Industry Directors. In addition, the Board must include at least two Public Directors and at least one, but no more than two, Issuer Directors. Finally, the Board shall include no more than one Staff Director, unless the Board consists of ten or more Directors, in which case, the Board shall include no more than two Staff Directors. --------------------------------------------------------------------------- \8\ ``Industry Director'' or ``Industry committee member'' means a Director (excluding any Staff Directors) or committee member who (1) is, or within the last year was, or has an immediate family member who is, or within the last year was, a member of a Self- Regulatory Subsidiary; (2) is, or within the last year was, employed by a member or a member organization of a Self-Regulatory Subsidiary; (3) has an immediate family member who is, or within the last year was, an executive officer of a member or a member organization of a Self-Regulatory Subsidiary; (4) has within the last year received from any member or member organization of a Self- Regulatory Subsidiary more than $100,000 per year in direct compensation, or received from such members or member organizations in the aggregate an amount of direct compensation that in any one year is more than 10 percent of the Director's annual gross compensation for such year, excluding in each case director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); or (5) is affiliated, directly or indirectly, with a member or member organization of a Self- Regulatory Subsidiary. See Article I(m) of the By-Laws. A ``Self- Regulatory Subsidiary'' is any subsidiary of the Company that is a self-regulatory organization as defined under Section 3(a)(26) of the Act. See Article I(s) of the By-Laws. Currently, the term ``Self-Regulatory Subsidiary'' encompasses NASDAQ OMX BX, Inc. (``BX''), The NASDAQ Stock Market LLC (``NASDAQ''), the Exchange, Boston Stock Exchange Clearing Corporation (``BSECC'') and the Stock Clearing Corporation of Philadelphia (``SCCP''). \9\ ``Non-Industry Director'' or ``Non-Industry committee member'' means a Director (excluding any Staff Director) or committee member who is (1) a Public Director or Public committee member; (2) an Issuer Director or Issuer committee member; or (3) any other individual who would not be an Industry Director or Industry committee member. See Article I(q) of the By-Laws. \10\ ``Issuer Director'' or ``Issuer committee member'' means a Director (excluding any Staff Director) or committee member who is an officer or employee of an issuer of securities listed on a national securities exchange operated by any Self-Regulatory Subsidiary, excluding any Director or committee member who is a director of such an issuer but is not also an officer or employee of such an issuer. See Article I(o) of the By-Laws. \11\ ``Public Director'' or ``Public committee member'' means a Director or committee member who (1) is not an Industry Director or Industry committee member, (2) is not an Issuer Director or Issuer committee member, and (3) has no material business relationship with a member or member organization of a Self-Regulatory Subsidiary, the Company or its affiliates, or the Financial Industry Regulatory Authority, Inc. and its affiliates. See Article I(r) of the By-Laws. \12\ ``Staff Director'' means an officer of the Company that is serving as a Director. See Article I(t) of the By-Laws. --------------------------------------------------------------------------- The Company proposes to amend Section 4.3 of the By-Laws to state that the Board may, rather than shall, include one, but no more than two, Issuer Directors. With this change, the Company intends to give itself the option, but not the requirement, to include one or two Issuer Directors on its Board. Issuer Directors bring to the Board the perspective of an officer or employee of companies listed on The NASDAQ Stock Market. While the Company highly values the views of its listed companies, it does not believe that it is strictly necessary to have an Issuer Director on its own Board to represent those views. Within the overall governance structure of the Company and its subsidiaries, issues relating to listed companies are generally the province of NASDAQ and its Board of Directors, rather than the Company and its Board of Directors. The Company is a holding company for over 100 subsidiaries that provide both regulated and unregulated products and services across the globe, while NASDAQ is the Company subsidiary that, among other things, provides listing services on The NASDAQ Stock Market. The Company's Board generally focuses on the overall strategic direction of the Company, while NASDAQ's Board generally focuses on issues relevant specifically to The NASDAQ Stock Market, including issues affecting listed companies. Furthermore, NASDAQ's Board includes issuer representation, as required by its By-Laws.\13\ Finally, if the Company's Board ever does address issues relating to listed companies, its Directors are experienced and capable enough to handle those issues without specifically having an Issuer Director on the Board.\14\ --------------------------------------------------------------------------- \13\ See Article III, Section 2 of NASDAQ's By-Laws. \14\ Currently, three of the Company's eleven Directors are also directors of companies listed on The NASDAQ Stock Market or another national securities exchange. These Directors do not qualify as Issuer Directors because they are not specifically officers or employees of listed companies; however, as directors of such companies, they are familiar with corporate governance topics and other issues confronted by listed companies. --------------------------------------------------------------------------- Therefore, it is not strictly necessary to have an officer or employee of a listed company on the Company's Board of Directors, and accordingly, the Company proposes to amend its By-Laws to give itself the option, but not the requirement, to include an Issuer Director on its Board. ii. Section 4.7 As required by Section 4.13(h)(iii) of the By-Laws, the Company's Corporate Secretary certifies to the Nominating & Governance Committee of the Company's Board on an annual basis the classification of each Director following a review of information relating to the classifications collected from the Directors. This certification usually occurs in connection with the Company's annual meeting of stockholders, and at the same time, Directors are elected to serve on various Board committees, all of which have compositional requirements relating to the classifications.\15\ However, Directors' classifications may change from time to time following the annual meeting due to various changes in personal circumstances (e.g., a retirement or job change). Directors are required to report to the Corporate Secretary any change in the information used as the basis of their classification.\16\ --------------------------------------------------------------------------- \15\ See Section 4.13 of the By-Laws. \16\ See Section 4.13(h)(iii) of the By-Laws. --------------------------------------------------------------------------- Section 4.7 of the By-Laws addresses potential disqualifications of Directors due to a classification change. Under this section, the term of office of a Director shall terminate immediately upon a determination by the Board, by a majority vote of the remaining Directors, that: (a) The Director no longer satisfies the classification for which the Director was elected; and (b) the Director's continued service would violate the Board compositional requirements. Section 4.7 also states that if a Director position becomes vacant because of such disqualification, and the remaining term of office is not more than six months, the By-Laws do not require an immediate replacement. The Company has observed two potential weaknesses relating to the disqualification procedures as currently drafted. First, Section 4.7 of the By-Laws does not address a situation where a Director's classification has changed, but the Board believes that it is in the best interests of the Company and its stockholders for such Director to remain on the Board. Second, the By-Laws could be read to contemplate that the Company must immediately cure any deficiencies in Board or committee composition that may occur because of a change in a Director or committee member's classification because otherwise the Board would not meet all of the compositional requirements set forth in Section 4.3 of the By-Laws.\17\ It [[Page 843]] would be extremely disruptive to the Board, its committees and the Company to add, remove, disqualify or replace a Director between annual meetings of stockholders simply because the Director no longer has the same classification he or she had at the time of the annual meeting. In addition, the selection of nominees to the Company's Board is an extremely complex process, managed by the Board's Nominating & Governance Committee, that takes almost the full year between annual meetings of stockholders. The Nominating & Governance Committee considers possible candidates suggested by Board members, industry groups, stockholders, senior management and/or a third-party search firm engaged from time-to-time to assist in identifying and evaluating qualified candidates. In evaluating candidates for nomination to the Board, the Nominating & Governance Committee reviews the skills, qualifications, characteristics and experience desired for the Board as a whole and for its individual members, with the objective of having a Board that reflects diverse backgrounds and senior level experience in the areas of global business, finance, legal and regulatory, technology and marketing. The Nominating & Governance Committee evaluates each individual candidate in the context of the Board as a whole, with the objective of maintaining a group of Directors that can further the success of Nasdaq's business, while representing the interests of stockholders, employees and the communities in which the company operates. Because the nominee selection process is so long and complex, the Board cannot act quickly to replace a Director whose classification has changed, and it is not in the best interests of the Company's stockholders for the Board to be forced to take such an action when the Director otherwise provides valuable service to the Board. --------------------------------------------------------------------------- \17\ But see Kurz v. Holbrook, 989 A.2d 140, 156-57 (Del.Ch. 2010) (holding that a by-law cannot disqualify a director who was duly qualified at the time of election during the middle of his or her term), rev'd on other grounds sub nom Crown EMAK P'ners, LLC v. Kurz, 992 A.2d 377 (Del. 2010); see also Klaassen v. Allegro Development Corp., 2013 WL 5739680, at *23 (Del. Ch. Oct. 11, 2013) (noting that director qualifications are applied at the front-end of the director's term when such director is elected and qualified), aff'd 106 A.3d 1035 (Del. 2014). --------------------------------------------------------------------------- The Company therefore proposes to amend Section 4.7 of the By-Laws to provide that the Board may elect to defer until the next annual meeting of stockholders a determination regarding a change in a Director's classification and such Director's continued service on the Board.\18\ Further, if the Board makes such an election, neither the Board nor any committee shall be deemed to be in violation of Section 4.3 of the By-Laws, which relates to Board composition, or Section 4.13 of the By-Laws, which relates to committee composition. This will give the Board the option to retain Directors whose classification has changed, but whose continued service is otherwise beneficial to the Board, the Company and its stockholders. This also will prevent the significant disruption that would occur if the Board had to replace a Director between annual meetings of stockholders and allow the Board to continue to make informed, deliberate decisions regarding Director nominees, rather than force it to act quickly in a way that is not in the best interest of the Company's stockholders. --------------------------------------------------------------------------- \18\ The intent of the amendment is to allow the Board a deferral until the next annual meeting when it can nominate a slate of directors with classifications sufficient to satisfy the requirements of Section 4.3 of the By-Laws for election by the Company's stockholders. Assuming due election of the Board's nominees, the Board therefore will comply with Section 4.3 of the By-Laws immediately after the next annual meeting. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\19\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\20\ in particular, in that it is designed to promote just and equitable principles of trade, 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. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78f(b). \20\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- First, the Company is proposing an amendment to Section 4.3 of the By-Laws to state that it may, rather than shall, include at least one, but no more than two, Issuer Directors on its Board. The Exchange believes that this change will protect investors and the public interest by allowing the Company's Nominating & Governance Committee to select nominees for the Company's Board based on the overall strategic needs of the Board, the Company and its stockholders without forcing the Board to fill one slot with an officer or director of a listed company (i.e., an Issuer Director). The Exchange notes that the Company would still have the option to include Issuer Directors on the Board, and the Exchange believes the views of listed companies are well- represented on the Board without the explicit participation of an Issuer Director.\21\ --------------------------------------------------------------------------- \21\ See note 14, supra. --------------------------------------------------------------------------- Second, the Company is proposing an amendment to Section 4.7 of the By-Laws to provide that the Board may elect to defer until the next annual meeting of stockholders a determination regarding a change in a Director's classification and such Director's continued service on the Board. Further, if the Board makes such an election, neither the Board nor any committee shall be deemed to be in violation of Section 4.3 of the By-Laws, which relates to Board composition, or Section 4.13 of the By-Laws, which relates to committee composition. The Exchange believes that this change will protect investors and the public interest by clarifying the disqualification provisions in the Company's By-Laws, which are currently ambiguous. In addition, the change will prevent the significant disruption that would occur if the Board were forced to replace an otherwise valuable director between annual meetings. B. Self-Regulatory Organization's Statement on Burden on Competition Because the proposed rule change relates to the governance 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days of such date (i) as the Commission may designate 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: [[Page 844]] Electronic CommentsUse 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-Phlx-2015-113 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-Phlx-2015-113. 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 such filing also will be available for inspection and copying at the principal offices 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-2015-113, and should be submitted on or before January 28, 2016. --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ Jill M. Peterson, Assistant Secretary. [FR Doc. 2015-33309 Filed 1-6-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 4 / Thursday, January 7, 2016 / Notices 841
IV. Solicitation of Comments the proposed rule change is available on
Jill M. Peterson, the Exchange’s Web site at http://
Interested persons are invited to
submit written data, views, and Assistant Secretary. nasdaqomxphlx.cchwallstreet.com, at
arguments concerning the foregoing, [FR Doc. 2015–33305 Filed 1–6–16; 8:45 am] the principal office of the Exchange, and
including whether the proposed rule BILLING CODE 8011–01–P at the Commission’s Public Reference
change is consistent with the Act. Room.
Comments may be submitted by any of II. Self-Regulatory Organization’s
the following methods: SECURITIES AND EXCHANGE
COMMISSION Statement of the Purpose of, and
Electronic Comments Statutory Basis for, the Proposed Rule
[Release No. 34–76810; File No. SR–Phlx– Change
• Use the Commission’s Internet 2015–113]
comment form (http://www.sec.gov/ In its filing with the Commission, the
rules/sro.shtml); or Self-Regulatory Organizations;
Exchange included statements
• Send an email to rule-comments@ NASDAQ OMX PHLX LLC; Notice of
concerning the purpose of and basis for
sec.gov. Please include File Number SR– Filing of Proposed Rule Change, as
the proposed rule change and discussed
BSECC–2015–002 on the subject line. Modified by Amendment No. 2 Thereto,
To Amend the By-Laws of Nasdaq, Inc. any comments it received on the
Paper Comments proposed rule change. The text of these
December 31, 2015. statements may be examined at the
• Send paper comments in triplicate Pursuant to Section 19(b)(1) of the places specified in Item IV below. The
to Secretary, Securities and Exchange Securities Exchange Act of 1934 Exchange has prepared summaries, set
Commission, 100 F Street NE., (‘‘Act’’),1 and Rule 19b–4 thereunder,2 forth in sections A, B, and C below, of
Washington, DC 20549–1090. notice is hereby given that on December the most significant aspects of such
All submissions should refer to File 21, 2015, NASDAQ OMX PHLX LLC statements.
Number SR–BSECC–2015–002. This file (‘‘Phlx’’ or ‘‘Exchange’’) filed with the
number should be included on the Securities and Exchange Commission A. Self-Regulatory Organization’s
subject line if email is used. To help the (‘‘SEC’’ or ‘‘Commission’’) the proposed Statement of the Purpose of, and
Commission process and review your rule change as described in Items I and Statutory Basis for, the Proposed Rule
comments more efficiently, please use II below, which Items have been Change
only one method. The Commission will prepared by the Exchange. On December
1. Purpose
post all comments on the Commission’s 29, 2015, the Exchange filed
Internet Web site (http://www.sec.gov/ Amendment No. 1 to the proposal.3 On The Company is proposing
rules/sro.shtml). December 30, 2015, the Exchange filed amendments to certain provisions of its
Copies of the submission, all Amendment No. 2 to the proposal.4 The By-Laws that relate to Director 6
subsequent amendments, all written Commission is publishing this notice to classifications.7 Specifically, the
statements with respect to the proposed solicit comments on the proposed rule Company proposes to revise Section 4.3
rule change that are filed with the change, as modified by Amendment No. of the By-Laws to state that it may,
Commission, and all written 2, from interested persons.
rather than shall, include at least one,
communications relating to the I. Self-Regulatory Organization’s but no more than two, Issuer Directors
proposed rule change between the Statement of the Terms of Substance of on its Board. In addition, the Company
Commission and any person, other than the Proposed Rule Change proposes to revise Section 4.7 of the By-
those that may be withheld from the
The Exchange is filing this proposed Laws to clarify the procedures when a
public in accordance with the
provisions of 5 U.S.C. 552, will be rule change with respect to amendments Director’s classification changes
available for Web site viewing and of the By-Laws (the ‘‘By-Laws’’) of its between annual meetings of
printing in the Commission’s Public parent corporation, Nasdaq, Inc. stockholders.
Reference Room, 100 F Street NE., (‘‘Nasdaq’’ or the ‘‘Company’’), to revise
i. Section 4.3
Washington, DC 20549 on official the requirements regarding Director
business days between the hours of classifications. This Amendment No. 2 Currently, the Company’s By-Laws
10:00 a.m. and 3:00 p.m. Copies of such to SR–Phlx–2015–113 amends and require that all of the Company’s
filing also will be available for replaces the original filing in its Directors be classified as: (i) Industry
inspection and copying at the principal entirety.5 The proposed amendments
offices of BSECC. All comments will be implemented on a date
received will be posted without change; designated by the Company following
the Commission does not edit personal approval by the Commission. The text of
identifying information from
1 15 U.S.C. 78s(b)(1).
submissions. You should submit only 2 17 CFR 240.19b–4. 6 ‘‘Director’’ means a member of the Company’s
information that you wish to make 3 On December 30, 2015, the Exchange withdrew Board of Directors. See Article I(j) of the By-Laws.
available publicly. Amendment No. 1. 7 The provisions of the Company’s By-Laws that
All submissions should refer to File 4 Amendment No. 2 amends and replaces the
relate to Director classifications are completely
Number SR–BSECC–2015–002, and original filing in its entirety. In Amendment No. 2, distinct from the Listing Rules of The NASDAQ
rmajette on DSK2TPTVN1PROD with NOTICES
should be submitted on or before the Exchange, among other things, clarified the Stock Market. Therefore, the proposed amendments
operation of the current and proposed provisions of
January 28, 2016. the By-Laws of Nasdaq, Inc. and how the proposed
do not affect in any way the Company’s obligation,
rule change would operate in conjunction with the as an issuer listed on The NASDAQ Stock Market,
For the Commission, by the Division of to comply with the Listing Rules, and the Company
Trading and Markets, pursuant to delegated Listing Rules of The NASDAQ Stock Market. See
infra, note 7. will continue to comply with the Listing Rules,
authority.19 5 Amendment No. 1 to SR–Phlx–2015–113 was including provisions relating to corporate
filed on December 29, 2015 and subsequently governance, following the effectiveness of the
19 17 CFR 200.30–3(a)(12). withdrawn on December 30, 2015. proposed By-Law amendments.
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![844 Federal Register / Vol. 81, No. 4 / Thursday, January 7, 2016 / Notices
Electronic Comments SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
COMMISSION Statement of the Purpose of, and
• Use the Commission’s Internet Statutory Basis for, the Proposed Rule
comment form (http://www.sec.gov/ [Release No. 34–76813; File No. SR–FINRA–
Change
rules/sro.shtml); or 2015–059]
1. Purpose
• Send an email to rule-comments@ Self-Regulatory Organizations;
sec.gov. Please include File Number SR– Financial Industry Regulatory FINRA Rule 4524 requires each firm,
Phlx–2015–113 on the subject line. Authority, Inc.; Notice of Filing of a as FINRA shall designate, to file such
additional financial or operational
Proposed Rule Change To Amend the
Paper Comments schedules or reports as FINRA may
Derivatives and Other Off-Balance
deem necessary or appropriate for the
• Send paper comments in triplicate Sheet Items Schedule Pursuant to
protection of investors or in the public
to Secretary, Securities and Exchange FINRA Rule 4524 (Supplemental
interest as a supplement to the FOCUS
Commission, 100 F Street NE., FOCUS Information)
Report.3 In February 2013, the SEC
Washington, DC 20549–1090. December 31, 2015. approved FINRA’s adoption, pursuant
Pursuant to Section 19(b)(1) of the to FINRA Rule 4524, of the OBS as a
All submissions should refer to File
Securities Exchange Act of 1934 (‘‘Act’’ supplement to the FOCUS report.4 The
Number SR–Phlx–2015–113. This file
or ‘‘SEA’’) 1 and Rule 19b–4 OBS captures important information
number should be included on the that is not otherwise reported on firms’
thereunder,2 notice is hereby given that
subject line if email is used. To help the balance sheets and requires all firms
on December 23, 2015, Financial
Commission process and review your that carry customer accounts or self-
Industry Regulatory Authority, Inc.
comments more efficiently, please use clear or clear transactions for others
(‘‘FINRA’’) filed with the Securities and
only one method. The Commission will Exchange Commission (‘‘SEC’’ or (referred to, collectively, as ‘‘carrying or
post all comments on the Commission’s ‘‘Commission’’) the proposed rule clearing firms’’) to file with FINRA the
Internet Web site (http://www.sec.gov/ change as described in Items I and II OBS within 22 business days of the end
rules/sro.shtml). Copies of the below, which items have been of each calendar quarter, unless a
submission, all subsequent substantially prepared by FINRA. The carrying or clearing firm meets the de
amendments, all written statements Commission is publishing this notice to minimis exception set forth in the
with respect to the proposed rule solicit comments on the proposed rule instructions to the OBS.5
change that are filed with the change from interested persons. Pursuant to FINRA Rule 4524, the
Commission, and all written proposed rule change would amend the
communications relating to the I. Self-Regulatory Organization’s instructions to the OBS to expand its
Statement of the Terms of Substance of application beyond carrying or clearing
proposed rule change between the
the Proposed Rule Change firms to include firms that neither carry
Commission and any person, other than
those that may be withheld from the FINRA is proposing to amend the customer accounts nor clear
instructions to the Derivatives and transactions (referred to, collectively, as
public in accordance with the
Other Off-Balance Sheet Items Schedule ‘‘non-clearing firms’’) that have,
provisions of 5 U.S.C. 552, will be pursuant to SEA Rule 15c3–1,6 a
available for Web site viewing and (‘‘OBS’’) pursuant to FINRA Rule 4524
printing in the Commission’s Public (Supplemental FOCUS Information) to
3 See Securities Exchange Act Release No. 66364
expand the application of the OBS to
Reference Room, 100 F Street NE., (February 9, 2012), 77 FR 8938 (February 15, 2012)
certain non-carrying/non-clearing firms (Order Approving File No. SR–FINRA–2011–064).
Washington, DC 20549 on official
that have significant amounts of off- FINRA Rule 4524 also provides that FINRA will
business days between the hours of
balance sheet obligations. The proposed specify the content of additional schedules or
10:00 a.m. and 3:00 p.m. Copies of such rule change does not propose reports, their format, and the timing and the
filing also will be available for frequency of such supplemental filings in a
amendments to existing rule text. Regulatory Notice (or similar communication), the
inspection and copying at the principal The text of the proposed rule change content of which FINRA will file with the
offices of the Exchange. All comments is available on FINRA’s Web site at Commission pursuant to Section 19(b) of the Act.
received will be posted without change; http://www.finra.org, at the principal 4 See Securities Exchange Act Release No. 68832
the Commission does not edit personal (February 5, 2013), 78 FR 9754 (February 11, 2013)
office of FINRA and at the (Order Approving File No. SR–FINRA–2012–050).
identifying information from Commission’s Public Reference Room. Carrying or clearing firms were required to file with
submissions. You should submit only FINRA their initial OBS on or before July 31, 2013,
II. Self-Regulatory Organization’s to disclose off-balance sheet information as of June
information that you wish to make
Statement of the Purpose of, and 30, 2013. See Regulatory Notice 13–10 (March 2013)
available publicly. All submissions (Supplemental FOCUS Information).
Statutory Basis for, the Proposed Rule
should refer to File Number SR–Phlx– Change
5 The de minimis exception relieves a carrying or
2015–113, and should besubmitted on clearing firm from filing the OBS for the reporting
or before January 28, 2016. In its filing with the Commission, period if the aggregate of all gross amounts of off-
FINRA included statements concerning balance sheet items is less than 10 percent of the
For the Commission, by the Division of firm’s excess net capital on the last day of the
the purpose of and basis for the reporting period. For purposes of the OBS, as well
Trading and Markets, pursuant to delegated proposed rule change and discussed any as the proposed amendments to the OBS, the term
authority.22 comments it received on the proposed ‘‘excess net capital’’ means net capital reduced by
Jill M. Peterson, rule change. The text of these statements the greater of the minimum dollar net capital
requirement or two percent of combined aggregate
Assistant Secretary. may be examined at the places specified
rmajette on DSK2TPTVN1PROD with NOTICES
debit items as shown in the Formula for Reserve
[FR Doc. 2015–33309 Filed 1–6–16; 8:45 am] in Item IV below. FINRA has prepared Requirements pursuant to SEA Rule 15c3–3. See
BILLING CODE 8011–01–P summaries, set forth in sections IIA, IIB, Securities Exchange Act Release No. 68832
and IIC below, of the most significant (February 5, 2013), 78 FR 9754, 9755 (February 11,
2013) (Order Approving File No. SR–FINRA–2012–
aspects of such statements. 050).
6 See 17 CFR 240.15c3–1 (Net Capital
1 15 U.S.C. 78s(b)(1). Requirements for Brokers or Dealers). SEA Rule
22 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. 15c3–1(a)(2)(iii) requires a ‘‘dealer’’ (as defined in
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Document Created: 2016-01-07 00:13:15
Document Modified: 2016-01-07 00:13:15
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 841 |
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