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Notice2022-11786

Self-Regulatory Organizations; Boston Stock Exchange Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Nasdaq Amended and Restated Certificate of Incorporation

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Published
June 2, 2022

Issuing agencies

Securities and Exchange Commission

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<title>Federal Register, Volume 87 Issue 106 (Thursday, June 2, 2022)</title>
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[Federal Register Volume 87, Number 106 (Thursday, June 2, 2022)]
[Notices]
[Pages 33566-33567]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-11786]



[[Page 33566]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94990; File No. SR-BSECC-2022-001]


Self-Regulatory Organizations; Boston Stock Exchange Clearing 
Corporation; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Amend the Nasdaq Amended and Restated Certificate of 
Incorporation

May 26, 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 16, 2022, Boston Stock Exchange Clearing 
Corporation (``BSECC'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by BSECC. 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. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    BSECC is filing this proposed rule change 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 BSECC's 
website at <a href="https://listingcenter.nasdaq.com/rulebook/bsecc/rules">https://listingcenter.nasdaq.com/rulebook/bsecc/rules</a>, at 
the principal office of BSECC, and at the Commission's Public Reference 
Room.

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, BSECC 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. BSECC has prepared summaries, set forth in Sections A, 
B, and C below, of the most significant aspects of such statements.

A. Clearing Agency'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, BSECC 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:
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    \3\ Nasdaq owns 100% of the equity interest in Nasdaq BX, Inc., 
which in turn owns 100% of the equity interest in BSECC. BSECC's 
affiliates, Nasdaq BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, 
Nasdaq MRX, 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\
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    \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.
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    \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.
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    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
    BSECC believes that its proposal is consistent with Section 
17A(b)(3)(A) of the Act,\6\ in that it enables BSECC to be so organized 
as to have the capacity to be able to facilitate the prompt and 
accurate clearance and settlement of securities transactions and 
derivative agreements, contracts, and transactions for which it is 
responsible, to safeguard securities and funds in its custody or

[[Page 33567]]

control or for which it is responsible, to comply with the provisions 
of the Exchange Act and the rules and regulations thereunder, to 
enforce compliance by its participants with the rules of BSECC, and to 
carry out the purposes of the Exchange Act.
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    \6\ 15 U.S.C. 78q-1(b)(3)(A).
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    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 BSECC'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 BSECC to effectively carry out their regulatory oversight 
responsibilities under the Act.
    BSECC also believes that the proposal is consistent with Section 
17A(b)(3)(F) of the Act \7\ because it would not impact BSECC's 
governance or regulatory structure, which would continue to be designed 
to foster cooperation and coordination with persons engaged in the 
clearance and settlement of securities transactions, remove impediments 
to and perfect the mechanism of a national system for the prompt and 
accurate clearance and settlement of securities transactions, and, in 
general, to protect investors and the public interest.
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    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    BSECC believes that the proposed rule change would remove 
impediments to and perfect the mechanism of a national system for the 
prompt and accurate clearance and settlement of securities 
transactions, 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.
    BSECC 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 BSECC herein.\8\ As such, BSECC does not 
believe that its proposal raises any new or novel issues not already 
considered by the Commission.
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    \8\ 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'').
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B. Clearing Agency'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 BSECC, BSECC 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. Clearing Agency'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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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. 
BSECC has satisfied this requirement.
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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

    <bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#7e0c0b121b531d1113131b100a0d3e0d1b1d50191108"><span class="__cf_email__" data-cfemail="6715120b024a04080a0a020913142714020449000811">[email&#160;protected]</span></a>. Please include 
File Number SR-BSECC-2022-001 on the subject line.

Paper Comments

    <bullet> 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-BSECC-2022-001. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>). 
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 BSECC. 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-BSECC-2022-001 and should be submitted 
on or before June 23, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-11786 Filed 6-1-22; 8:45 am]
BILLING CODE 8011-01-P


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