Notice2023-17442
Self-Regulatory Organizations; Boston Stock Exchange Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding a Stockholders' Agreement By and Among Nasdaq, Inc., Adenza Parent, LP, and the Other Parties Thereto
Primary source
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Published
August 15, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 156 (Tuesday, August 15, 2023)</title>
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[Federal Register Volume 88, Number 156 (Tuesday, August 15, 2023)]
[Notices]
[Pages 55487-55489]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-17442]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98094; File No. SR-BSECC-2023-001]
Self-Regulatory Organizations; Boston Stock Exchange Clearing
Corporation; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Regarding a Stockholders' Agreement By and Among Nasdaq,
Inc., Adenza Parent, LP, and the Other Parties Thereto
August 9, 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, Boston Stock Exchange Clearing Corporation
(``BSECC'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III 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 the Proposed Rule Change
BSECC 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 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
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 BSECC), 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: <a href="https://www.sec.gov/ix?doc=/Archives/edgar/data/0001120193/000119312523164839/d476077d8k.htm">https://www.sec.gov/ix?doc=/Archives/edgar/data/0001120193/000119312523164839/d476077d8k.htm</a>.
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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
[[Page 55488]]
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 BSECC
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 BSECC 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\ BSECC, Nasdaq BX, Inc. (``BX''), Nasdaq GEMX, LLC
(``GEMX''), Nasdaq ISE, LLC (``ISE''), Nasdaq MRX, LLC (``MRX''),
The Nasdaq Stock Market LLC (``NSM''), Nasdaq PHLX LLC (``Phlx''),
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 NSM 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 NSM. 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). NSM Rule 5605, which governs Nasdaq as a company whose
securities are listed on NSM, requires Nominating & Governance
Committee members to satisfy the definition of ``independence'' in
NSM Rule 5605 and IM-5605 and to otherwise be deemed independent by
the Nasdaq Board.
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2. Statutory Basis
BSECC believes that its proposal is consistent with section
17A(b)(3)(A) of the Act,\7\ 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
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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\7\ 15 U.S.C. 78q-1(b)(3)(A).
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The proposal related to the Stockholders' Agreement 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 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 BSECC 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 NSM 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 represent a
small percentage (approximately 8.3%) of the Nasdaq Board.
BSECC also notes that the proposed rule change is substantially
similar to prior proposals by BSECC or its affiliated SROs related to
Nasdaq stockholders' agreements that gave similar rights to recommend
Nasdaq Board designees.\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\ 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. 63830 (February 3, 2011), 76 FR 7236 (February 9, 2011)
(SR-SCCP-2011-001; SR-BSECC-2011-001) (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. Clearing Agency'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 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)(iii) of the Act \9\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 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.
BSECC has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ of the Act
normally does not become operative prior to 30 days after the date of
filing. However, Rule 19b-4(f)(6)(iii) \12\ 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
[[Page 55489]]
Commission to waive the 30-day operative delay contained in Rule 19b-
4(f)(6)(iii).\13\ 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.\14\
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ 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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#2e5c5b424b034d4143434b405a5d6e5d4b4d00494158"><span class="__cf_email__" data-cfemail="84f6f1e8e1a9e7ebe9e9e1eaf0f7c4f7e1e7aae3ebf2">[email protected]</span></a>. Please include
file number SR-BSECC-2023-001 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-2023-001. 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="https://www.sec.gov/rules/sro.shtml">https://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
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-BSECC-2023-001 and should be
submitted on or before September 5, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17442 Filed 8-14-23; 8:45 am]
BILLING CODE 8011-01-P
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