June 26, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
and Rule 19b-4 thereunder,
notice is hereby given that on June 17, 2019, Nasdaq BX, Inc. (“BX” or “Exchange”) 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 the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to harmonize the Exchange's By-Law provisions regarding the size of the Exchange's Board of Directors (“Board”) to those of the other Nasdaq, Inc.-owned U.S. exchanges, The Nasdaq Stock Market LLC (“Nasdaq”), Nasdaq PHLX LLC (“Phlx”), Nasdaq ISE, LLC (“ISE”), Nasdaq GEMX, LLC (“GEMX”), and Nasdaq MRX, LLC (“MRX”) (together, “Affiliated Exchanges”).
The text of the proposed rule change is available on the Exchange's website at http://nasdaqbx.cchwallstreet.com/, 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
The Exchange proposes to amend its By-Laws at Article IV, Section 4.2 
to conform its provisions regarding the size of the Exchange's Board to those of the Affiliated Exchanges.
By-Law Article IV contains provisions regarding the powers and composition of the Board, which are generally aligned with similar provisions in the Limited Liability Company (“LLC”) Agreements and By-Laws of the Affiliated Exchanges. For instance, as is the case with the Affiliated Exchanges, the composition of the Exchange's Board is required to reflect a balance among Industry Directors,
Member Representative Directors,
and Non-Industry Directors,
including Public Directors 
and Director representatives of issuers and investors (“issuer representatives”). Specifically, the number of Non-Industry Directors, including at least one Public Director and at least one issuer representative, shall equal or exceed the sum of the number of Industry Directors and Member Representative Directors. In addition, at least 20% of the Directors shall be Member Representative Directors.
Furthermore, consistent with the Affiliated Exchanges, the Exchange's By-Laws presently allow the stockholders 
to set the exact number of Directors.
Unlike the Affiliated Start Printed Page 31642Exchanges, however, the Exchange's By-Laws require that the minimum Board size be fixed at ten Directors.
The Exchange now proposes to remove the minimum threshold of ten Directors contained in the By-Laws to align with the provisions in the LLC Agreements of the Affiliated Exchanges. The Exchange does not seek to amend the Board's authority or qualification requirements in the By-Laws other than to remove this minimum threshold. As such, the current requirements that the number of Non-Industry Directors (including at least one Public Director and at least one issuer representative) equal or exceed the sum of the number of Industry Directors and Member Representative Directors, and at least 20% of the Directors be Member Representative Directors, would continue to apply.
The practical effect of the proposed rule change is to enable the size of the Board to be set below ten members. The Exchange believes that a Board consisting of less than ten members is sufficiently large to effectively perform the Board's oversight responsibilities, and when combined with the current Board composition requirements discussed above, is consistent with the Act. Furthermore, as noted above, while the Affiliated Exchanges have substantially similar provisions in their respective LLC Agreements authorizing the sole member to determine the number of directors, these LLC Agreement provisions do not have a strict minimum threshold on Board size like BX.
As such, the proposed changes will further streamline the rules governing the organization and administration across BX and the Affiliated Exchanges.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
in general, and furthers the objectives of Section 6(b)(1) of the Act,
which requires that the Exchange to be so organized so 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 members and persons associated with its members, with the provisions of the Act, the rules and regulations thereunder, and the rules of the Exchange; Section 6(b)(3) of the Act,
which requires that the rules of a national securities exchange assure the fair representation of its members in the selection of its directors and administration of its affairs, and provide that one or more directors shall be representative of issuers and investors and not be associated with a member of the exchange, broker, or dealer; and Section 6(b)(5) of the Act,
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. The proposed changes will eliminate the requirement for a minimum of ten Directors on the Board currently in Article IV, Section 4.2 of the Exchange's By-Laws. As discussed above, the current Board composition requirements in the By-Laws remain unchanged under this proposal, and the requirements that the number of Non-Industry Directors (including at least one Public Director and at least one issuer representative) equal or exceed the sum of the number of Industry Directors and Member Representative Directors, and at least 20% of the Directors be Member Representative Directors, would continue to apply. Accordingly, the Exchange believes that the proposed removal of the minimum threshold will improve administrative efficiency and effectiveness by operating with a smaller number of directors while continuing to fulfill its statutory obligations regarding the fair representation of members of the Exchange. In addition, the proposed amendments will have the additional benefit of bringing the Exchange's requirements on Board size into greater conformity with those of the Affiliated Exchanges, which allow for discretion as to the size of their boards, thereby creating more consistent standards among the affiliated exchanges owned by Nasdaq, Inc.
As such, the Exchange believes that its proposal will bring greater consistency to its rules, which is beneficial to both investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
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. The proposed rule change relates solely to the administration and governance of the Exchange and will have no effect on the Exchange's business operations or competitive position.
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 
and Rule 19b-4(f)(6) thereunder.
A proposed rule change filed under Rule 19b-4(f)(6) 
normally does not become operative prior to 30 days after the date of the filing. However, Rule 19b-4(f)(6)(iii) 
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. The Exchange states that the annual meeting of the stockholder will take place in June 2019 to address the election of Directors as well as certain housekeeping items, which has historically included setting the size of the Board. The Exchange states that the waiver of the operative delay will allow the Exchange to harmonize its rules across the Affiliated Exchanges in a timely manner, thereby creating more consistent standards for the administration and governance across the Nasdaq, Inc.-owned affiliated exchanges. Accordingly, the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the 30-day operative delay and designates the Start Printed Page 31643proposed rule change as operative upon filing.
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 change 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:
- 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-BX-2019-021. 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-BX-2019-021 and should be submitted on or before July 23, 2019.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Jill M. Peterson,
[FR Doc. 2019-14053 Filed 7-1-19; 8:45 am]
BILLING CODE 8011-01-P