[Federal Register Volume 88, Number 130 (Monday, July 10, 2023)]
[Rules and Regulations]
[Pages 43426-43429]
[FR Doc No: 2023-14585]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2023-1411; Project Identifier MCAI-2023-00710-E;
Amendment 39-22499; AD 2023-13-14]
RIN 2120-AA64

Airworthiness Directives; Safran Helicopter Engines, S.A. (Type
Certificate Previously Held by Turbomeca, S.A.) Engines

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule; request for comments.

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SUMMARY: The FAA is superseding Airworthiness Directive (AD) 2023-01-
12, which applied to all Safran Helicopter Engines, S.A. (Safran) Model
Arriel 1C, Arriel 1C1, and Arriel 1C2 engines. AD 2023-01-12 required
replacing affected fire detectors and prohibited installation of
affected fire detectors. Since the FAA issued AD 2023-01-12, the FAA
has determined that Model Arriel 1K1 engines are also affected by the
unsafe condition. This AD is prompted by reports of false engine fire
warnings. This AD requires replacing the affected fire detectors,
prohibits installation of affected fire detectors, and adds Model
Arriel 1K1 engines to the applicability, as specified in an European
Union Aviation Safety Agency (EASA) AD, which is incorporated by
reference (IBR). The FAA is issuing this AD to address the unsafe
condition on these products.

DATES: This AD is effective July 25, 2023.
    The Director of the Federal Register approved the incorporation by
reference of a certain publication listed in this AD as of July 25,
2023.
    The FAA must receive comments on this AD by August 24, 2023.

ADDRESSES: You may send comments, using the procedures found in 14 CFR
11.43 and 11.45, by any of the following methods:
     Federal eRulemaking Portal: Go to regulations.gov. Follow
the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    AD Docket: You may examine the AD docket at regulations.gov under
Docket No. FAA-2023-1411; or in person at Docket Operations between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD
docket contains this final rule, the mandatory continuing airworthiness
information (MCAI), any comments received, and other information. The
street address for Docket Operations is listed above.
    Material Incorporated by Reference:
     For service information incorporated by reference in this
final rule, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne,
Germany; phone: +49 221 8999 000; email: [email protected]; website:
easa.europa.eu. You may find this material on the EASA website at
ad.easa.europa.eu.
     You may view this service information at the FAA,
Airworthiness Products Section, Operational Safety Branch, 1200
District Avenue, Burlington, MA 01803. For information on the
availability of this material at the FAA, call<PHONE_NUMBER>. It is
also available at regulations.gov under Docket No. FAA-2023-1411.

FOR FURTHER INFORMATION CONTACT: Kevin Clark, Aviation Safety Engineer,
FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: (781)
238-7088; email: [email protected].

SUPPLEMENTARY INFORMATION:

Comments Invited

    The FAA invites you to send any written data, views, or arguments
about this final rule. Send your comments to

an address listed under ADDRESSES. Include ``Docket No. FAA-2023-1411;
Project Identifier MCAI-2023-00710-E'' at the beginning of your
comments. The most helpful comments reference a specific portion of the
final rule, explain the reason for any recommended change, and include
supporting data. The FAA will consider all comments received by the
closing date and may amend this final rule because of those comments.
    Except for Confidential Business Information (CBI) as described in
the following paragraph, and other information as described in 14 CFR
11.35, the FAA will post all comments received, without change, to
regulations.gov, including any personal information you provide. The
agency will also post a report summarizing each substantive verbal
contact received about this final rule.

Confidential Business Information

    CBI is commercial or financial information that is both customarily
and actually treated as private by its owner. Under the Freedom of
Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public
disclosure. If your comments responsive to this AD contain commercial
or financial information that is customarily treated as private, that
you actually treat as private, and that is relevant or responsive to
this AD, it is important that you clearly designate the submitted
comments as CBI. Please mark each page of your submission containing
CBI as ``PROPIN.'' The FAA will treat such marked submissions as
confidential under the FOIA, and they will not be placed in the public
docket of this AD. Submissions containing CBI should be sent to Kevin
Clark, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410,
Westbury, NY 11590. Any commentary that the FAA receives which is not
specifically designated as CBI will be placed in the public docket for
this rulemaking.

Background

    The FAA issued AD 2023-01-12, Amendment 39-22306 (88 FR 3629,
January 20, 2023) (AD 2023-01-12), for all Safran Helicopter Engines,
S.A. (Type Certificate previously held by Turbomeca, S.A.) Model Arriel
1C, Arriel 1C1, and Arriel 1C2 engines. AD 2023-01-12 was prompted by
an MCAI originated by EASA, which is the Technical Agent for the Member
States of the European Union. EASA issued EASA AD 2022-0256, dated
December 19, 2022 (EASA AD 2022-0256) to correct an unsafe condition
identified as reports of false engine fire warnings.
    AD 2023-01-12 required replacing the affected fire detectors and
prohibited installation of affected fire detectors, as specified in
EASA AD 2022-0256. The FAA issued AD 2023-01-12 to prevent false engine
fire warnings.

Actions Since AD 2023-01-12 Was Issued

    Since the FAA issued AD 2023-01-12, EASA superseded EASA AD 2022-
0256 and issued EASA AD 2023-0110, dated May 26, 2023 (EASA AD 2023-
0110) (referred to after this as the MCAI). The MCAI states that Safran
determined that Model Arriel 1K and Arriel 1K1 engines may also have
the affected fire detectors installed and are subject to the same
unsafe condition. The MCAI retains the requirements of EASA AD 2022-
0256 and expands the applicability to include the Model Arriel 1K and
Arriel 1K1 engines.
    You may examine the MCAI in the AD docket at regulations.gov under
Docket No. FAA-2023-1411.

Related Service Information Under 1 CFR Part 51

    The FAA reviewed EASA AD 2023-0110, which specifies procedures for
replacing affected fire detectors. EASA AD 2023-0110 also specifies not
to install an affected fire detector on any engine. This service
information is reasonably available because the interested parties have
access to it through their normal course of business or by the means
identified in ADDRESSES.
    This service information is reasonably available because the
interested parties have access to it through their normal course of
business or by the means identified in ADDRESSES.

FAA's Determination

    These products have been approved by the aviation authority of
another country and are approved for operation in the United States.
Pursuant to the FAA's bilateral agreement with this State of Design
Authority, it has notified the FAA of the unsafe condition described in
the MCAI described above. The FAA is issuing this AD after determining
that the unsafe condition described previously is likely to exist or
develop on other products of the same type design.

AD Requirements

    This AD retains none of the requirements of AD 2023-01-12, This AD
adds Model Arriel 1K1 engines to the applicability and requires
accomplishing the actions specified in the MCAI already described,
except for any differences identified as exceptions in the regulatory
text of this AD, and except as discussed under ``Differences Between
this AD and the MCAI''.

Differences Between This AD and the MCAI

    Model Arriel 1K engines are contained in the applicability of EASA
AD 2023-0110 but do not have an FAA type certificate. Therefore, this
AD does not include those engines in the applicability.

Justification for Immediate Adoption and Determination of the Effective
Date

    Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5
U.S.C. 551 et seq.) authorizes agencies to dispense with notice and
comment procedures for rules when the agency, for ``good cause,'' finds
that those procedures are ``impracticable, unnecessary, or contrary to
the public interest.'' Under this section, an agency, upon finding good
cause, may issue a final rule without providing notice and seeking
comment prior to issuance. Further, section 553(d) of the APA
authorizes agencies to make rules effective in less than thirty days,
upon a finding of good cause.
    An unsafe condition exists that requires the immediate adoption of
this AD without providing an opportunity for public comments prior to
adoption. The FAA has found that the risk to the flying public
justifies foregoing notice and comment prior to adoption of this rule
because fire detectors that do not conform to the type design could
lead to false engine fire warnings. Safran was informed of three
occurrences of illumination of the engine fire alarm without confirmed
fire (untimely illumination) on airframes equipped with affected fire
detectors. False engine fire warnings are an unsafe condition requiring
urgent corrective action because, if a helicopter is equipped with two
engines with an affected fire detector installed, an engine fire
warning could occur on both engines during the same flight. This unsafe
condition, if not addressed, could lead to commanded in-flight engine
shut-down, possibly resulting in damage to the helicopter and reduced
control of the helicopter. Replacement of the fire detectors for Model
Arriel 1K1 engines requires compliance within 30 flight hours or 60
days from the effective date of this AD. Replacement of the fire
detectors for Model Arriel 1C, Arriel 1C1, and Arriel 1C2 engines
requires compliance before further flight. Accordingly, notice and
opportunity for prior public comment are impracticable

and contrary to the public interest pursuant to 5 U.S.C. 553(b)(3)(B).
    In addition, the FAA finds that good cause exists pursuant to 5
U.S.C. 553(d) for making this amendment effective in less than 30 days,
for the same reasons the FAA found good cause to forgo notice and
comment.

Regulatory Flexibility Act

    The requirements of the Regulatory Flexibility Act (RFA) do not
apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt
a rule without prior notice and comment. Because FAA has determined
that it has good cause to adopt this rule without prior notice and
comment, RFA analysis is not required.

Costs of Compliance

    The FAA estimates that this AD affects 30 engines installed on
helicopters of U.S. registry.
    The FAA estimates the following costs to comply with this AD:

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per      Cost on U.S.
                Action                         Labor cost           Parts cost        product        operators
----------------------------------------------------------------------------------------------------------------
Replace fire detectors................  1 work-hour x $85 per             $1,800          $1,885         $56,550
                                         hour = $85.
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Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. Subtitle VII, Aviation Programs,
describes in more detail the scope of the Agency's authority.
    The FAA is issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701: General requirements.
Under that section, Congress charges the FAA with promoting safe flight
of civil aircraft in air commerce by prescribing regulations for
practices, methods, and procedures the Administrator finds necessary
for safety in air commerce. This regulation is within the scope of that
authority because it addresses an unsafe condition that is likely to
exist or develop on products identified in this rulemaking action.

Regulatory Findings

    This AD will not have federalism implications under Executive Order
13132. This AD will not have a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government.
    For the reasons discussed above, I certify that this AD:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866, and
    (2) Will not affect intrastate aviation in Alaska.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

The Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

0
1. The authority citation for part 39 continues to read as follows:

    Authority:  49 U.S.C. 106(g), 40113, 44701.

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by:
0
a. Removing Airworthiness Directive 2023-01-12, Amendment 39-22306 (88
FR 3629, January 20, 2023); and
0
b. Adding the following new airworthiness directive:

2023-13-14 Safran Helicopter Engines, S.A. (Type Certificate
Previously Held by Turbomeca, S.A.): Amendment 39-22499; Docket No.
FAA-2023-1411; Project Identifier MCAI-2023-00710-E.

(a) Effective Date

    This airworthiness directive (AD) is effective July 25, 2023.

(b) Affected ADs

    This AD replaces AD 2023-01-12, Amendment 39-22306 (88 FR 3629,
January 20, 2023) (AD 2023-01-12).

(c) Applicability

    This AD applies to all Safran Helicopter Engines, S.A. (Type
Certificate previously held by Turbomeca, S.A.) Model Arriel 1C,
Arriel 1C1, Arriel 1C2, and Arriel 1K1 engines.

(d) Subject

    Joint Aircraft System Component (JASC) Code 7200, Engine
(Turbine/Turboprop).

(e) Unsafe Condition

    This AD was prompted by false engine fire warnings. The FAA is
issuing this AD to prevent false engine fire warnings. The unsafe
condition, if not addressed, could lead to commanded in-flight
engine shut-down, possibly resulting in damage to the helicopter and
reduced control of the helicopter.

(f) Compliance

    Comply with this AD within the compliance times specified,
unless already done.

(g) Required Actions

    Except as specified in paragraphs (h) and (i) of this AD:
Perform all required actions within the compliance times specified
in, and in accordance with European Union Aviation Safety Agency
(EASA) AD 2023-0110, dated May 26, 2023.

(h) Exceptions to EASA AD 2023-0110

    (1) Where the ``Reference Date'' for Model Arriel 1K1 engines in
Table 1 of EASA AD 2023-0110 specifies ``The effective date of this
[EASA] AD,'' this AD requires using the effective date of this AD.
    (2) Where the ``Reference Date'' for Model Arriel 1C, Arriel
1C1, and Arriel 1C2 engines in Table 1 of EASA AD 2023-0110
specifies ``02 January 2023,'' this AD requires compliance before
further flight.
    (3) This AD does not adopt the Remarks paragraph of EASA AD
2023-0110.
    (4) Although the service information referenced in EASA AD 2023-
0110 specifies to discard any removed fire detectors, this AD
requires removing those parts from service.

(i) No Reporting Requirement

    Although the service information referenced in EASA AD 2023-0110
specifies to submit certain information to the manufacturer, this AD
does not include that requirement.

(j) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, International Validation Branch, FAA, has the
authority to approve AMOCs for this AD, if requested using the
procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19,
send your request to your principal inspector or local Flight
Standards District Office, as appropriate. If sending information
directly to the manager of the International Validation Branch, send
it to the attention of the person identified in paragraph (k) of
this AD and email to: [email protected].
    (2) Before using any approved AMOC, notify your appropriate
principal inspector, or lacking a principal inspector, the manager
of the local flight standards district office/certificate holding
district office.

(k) Additional Information

    For more information about this AD, contact Kevin Clark,
Aviation Safety

Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590;
phone:<PHONE_NUMBER>; email: [email protected].

(l) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference of the service information listed in this
paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless the AD specifies otherwise.
    (i) European Union Aviation Safety Agency AD 2023-0110, dated
May 26, 2023.
    (ii) [Reserved]
    (3) For EASA AD 2023-0110, contact EASA, Konrad-Adenauer-Ufer 3,
50668 Cologne, Germany; phone: +49 221 8999 000; email:
[email protected]. You may find this material on the EASA website
at ad.easa.europa.eu.
    (4) You may view this service information at the FAA,
Airworthiness Products Section, Operational Safety Branch, 1200
District Avenue, Burlington, MA 01803. For information on the
availability of this material at the FAA, call<PHONE_NUMBER>.
    (5) You may view this service information that is incorporated
by reference at the National Archives and Records Administration
(NARA). For information on the availability of this material at
NARA, email: [email protected], or go to: www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued on June 30, 2023.
Michael Linegang,
Acting Director, Compliance & Airworthiness Division, Aircraft
Certification Service.
[FR Doc. 2023-14585 Filed 7-6-23; 11:15 am]
BILLING CODE 4910-13-P


[Federal Register Volume 79, Number 191 (Thursday, October 2, 2014)]
[Notices]
[Page 59487]
[FR Doc No: 2014-23488]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. ER03-427-001 and ER03-427-002]

Mesquite Power, LLC; Supplemental Notice That Initial Market-
Based Rate Filing Includes Request for Blanket Section 204
Authorization

    This is a supplemental notice in the above-referenced proceeding,
of Mesquite Power, LLC's application for market-based rate authority,
with an accompanying rate schedule, noting that such application
includes a request for blanket authorization, under 18 CFR Part 34, of
future issuances of securities and assumptions of liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR Part 34, of future issuances of securities and assumptions of
liability is October 10, 2014.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
5 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426.
    The filings in the above-referenced proceeding(s) are accessible in
the Commission's eLibrary system by clicking on the appropriate link in
the above list. They are also available for review in the Commission's
Public Reference Room in Washington, DC. There is an eSubscription link
on the Web site that enables subscribers to receive email notification
when a document is added to a subscribed docket(s). For assistance with
any FERC Online service, please email<EMAIL_ADDRESS>or
call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.

    Dated: September 26, 2014.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2014-23488 Filed 10-1-14; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 81, Number 193 (Wednesday, October 5, 2016)]
[Notices]
[Pages 69102-69109]
[FR Doc No: 2016-24007]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78985; File No. SR-ISE-2016-22]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing of Proposed Rule Change To Amend the By-Laws of
Nasdaq, Inc. To Implement Proxy Access

September 29, 2016.
    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 September 15, 2016, International Securities Exchange, LLC
(``ISE'') or ``Exchange'') 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 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 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 implement proxy
access. 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 www.ise.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

1. Purpose
Background
    At Nasdaq's 2016 annual meeting held on May 5, 2016, Nasdaq's
stockholders considered a stockholder proposal submitted under Rule
14a-8 under the Act.\3\ The proposal, which passed with 73.52% of the
votes cast, requested that Nasdaq's Board of Directors (the ``Board'')
take steps to implement a ``proxy access'' by-law. Proxy access by-laws
allow a stockholder, or group of stockholders, who comply with certain
requirements, to nominate candidates for service on a board and have
those candidates included in a company's proxy materials. Such
provisions allow stockholders to nominate candidates without
undertaking the expense of a proxy solicitation.
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    \3\ See 17 CFR 240.14a-8, which establishes procedures pursuant
to which stockholders of a public company may have their proposals
placed alongside management's proposals in the company's proxy
materials for presentation to a vote at a meeting of stockholders.
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    Following the 2016 annual meeting, the Nominating & Governance
Committee (the ``Committee'') of the Board and the Board reviewed the
voting results on the stockholder proposal and discussed proxy access
generally. The Committee ultimately recommended to the Board, and the
Board approved, certain changes to Nasdaq's By-Laws to implement proxy
access. Nasdaq now proposes to make these changes by adopting new
Section 3.6 of the By-Laws and making certain conforming changes to
current Sections 3.1, 3.3 and 3.5 of the By-Laws, all of which are
described further below.
    In developing its proposal, Nasdaq has generally tried to balance
the relative weight of arguments for and against proxy access
provisions. On the one hand, Nasdaq recognizes the significance of this
issue to some investors, who see proxy access as an important
accountability mechanism that allows them to participate in board
elections through the nomination of stockholder candidates that are
presented in a company's proxy statement. On the other hand, Nasdaq's
proposed proxy access provision includes certain procedural
requirements that ensure, among other things, that the Company and its
stockholders will have full and accurate information about nominating
stockholders and their nominees and that such stockholders and nominees
will comply with applicable laws, regulations and other requirements.
Proposed Section 3.6(a) of the By-Laws
    To respond to feedback from its stockholders, Nasdaq proposes to
amend its By-Laws to, as set forth in the first sentence of proposed
Section 3.6(a), require the Company to include in its proxy statement,
its form proxy and any ballot distributed at the stockholder meeting,
the name of, and certain Required Information \4\ about, any person
nominated for election (the ``Stockholder Nominee'') to the Board by a
stockholder or group of stockholders (the ``Eligible Stockholder'') \5\
that satisfies the requirements set forth in the proxy access provision
of Nasdaq's By-Laws.\6\ To utilize this provision, the Eligible
Stockholder must expressly elect at the time of providing a required
notice to the Company of the proxy access nomination (the ``Notice of
Proxy Access Nomination'') to have its nominee included in the
Company's proxy materials. Stockholders will be eligible to submit
proxy access nominations only at annual meetings of stockholders when
the Board solicits proxies with respect to the election of directors.
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    \4\ The Required Information is the information provided to
Nasdaq's Corporate Secretary about the Stockholder Nominee and the
Eligible Stockholder that is required to be disclosed in the
Company's proxy statement by the regulations promulgated under the
Act, and if the Eligible Stockholder so elects, a written statement,
not to exceed 500 words, in support of the Stockholder Nominee(s)'
candidacy (the ``Statement'').
    \5\ As used throughout Nasdaq's By-Laws, the term ``Eligible
Stockholder'' includes each member of a stockholder group that
submits a proxy access nomination to the extent the context
requires.
    \6\ When the Company includes proxy access nominees in the proxy
materials, such individuals will be included in addition to any
persons nominated for election to the Board or any committee
thereof.
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    The next two sentences of Section 3.6(a) provide some additional
clarification on the term ``Eligible Stockholder.'' First, in
calculating the number of stockholders in a group seeking to qualify as
an Eligible Stockholder, two or more of the following types of funds
shall be counted as one stockholder: (i) funds under common management
and investment control, (ii) funds under common management and funded
primarily by the same employer, or (iii) funds that are a ``group of
investment companies'' as such term is defined in Section
12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended.\7\
Nasdaq views this as a stockholder-friendly provision that will make it
easier for such funds to participate in a proxy access nomination since
they will not have to comply with the procedural requirements in the
proxy access provision multiple times. Second, in the event that the
Eligible Stockholder consists of a group of stockholders, any and all
requirements and obligations for an individual Eligible Stockholder
shall apply to each member of the group, except that the Required
Ownership Percentage (discussed further below) shall apply to the
ownership of the group in the aggregate. Generally, the applicable
requirements and obligations relate to information that each member of
the nominating group must provide to Nasdaq about itself, as discussed
further below. Nasdaq believes it is reasonable to require each member
of the nominating group to provide such information so that both the
Company and its stockholders are fully informed about the entire group
making the proxy access nomination.
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    \7\ See 15 U.S.C. 80a-12(d)(1)(G)(ii), which defines ``group of
investment companies'' as any two or more registered investment
companies that hold themselves out to investors as related companies
for purposes of investment and investor services.
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    The final sentence of proposed Section 3.6(a) allows Nasdaq to omit
from its proxy materials any information or Statement (or portion
thereof) that it, in good faith, believes is untrue in any material
respect (or omits to state a material fact necessary in order to make
the statements made, in light of the circumstances under which they are
made, not misleading) or would violate any applicable law or
regulation. This provision allows Nasdaq to comply with Rule 14a-9
under the Act \8\ and to protect its stockholders from information that
is materially untrue or that violates any law or regulation. The final
sentence of proposed Section 3.6(a) also explicitly allows Nasdaq to
solicit against, and include in the proxy statement its own statement
relating to, any Stockholder Nominee. This provision merely clarifies
that just because Nasdaq must include a proxy access nominee in its
proxy materials if the proxy access provisions are

satisfied, Nasdaq does not necessarily have to support that nominee.
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    \8\ See 17 CFR 240.14a-9, which generally prohibits proxy
solicitations that contain any statement which, at the time and in
the light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or which omits to
state any material fact necessary in order to make the statements
therein not false or misleading.
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Proposed Section 3.6(b) of the By-Laws
    Proposed Section 3.6(b) of the By-Laws establishes the deadline for
a timely Notice of Proxy Access Nomination. Specifically, such a notice
must be addressed to, and received by, Nasdaq's Corporate Secretary no
earlier than one hundred fifty (150) days and no later than one hundred
twenty (120) days before the anniversary of the date that Nasdaq issued
its proxy statement for the previous year's annual meeting of
stockholders. The Company believes this notice period will provide
stockholders an adequate window to submit nominees via proxy access,
while also providing the Company adequate time to diligence [sic] a
proxy access nominee before including them in the proxy statement for
the next annual meeting of stockholders.
Proposed Section 3.6(c) of the By-Laws
    Proposed Section 3.6(c) specifies that the maximum number of
Stockholder Nominees nominated by all Eligible Stockholders that will
be included in Nasdaq's proxy materials with respect to an annual
meeting of stockholders shall not exceed the greater of two and 25% of
the total number of directors in office (rounded down to the nearest
whole number) as of the last day on which a Notice of Proxy Access
Nomination may be delivered pursuant to and in accordance with the
proxy access provision of the By-Laws (the ``Final Proxy Access
Nomination Date''). In the event that one or more vacancies for any
reason occurs after the Final Proxy Access Nomination Date but before
the date of the annual meeting and the Board resolves to reduce the
size of the Board in connection therewith, the maximum number of
Stockholder Nominees included in Nasdaq's proxy materials shall be
calculated based on the number of directors in office as so reduced.
Any individual nominated by an Eligible Stockholder for inclusion in
the proxy materials pursuant to the proxy access provision of the By-
Laws whom the Board decides to nominate as a nominee of the Board, and
any individual nominated by an Eligible Stockholder for inclusion in
the proxy materials pursuant to the proxy access provision but whose
nomination is subsequently withdrawn, shall be counted as one of the
Stockholder Nominees for purposes of determining when the maximum
number of Stockholder Nominees has been reached.
    Any Eligible Stockholder submitting more than one Stockholder
Nominee for inclusion in the proxy materials shall rank such
Stockholder Nominees based on the order that the Eligible Stockholder
desires such Stockholder Nominees to be selected for inclusion in the
proxy statement in the event that the total number of Stockholder
Nominees submitted by Eligible Stockholders pursuant to the proxy
access provision exceeds the maximum number of nominees allowed. In the
event that the number of Stockholder Nominees submitted by Eligible
Stockholders exceeds the maximum number of nominees allowed, the
highest ranking Stockholder Nominee who meets the requirements of the
proxy access provision of the By-Laws from each Eligible Stockholder
will be selected for inclusion in the proxy materials until the maximum
number is reached, going in order of the amount (largest to smallest)
of shares of Nasdaq's outstanding common stock each Eligible
Stockholder disclosed as owned in its respective Notice of Proxy Access
Nomination submitted to Nasdaq. If the maximum number is not reached
after the highest ranking Stockholder Nominee who meets the
requirements of the proxy access provision of the By-Laws from each
Eligible Stockholder has been selected, this process will continue as
many times as necessary, following the same order each time, until the
maximum number is reached. Following such determination, if any
Stockholder Nominee who satisfies the eligibility requirements
thereafter is nominated by the Board, or is not included in the proxy
materials or is not submitted for election as a director, in either
case, as a result of the Eligible Stockholder becoming ineligible or
withdrawing its nomination, the Stockholder Nominee becoming unwilling
or unable to serve on the Board or the Eligible Stockholder or the
Stockholder Nominee failing to comply with the proxy access provision
of the By-Laws, no other nominee or nominees shall be included in the
proxy materials or otherwise submitted for director election in
substitution thereof.
    The Company believes it is reasonable to limit the Board seats
available to proxy access nominees, to establish procedures for
selecting candidates if the nominee limit is exceeded and to exclude
further proxy access nominees in the cases set forth above. The
limitation on Board seats available to proxy access nominees ensures
that proxy access cannot be used to take over the entire Board, which
is not the stated purpose of proxy access campaigns. The procedures for
selecting candidates if the nominee limit is exceeded establish clear
and rational guidelines for an orderly nomination process to avoid the
Company having to make arbitrary judgments among candidates. Finally,
the exclusion of further proxy access nominees in certain cases will
avoid further time and expense to the Company when the proxy access
nominee has been nominated by the Board, in which case the goal of the
proxy access nomination has been achieved, or in certain cases when the
Eligible Stockholder or Stockholder Nominee is at fault.
Proposed Section 3.6(d) of the By-Laws
    Proposed Section 3.6(d) clarifies, for the avoidance of doubt, how
``ownership'' will be defined for purposes of meeting the Required
Ownership Percentage (discussed further below). Specifically, an
Eligible Stockholder shall be deemed to ``own'' only those outstanding
shares of Nasdaq's common stock as to which the stockholder possesses
both: (i) The full voting and investment rights pertaining to the
shares; and (ii) the full economic interest in (including the
opportunity for profit from and risk of loss on) such shares; provided
that the number of shares calculated in accordance with clauses (i) and
(ii) shall not include any shares:
     Sold by such stockholder or any of its affiliates in any
transaction that has not been settled or closed, including any short
sale;
     borrowed by such stockholder or any of its affiliates for
any purposes or purchased by such stockholder or any of its affiliates
pursuant to an agreement to resell; or
     subject to any option, warrant, forward contract, swap,
contract of sale, other derivative or similar agreement entered into by
such stockholder or any of its affiliates, whether any such instrument
or agreement is to be settled with shares or with cash based on the
notional amount or value of shares of Nasdaq's outstanding common
stock, in any such case which instrument or agreement has, or is
intended to have, or if exercised by either party would have, the
purpose or effect of:
    [cir] Reducing in any manner, to any extent or at any time in the
future, such stockholder's or its affiliates' full right to vote or
direct the voting of any such shares; and/or
    [cir] hedging, offsetting or altering to any degree any gain or
loss realized or realizable from maintaining the full economic
ownership of such shares by such stockholder or its affiliates.
    Further, a stockholder shall ``own'' shares held in the name of a
nominee or other intermediary so long as the stockholder retains the
right to instruct

how the shares are voted with respect to the election of directors and
possesses the full economic interest in the shares. A stockholder's
ownership of shares shall be deemed to continue during any period in
which the stockholder has delegated any voting power by means of a
proxy, power of attorney or other instrument or arrangement which is
revocable at any time by the stockholder. A stockholder's ownership of
shares shall be deemed to continue during any period in which the
stockholder has loaned such shares provided that the stockholder has
the power to recall such loaned shares on three (3) business days'
notice, has recalled such loaned shares as of the date of the Notice of
Proxy Access Nomination and holds such shares through the date of the
annual meeting. The terms ``owned,'' ``owning'' and other variations of
the word ``own'' shall have correlative meanings. Whether outstanding
shares of Nasdaq's common stock are ``owned'' for these purposes shall
be determined by the Board or any committee thereof, in each case, in
its sole discretion. For purposes of the proxy access provision of the
By-Laws, the term ``affiliate'' or ``affiliates'' shall have the
meaning ascribed thereto under the rules and regulations of the Act.\9\
An Eligible Stockholder shall include in its Notice of Proxy Access
Nomination the number of shares it is deemed to own for the purposes of
the proxy access provision of the By-Laws.
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    \9\ Pursuant to Rule 12b-2 under the Act, ``[a]n `affiliate' of,
or a person `affiliated' with, a specified person, is a person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
person specified.'' 17 CFR 240.12b-2. Further, ``[t]he term
`control' (including the terms `controlling,' `controlled by' and
`under common control with') means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership
of voting securities, by contract, or otherwise.'' 17 CFR 240.12b-2.
---------------------------------------------------------------------------

Proposed Section 3.6(e) of the By-Laws
    The first paragraph of proposed Section 3.6(e) establishes certain
requirements for an Eligible Stockholder to make a proxy access
nomination. Specifically, an Eligible Stockholder must have owned
(defined as discussed above) 3% or more (the ``Required Ownership
Percentage'') of Nasdaq's outstanding common stock (the ``Required
Shares'') continuously for 3 years (the ``Minimum Holding Period'') as
of both the date the Notice of Proxy Access Nomination is received by
Nasdaq's Corporate Secretary and the record date for determining the
stockholders entitled to vote at the annual meeting and must continue
to own the Required Shares through the meeting date.
    Proposed Section 3.6(e) also sets forth the information that an
Eligible Stockholder must provide to Nasdaq's Corporate Secretary in
writing within the deadline discussed above in order to make a proxy
access nomination. This information includes:
     One or more written statements from the record holder of
the shares (and from each intermediary through which the shares are or
have been held during the Minimum Holding Period) verifying that, as of
a date within seven calendar days prior to the date the Notice of Proxy
Access Nomination is delivered to, or mailed to and received by,
Nasdaq's Corporate Secretary, the Eligible Stockholder owns, and has
owned continuously for the Minimum Holding Period, the Required Shares,
and the Eligible Stockholder's agreement to provide, within five (5)
business days after the record date for the annual meeting, written
statements from the record holder and intermediaries verifying the
Eligible Stockholder's continuous ownership of the Required Shares
through the record date; \10\
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    \10\ See proposed Section 3.6(e)(i) of the By-Laws.
---------------------------------------------------------------------------

     a copy of the Schedule 14N that has been filed with the
SEC as required by Rule 14a-18 under the Act; \11\
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    \11\ See proposed Section 3.6(e)(ii) of the By-Laws; see also 17
CFR 240.14n-101 and 17 CFR 240.14a-18, which generally require a
Nominating Stockholder to provide notice to the Company of its
intent to submit a proxy access nomination on a Schedule 14N and
file that notice, including the required disclosure, with the
Commission on the date first transmitted to the Company.
---------------------------------------------------------------------------

     the information, representations and agreements with
respect to the Eligible Stockholder that are the same as those that
would be required to be set forth in a stockholder's notice of
nomination with respect to a ``Proposing Person'' pursuant to Section
3.1(b)(i) and Section 3.1(b)(iii) of the By-Laws; \12\
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    \12\ See proposed Section 3.6(e)(iii) of the By-Laws; see also
Sections 3.1(b)(i) and 3.1(b)(iii) of the By-Laws, which constitute
part of Nasdaq's ``advance notice'' provision under which a
``Proposing Person'' may, among other things, nominate a person for
election to the Board.
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     the consent of each Stockholder Nominee to being named in
the proxy statement as a nominee and to serving as a director if
elected; \13\
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    \13\ See proposed Section 3.6(e)(iv) of the By-Laws.
---------------------------------------------------------------------------

     a representation that the Eligible Stockholder:
    [cir] Acquired the Required Shares in the ordinary course of
business and not with the intent to change or influence control of
Nasdaq, and does not presently have such intent; \14\
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    \14\ See proposed Section 3.6(e)(v)(A) of the By-Laws.
---------------------------------------------------------------------------

    [cir] presently intends to maintain qualifying ownership of the
Required Shares through the date of the annual meeting; \15\
---------------------------------------------------------------------------

    \15\ See proposed Section 3.6(e)(v)(B) of the By-Laws.
---------------------------------------------------------------------------

    [cir] has not nominated and will not nominate for election any
individual as a director at the annual meeting, other than its
Stockholder Nominee(s); \16\
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    \16\ See proposed Section 3.6(e)(v)(C) of the By-Laws.
---------------------------------------------------------------------------

    [cir] has not engaged and will not engage in, and has not and will
not be a participant in another person's, ``solicitation'' within the
meaning of Rule 14a-1(l) under the Act in support of the election of
any individual as a director at the annual meeting, other than its
Stockholder Nominee(s) or a nominee of the Board; \17\
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    \17\ See proposed Section 3.6(e)(v)(D) of the By-Laws; see also
17 CFR 240.14a-1(l), which defines the related terms ``solicit'' and
``solicitation.''
---------------------------------------------------------------------------

    [cir] agrees to comply with all applicable laws and regulations
with respect to any solicitation in connection with the meeting or
applicable to the filing and use, if any, of soliciting material; \18\
---------------------------------------------------------------------------

    \18\ See proposed Section 3.6(e)(v)(E) of the By-Laws.
---------------------------------------------------------------------------

    [cir] will provide facts, statements and other information in all
communications with Nasdaq and its stockholders that are or will be
true and correct in all material respects and do not and will not omit
to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not
misleading; \19\ and
---------------------------------------------------------------------------

    \19\ See proposed Section 3.6(e)(v)(F) of the By-Laws.
---------------------------------------------------------------------------

    [cir] as to any two or more funds whose shares are aggregated to
count as one stockholder for the purpose of constituting an Eligible
Stockholder, within five business days after the date of the Notice of
Proxy Access Nomination, will provide to Nasdaq documentation
reasonably satisfactory to Nasdaq that demonstrates that the funds
satisfy the requirements in the By-Laws, which were discussed above,
for the funds to qualify as one Eligible Stockholder; \20\
---------------------------------------------------------------------------

    \20\ See proposed Section 3.6(e)(v)(G) of the By-Laws.
---------------------------------------------------------------------------

     a representation as to the Eligible Stockholder's
intentions with respect to maintaining qualifying ownership of the
Required Shares for at least one year following the annual meeting;
\21\
---------------------------------------------------------------------------

    \21\ See proposed Section 3.6(e)(vi) of the By-Laws.

---------------------------------------------------------------------------

     an undertaking that the Eligible Stockholder agrees to:
    [cir] Assume all liability stemming from any legal or regulatory
violation arising out of the Eligible Stockholder's communications with
Nasdaq's stockholders or out of the information that the Eligible
Stockholder provided to Nasdaq; \22\
---------------------------------------------------------------------------

    \22\ See proposed Section 3.6(e)(vii)(A) of the By-Laws.
---------------------------------------------------------------------------

    [cir] indemnify and hold harmless Nasdaq and each of its directors,
officers and employees individually against any liability, loss or
damages in connection with any threatened or pending action, suit or
proceeding, whether legal, administrative or investigative, against
Nasdaq or any of its directors, officers or employees arising out of
any nomination submitted by the Eligible Stockholder pursuant to the
proxy access provision; \23\ and
---------------------------------------------------------------------------

    \23\ See proposed Section 3.6(e)(vii)(B) of the By-Laws.
---------------------------------------------------------------------------

    [cir] file with the SEC any solicitation or other communication
with Nasdaq's stockholders relating to the meeting at which the
Stockholder Nominee will be nominated, regardless of whether any such
filing is required under Regulation 14A of the Act or whether any
exemption from filing is available thereunder; \24\ and
---------------------------------------------------------------------------

    \24\ See proposed Section 3.6(e)(vii)(C) of the By-Laws; see
also 17 CFR 240.14a-1--14b-2, which governs solicitations of
proxies.
---------------------------------------------------------------------------

     in the case of a nomination by a group of stockholders
that together is an Eligible Stockholder, the designation by all group
members of one group member that is authorized to act on behalf of all
such members with respect to the nomination and matters related
thereto, including withdrawal of the nomination.\25\
---------------------------------------------------------------------------

    \25\ See proposed Section 3.6(e)(viii) of the By-Laws.
---------------------------------------------------------------------------

    In proposing the Required Ownership Percentage and the Minimum
Holding Period, Nasdaq seeks to ensure that the Eligible Stockholder
has had a sufficient stake in the Company for a sufficient amount of
time and is not pursuing a short-term agenda. In proposing the
informational requirements for the Eligible Stockholder, Nasdaq's goal
is to gather sufficient information about the Eligible Stockholder for
both itself and its stockholders. Among other things, this information
will ensure that Nasdaq is able to comply with its disclosure and other
requirements under applicable law and that Nasdaq, its Board and its
stockholders are able to assess the proxy access nomination adequately.
Proposed Section 3.6(f) of the By-Laws
    Proposed Section 3.6(f) establishes the information the Stockholder
Nominee must deliver to Nasdaq's Corporate Secretary within the time
period specified for delivering the Notice of Proxy Access Nomination.
This information includes:
     The information required with respect to persons whom a
stockholder proposes to nominate for election or reelection as a
director by Section 3.1(b)(i) of the By-Laws \26\ including, but not
limited to, the signed questionnaire, representation and agreement
required by Section 3.1(b)(i)(D) of the By-Laws; \27\ and
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    \26\ Section 3.1(b)(i) of the By-Laws describes the information
that a proposing stockholder must provide about an individual the
stockholder proposes to nominate for election or reelection as a
director pursuant to the ``advance notice'' provision of the By-
Laws.
    \27\ Section 3.1(b)(i)(D) of the By-Laws requires a completed
and signed questionnaire, representation and agreement, each
containing certain information, from each individual proposed to be
nominated for election or reelection as a director pursuant to the
``advance notice'' provision of the By-Laws.
---------------------------------------------------------------------------

     a written representation and agreement that such person:
    [cir] Will act as a representative of all of Nasdaq's stockholders
while serving as a director; and
    [cir] will provide facts, statements and other information in all
communications with Nasdaq and its stockholders that are or will be
true and correct in all material respects (and shall not omit to state
a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading).
    In addition, at the request of Nasdaq, the Stockholder Nominee(s)
must submit all completed and signed questionnaires required of
Nasdaq's directors and officers. Nasdaq may request such additional
information as necessary to (y) permit the Board to determine if each
Stockholder Nominee satisfies the requirements of the proxy access
provision of the By-Laws or if each Stockholder Nominee is independent
under the listing standards of The NASDAQ Stock Market, any applicable
rules of the SEC and any publicly disclosed standards used by the Board
in determining and disclosing the independence of Nasdaq's directors
\28\ and/or (z) permit Nasdaq's Corporate Secretary to determine the
classification of such nominee as an Industry, Non-Industry, Issuer or
Public Director, if applicable, in order to make the certification
referenced in Section 4.13(h)(iii) of the By-Laws.\29\
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    \28\ Currently, the independence of Nasdaq's directors is
determined pursuant to the definition of ``Independent Director'' in
Listing Rule 5605(a)(2) of The NASDAQ Stock Market, under which
certain categories of individuals cannot be deemed independent and
with respect to other individuals, the Board must make an
affirmative determination that such individual has no relationship
that, in the opinion of the Board, would interfere with the exercise
of independent judgment in carrying out the responsibilities of a
director. Other independence standards under the SEC rules and the
Listing Rules of The NASDAQ Stock Market apply to members of certain
of the Board's committees. As detailed below, the Commission notes
that, while additional, more stringent independence standards may be
adopted by the Board in the future, as of the date of this Notice no
such standards have been adopted by the Board.
    \29\ Section 4.13(h)(iii) of the By-Laws requires Nasdaq's
Corporate Secretary to collect from each nominee for director such
information as is reasonably necessary to serve as the basis for a
determination of the nominee's classification as an Industry, Non-
Industry, Issuer, or Public Director, if applicable, and to certify
to the Committee each nominee's classification, if applicable.
Detailed definitions of the terms ``Industry Director,'' ``Non-
Industry Director,'' ``Issuer Director'' and ``Public Director'' are
included in Article I of the By-Laws.
---------------------------------------------------------------------------

    Like the informational requirements for an Eligible Stockholder,
which are set forth above, the informational requirements for the
Stockholder Nominee ensure that both Nasdaq and its stockholders will
have sufficient information about the Stockholder Nominee. Among other
things, this information will ensure that Nasdaq is able to comply with
its disclosure and other requirements under applicable law and that
Nasdaq, its Board and its stockholders are able to assess the proxy
access nomination adequately.
Proposed Section 3.6(g) of the By-Laws
    Pursuant to proposed Section 3.6(g), each Eligible Stockholder or
Stockholder Nominee must promptly notify Nasdaq's Corporate Secretary
of any information or communications provided by the Eligible
Stockholder or Stockholder Nominee to Nasdaq or its stockholders that
ceases to be true and correct in all material respects or omits a
material fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading and of the
information that is required to correct any such defect. This provision
further states that providing any such notification shall not be deemed
to cure any defect or, with respect to any defect that Nasdaq
determines is material, limit Nasdaq's rights to omit a Stockholder
Nominee from its proxy materials. This provision is intended to protect
Nasdaq's stockholders by requiring an Eligible Stockholder or
Stockholder Nominee to give Nasdaq notice of information previously
provided that is materially untrue. Nasdaq may then decide what action
to

take with respect to such defect, which may include, with respect to a
material defect, omitting the relevant Stockholder Nominee from its
proxy materials.
Proposed Section 3.6(h) of the By-Laws
    Proposed Section 3.6(h) provides that Nasdaq shall not be required
to include a Stockholder Nominee in its proxy materials for any meeting
of stockholders under certain circumstances. In these situations, the
proxy access nomination shall be disregarded and no vote on such
Stockholder Nominee will occur, even if Nasdaq has received proxies in
respect of the vote. These circumstances occur when the Stockholder
Nominee:
     Has been nominated by an Eligible Stockholder who has
engaged in or is currently engaged in, or has been or is a participant
in another person's, ``solicitation'' within the meaning of Rule 14a-
1(l) under the Act in support of the election of any individual as a
director at the annual meeting other than its Stockholder Nominee(s) or
a nominee of the Board; \30\
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    \30\ See proposed Section 3.6(h)(i) of the By-Laws; see also 17
CFR 240.14a-1(l), which defines the related terms ``solicit'' and
``solicitation.''
---------------------------------------------------------------------------

     is not independent under the listing standards of The
NASDAQ Stock Market, any applicable rules of the SEC and any publicly
disclosed standards used by the Board in determining and disclosing
independence of Nasdaq's directors, in each case as determined by the
Board in its sole discretion; \31\
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    \31\ See proposed Section 3.6(h)(ii) of the By-Laws; see also
footnote 28, supra. The Commission notes that, while additional,
more stringent independence standards may be adopted by the Board in
the future, as of the date of this Notice no such standards have
been adopted by the Board. The Commission further notes that,
according to Nasdaq, should the Board decide to adopt additional,
more stringent standards than those required under Nasdaq listing
standards and any requirements under Commission rules, all director
nominees would be evaluated against these standards--not just those
shareholder candidates nominated under the provisions of proposed
Section 3.6.
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     would, if elected as a member of the Board, cause Nasdaq
to be in violation of the By-Laws (including but not limited to the
compositional requirements of the Board set forth in Section 4.3 of the
By-Laws), its Amended and Restated Certificate of Incorporation, the
rules and listing standards of The NASDAQ Stock Market, or any
applicable state or federal law, rule or regulation; \32\
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    \32\ See proposed Section 3.6(h)(iii) of the By-Laws; see also
Section 4.3 of the By-Laws, which provides that 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 may include 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. Detailed definitions of the terms ``Non-Industry
Director,'' ``Industry Director,'' ``Public Director,'' ``Issuer
Director'' and ``Staff Director'' are included in Article I of the
By-Laws.
---------------------------------------------------------------------------

     is or has been, within the past three (3) years, an
officer or director of a competitor, as defined for purposes of Section
8 of the Clayton Antitrust Act of 1914; \33\
---------------------------------------------------------------------------

    \33\ See proposed Section 3.6(h)(iv) of the By-Laws; see also 15
U.S.C. 19(a)(1), which generally provides that ``[n]o person shall,
at the same time, serve as a director or officer in any two
corporations'' that are ``competitors'' such that ``the elimination
of competition by agreement between them would constitute a
violation of any of the antitrust laws.''
---------------------------------------------------------------------------

     is a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses) or has been
convicted in such a criminal proceeding within the past ten (10) years;
\34\
---------------------------------------------------------------------------

    \34\ See proposed Section 3.6(h)(v) of the By-Laws.
---------------------------------------------------------------------------

     is subject to any order of the type specified in Rule
506(d) of Regulation D promulgated under the Securities Act of 1933, as
amended; \35\
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    \35\ See proposed Section 3.6(h)(vi) of the By-Laws; see also 17
CFR 230.506(d), which generally disqualifies offerings involving
certain felons and other bad actors from relying on the ``safe
harbor'' in Rule 506 of Regulation D from registration under the
Securities Act of 1933, as amended.
---------------------------------------------------------------------------

     is subject to ``statutory disqualification'' under Section
3(a)(39) of the Act; \36\
---------------------------------------------------------------------------

    \36\ See proposed Section 3.6(h)(vii) of the By-Laws; see also
15 U.S.C. 78c(a)(39), which disqualifies certain categories of
individuals who generally have engaged in misconduct from membership
or participation in, or association with a member of, a self-
regulatory organization.
---------------------------------------------------------------------------

     has, or the applicable Eligible Stockholder has, provided
information to Nasdaq in respect of the proxy access nomination that
was untrue in any material respect or omitted to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, as determined
by the Board or any committee thereof, in each case, in its sole
discretion; \37\ or
---------------------------------------------------------------------------

    \37\ See proposed Section 3.6(h)(viii) of the By-Laws.
---------------------------------------------------------------------------

     breaches or fails, or the applicable Eligible Stockholder
breaches or fails, to comply with its obligations pursuant to the By-
Laws, including, but not limited to, the proxy access provisions and
any agreement, representation or undertaking required by the proxy
access provisions.\38\
---------------------------------------------------------------------------

    \38\ See proposed Section 3.6(h)(ix) of the By-Laws.
---------------------------------------------------------------------------

    Nasdaq believes these provisions will protect the Company and its
stockholders by allowing it to exclude certain categories of
objectionable Stockholder Nominees from the proxy statement.
Proposed Section 3.6(i) of the By-Laws
    Under proposed Section 3.6(i), the Board or the chairman of the
meeting of stockholders shall declare a proxy access nomination
invalid, and such nomination shall be disregarded even if proxies in
respect of such nomination have been received by the Company, if:
     The Stockholder Nominee(s) and/or the applicable Eligible
Stockholder have breached its or their obligations under the proxy
access provision of the By-Laws, as determined by the Board or the
chairman of the meeting of stockholders, in each case, in its or his
sole discretion; or
     the Eligible Stockholder (or a qualified representative
thereof) does not appear at the meeting of stockholders to present the
proxy access nomination.
    Nasdaq believes this provision protects the Company and its
stockholders by providing the Board or the chairman of the stockholder
meeting limited authority to disqualify a proxy access nominee when
that nominee or the sponsoring stockholder(s) have breached an
obligation under the proxy access provision, including the obligation
to appear at the stockholder meeting to present the proxy access
nomination.
Proposed Section 3.6(j) of the By-Laws
    Proposed Section 3.6(j) states that the following Stockholder
Nominees who are included in the Company's proxy materials for a
particular annual meeting of stockholders will be ineligible to be a
Stockholder Nominee for the next two annual meetings:
     A Stockholder Nominee who withdraws from or becomes
ineligible or unavailable for election at the annual meeting; or
     a Stockholder Nominee who does not receive at least 25% of
the votes cast in favor of such Stockholder Nominee's election.
    This provision will save the Company and its stockholders the time
and expense of analyzing and addressing subsequent proxy access
nominations regarding individuals who were included in the proxy
materials for a particular annual meeting but ultimately did not stand
for election or receive a substantial amount of votes. After the next
two annual meetings, these Stockholder Nominees would again be eligible
for nomination through the proxy access provisions of the By-Laws.

Proposed Section 3.6(k) of the By-Laws
    In case there are matters involving a proxy access nomination that
are open to interpretation, proposed Section 3.6(k) states that the
Board (or any other person or body authorized by the Board) shall have
exclusive power and authority to interpret the proxy access provisions
of the By-Laws and make all determinations deemed necessary or
advisable as to any person, facts or circumstances. In addition, all
actions, interpretations and determinations of the Board (or any person
or body authorized by the Board) with respect to the proxy access
provisions shall be final, conclusive and binding on the Company, the
stockholders and all other parties. While Nasdaq has attempted to
implement a clear, detailed and thorough proxy access provision, there
may be matters about future proxy access nominations that are open to
interpretation. In these cases, Nasdaq believes it is reasonable and
necessary to designate an arbiter to make final decisions on these
points and that the Board is best-suited to act as that arbiter.
Proposed Section 3.6(l) of the By-Laws
    Proposed Section 3.6(l) prohibits a stockholder from joining more
than one group of stockholders to become an Eligible Stockholder for
purposes of submitting a proxy access nomination for each annual
meeting of stockholders. Nasdaq analogizes this provision to Article
IV, Paragraph C(1) of its Amended and Restated Certificate of
Incorporation, under which each holder of Nasdaq's common stock shall
be entitled to one vote per share on all matters presented to the
stockholders for a vote. Similar to that provision, Nasdaq believes it
is reasonable for each share to count only once in submitting a proxy
access nomination.
Proposed Section 3.6(m) of the By-Laws
    For the avoidance of doubt, proposed Section 3.6(m) states that the
proxy access provisions outlined in Section 3.6 of the By-Laws shall be
the exclusive means for stockholders to include nominees in the
Company's proxy materials. Stockholders may, of course, continue to
propose nominees to the Committee and Board through other means, but
the Committee and Board will have final authority to determine whether
to include those nominees in the Company's proxy materials.
Revisions to Other Sections of the By-Laws
    Nasdaq also proposes to make conforming changes to Sections 3.1(a),
3.3(a), 3.3(c) and 3.5 of the By-Laws to provide clarifications and
prevent confusion. Specifically, current Section 3.1(a) enumerates the
methods by which nominations of persons for election to the Board may
be made at an annual meeting of stockholders; Nasdaq proposes to add
proxy access nominations to the list of methods. Current Section 3.3(a)
specifies that, among other things, only such persons who are nominated
in accordance with the procedures set forth in Article III of the By-
Laws \39\ shall be eligible to be elected at an annual or special
meeting of Nasdaq's stockholders to serve as directors; for the
avoidance of doubt, Nasdaq proposes to clarify that the reference to
Article III includes the proxy access provision in Section 3.6 of the
By-Laws with respect to director nominations in connection with annual
meetings. Current Section 3.3(c) states, among other things, that
compliance with Section 3.1(a)(iii) and (b) \40\ shall be the exclusive
means for a stockholder to make a director nomination; Nasdaq proposes
to add proxy access as an additional means for a stockholder to make a
director nomination. Finally, current Section 3.5 requires Nasdaq's
director nominees to submit to Nasdaq's Corporate Secretary a
questionnaire, representation and agreement within certain time
periods; Nasdaq proposes to clarify that proxy access nominees must
submit these materials within the time periods prescribed for delivery
of a Notice of Proxy Access Nomination, as described above.
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    \39\ Article III of the By-Laws relates to stockholder meetings.
    \40\ As part of Nasdaq's ``advance notice'' provision, Sections
3.1(a)(iii) and (b) of the By-Laws describe certain procedures that
a stockholder must follow to, among other things, nominate a person
for election to the Board.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\41\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\42\ 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.
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    \41\ 15 U.S.C. 78f(b).
    \42\ 15 U.S.C. 78f(b)(5).
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    In response to feedback from its investors, Nasdaq is proposing
changes to its By-Laws to implement proxy access. The Exchange believes
that, by permitting an Eligible Stockholder of Nasdaq that meets the
stated requirements to nominate directors and have its nominees
included in Nasdaq's annual meeting proxy statement, the proposed rule
change strengthens the corporate governance of the Exchange's ultimate
parent company, which is beneficial to both investors and the public
interest.
    In drafting its proxy access provision, Nasdaq has attempted to
strike an appropriate balance between responding to investor feedback
and including certain procedural and informational requirements for the
protection of the Company and its investors. Specifically, the
procedural requirements will protect investors by stating clearly and
explicitly the procedures stockholders must follow in order to submit a
proper proxy access nomination. The informational requirements will
enhance investor protection by ensuring, among other things, that the
Company and its stockholders have full and accurate information about
nominating stockholders and their nominees and that such stockholders
and nominees comply with applicable laws, regulations and other
requirements.
    Finally, the remaining changes are clarifying in nature, and they
enhance investor protection and the public interest by preventing
confusion with respect to the operation of the By-Law provisions.

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 (i) as the Commission may
designate up to 90 days of such date 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:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-ISE-2016-22 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-ISE-2016-22. 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 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; 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-ISE-2016-22 and should be
submitted on or before October 26, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
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    \43\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-24007 Filed 10-4-16; 8:45 am]
 BILLING CODE 8011-01-P