On March 18, the Securities and Exchange Commission issued Releases No. 34-61732 and 34-61733 describing immediately effective changes to Chicago Board Options Exchange, Incorporated (CBOE) and Chicago Stock Exchange (CHX) rules regarding broker discretionary voting. In line with similar changes recently adopted by the New York Stock Exchange, under amended CBOE Rule 31.85, brokers may not vote on director elections (contested or not) at shareholder meetings without specific instructions from the beneficial owner, except with respect to companies registered under the Investment Company Act of 1940. As amended, CBOE Rule 31.85 also will preclude broker discretionary voting on matters that materially amend an investment advisory contract with an investment company.

Also to streamline with the NYSE, CHX has amended Article 8, Rule 14 regarding proxy voting by CHX participants who hold stock on behalf of a beneficial owner to enumerate certain matters that substantially affect the rights and privileges of stock and therefore should not be voted on by CHX participants without instructions from the beneficial owner.

Click here to read SEC Release 34-61732. Click here to read SEC Release 34-61733.