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[Release No. 34-106292; File No. SR-TXSE-2026-008]

Self-Regulatory Organizations; Texas Stock Exchange LLC; Order Instituting Proceedings

to Determine Whether to Approve or Disapprove a Proposed Rule Change to Amend

Exchange Rule 13.003 Related to Proxy Voting

September 8, 2026.

Introduction

On May 28, 2026, Texas Stock Exchange LLC (the “Exchange” or “TXSE”) filed with

the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) 1 of the

Securities Exchange Act of 1934 (“Act”) 2 and Rule 19b-4 thereunder, 3 a proposed rule change to

amend Exchange Rule 13.003 related to proxy voting. The proposed rule change was published

for comment in the Federal Register on June 11, 2026. 4 On July 21, 2026, pursuant to Section

19(b)(2)(A) of the Act, 5 the Commission designated a longer period within which to take action on

the proposed rule change. 6 The Commission is instituting proceedings pursuant to Section

19(b)(2)(B) of the Act 76 to determine whether to approve or disapprove the proposed rule

change.

15 U.S.C. 78s(b)(1).

15 U.S.C. 78a.

17 CFR 240.19b-4.

See Securities Exchange Act Release No. 105623 (June 8, 2026), 91 FR 35593 (“Notice”). Comment letters

received on the proposed rule change are available at: https://www.sec.gov/rules-regulations/publiccomments/sr-txse-2026-008.

15 U.S.C. 78s(b)(2)(A).

See Securities Exchange Act Release No. 105956, 91 FR 46817 (July 24, 2026). The Commission

designated September 9, 2026, as the date by which the Commission shall approve or disapprove, or

institute proceedings to determine whether to disapprove, the proposed rule change.

15 U.S.C. 78s(b)(2)(B).

II.

Description of the Proposed Rule Change

As described more fully in the Notice, 8 the Exchange proposes to amend Rule 13.003 to

establish a mandatory process for the proportional allocation and voting of uninstructed shares

held by Members 9 of the Exchange on behalf of beneficial owners of TXSE-listed equity

securities. 10 Specifically, the proposed rule would require a Member to vote uninstructed shares

at shareholder meetings and to allocate votes on each proposal in proportion to voting

instructions received from beneficial owners for whom such Member holds shares in the

applicable TXSE-listed security, subject to the exclusions and methodology set forth in the

proposed rule.

Existing TXSE Rule 13.003

TXSE Rule 13.003(b) currently prohibits a Member from giving a proxy to vote stock

registered in its name, unless: (i) the Member is the beneficial owner of such stock; (ii) the proxy

is given pursuant to the written instructions of the beneficial owner; or (iii) the proxy is given

pursuant to the rules of any national securities exchange or association of which it is a member

provided that the records of the Member clearly indicate the procedure it is following. The

Exchange states that the treatment of uninstructed shares under the current framework generally

turns on the discretionary voting rules applicable to the Member, including NYSE Rule 452. 11

See Notice, supra note 4.

“Member” is defined as any registered broker or dealer that has been admitted to membership in the

Exchange. See Rule 1.005(q).

According to the Exchange, as provided in proposed Rule 13.003(c), any reference to securities or

companies listed on TXSE in this proposal is referring to securities or companies with their primary listing

on TXSE and is not referring to a dually-listed security with its primary listing on another national

securities exchange. See Notice, supra note 4, at 35593 n. 3.

The Exchange states that FINRA Rule 2251 similarly limits the circumstances under which FINRA

members may vote proxies without instructions from beneficial owners and permits a member to give a

proxy pursuant to the rules of a national securities exchange of which it is a member, and that Nasdaq

Existing Rule 13.003(c) separately prohibits a Member that is not the beneficial owner of a

security registered under Section 12 of the Act from granting a proxy to vote the security in

connection with a shareholder vote on the election of a member of the board of directors (other

than for a vote with respect to uncontested election of a member of the board of directors of any

investment company registered under the Investment Company Act of 1940), executive

compensation, or any other significant matter unless the beneficial owner of the security has

instructed the Member to vote the proxy in accordance with the voting instructions of the

beneficial owner.

Description of the Proposed Rule

According to the Exchange, proposed Rule 13.003(c) would apply to a Member that

holds shares of an equity security, with a primary listing on the Exchange, on behalf of a

beneficial owner and has not received voting instructions from that beneficial owner as of the

applicable instruction cutoff, referred to in the proposed rule as the “Calculation Date,” subject to

the exclusions set forth in the proposed rule. 12 The Exchange states that the proposed rule would

require the Covered Member (as defined below) to vote uninstructed shares at the shareholder

meeting and to allocate votes on each proposal in the same proportion as the instructions

received from participating beneficial owners for whom the Member holds shares in the

applicable security. 13 Specifically, proposed Rule 13.003(c) provides that, notwithstanding Rule

13.003(b)(iii), a Member that carries an account for the beneficial owner of an equity security of

an issuer with a primary listing on TXSE and holds such security in a name other than the name

General 9, Section 6 provides that Nasdaq members shall comply with FINRA Rule 2251 as if it were part

of Nasdaq’s rules. See id. at 35593 n. 8 (citing FINRA Rule 2251(b)(3); Nasdaq General 9, Section 6(a)).

See id. at 35594.

See id.

of the beneficial owner, other than accounts for which the Member of an affiliated person

exercises voting authority in a fiduciary, advisory, or discretionary capacity pursuant to an

agreement with the beneficial owner (“Covered Member”) shall, with respect to any shares of

such security held for a beneficial owner from whom no voting instructions have been received

as of the Calculation Date (as defined in proposed Rule 13.003, Interpretation and Policy .02)

(the “Uninstructed Shares”), comply with the obligations described below in connection with

each shareholder meeting of such issuer.

Proposed Rule 13.003(c)(1) provides that the Covered Member shall submit a proxy

designating the Uninstructed Shares as present at such meeting, regardless of whether any matter

on the ballot for such meeting would otherwise qualify as a routine matter permitting

discretionary voting under the rules of any other national securities exchange or association of

which such Covered Member is a member. Submission of a proxy for purposes of representation

at the meeting shall not be deemed the exercise of discretionary voting authority.

Proposed Rule 13.003(c)(2) provides that the Covered Member shall vote the

Uninstructed Shares on each proposal submitted to shareholders at such meeting by casting votes

FOR, AGAINST, and ABSTAINING, or such other voting categories as are available for the

applicable proposal, in the same proportion as the aggregate voting instructions received by such

Covered Member from beneficial owners of shares of such issuer held in the Covered Member’s

custody who have submitted voting instructions with respect to such proposal as of the

Calculation Date, as defined below (the “Instructed Vote Distribution”), calculated in accordance

with proposed Rule 13.003, Interpretation and Policy .02.

Proposed Rule 13.003(c)(2)(A) provides that if the Covered Member has received no

voting instructions from any beneficial owner with respect to a particular proposal as of the

Calculation Date, the Covered Member shall vote all Uninstructed Shares as ABSTAINING on

such proposal. Proposed Rule 13.003(c)(2)(B) provides that the proposed proportional allocation

requirement shall not apply to shares held or voted by a Covered Member in any capacity

described in proposed Rule 13.003(e), including shares voted by a Covered Member acting as an

executor, administrator, guardian, trustee, or in a similar representative or fiduciary capacity. The

proposed requirement also would not apply to shares voted by a named ERISA Plan investment

manager or by a designated investment adviser pursuant to proposed Rule 13.003(e). Such shares

also would be excluded from the calculation of the Instructed Vote Distribution.

Proposed Rule 13.003(c)(3) provides that the proportional allocation required under

proposed Rule 13.003(c)(2) constitutes a mandatory ministerial obligation of the Covered

Member. In executing such allocation, the Covered Member exercises no judgment, preference,

or discretion as to how Uninstructed Shares are voted; the allocation is determined solely by

application of the formula prescribed by such paragraph (c)(2) and proposed Rule 13.003,

Interpretation and Policy .02 without modification or substitution by the Covered Member. The

proportional allocation obligation under this paragraph (c) does not constitute the giving of a

proxy to vote at the Member’s discretion in violation of proposed Rule 13.003(b) or (d) or

Section 6(b)(10) of the Act.

Proposed Rule 13.003(c)(4) provides that a Covered Member shall maintain records of

the proportional allocation methodology applied pursuant to proposed Rule 13.003(c)(2) in

accordance with Exchange Act Rule 17a-4.

The Exchange states that it proposes to retain the existing prohibition, as set forth in

proposed Rule 13.003(d), on a Member that is not the beneficial owner of a Section 12 security

granting a proxy to vote the security in connection with director elections, executive

compensation, or any other significant matter determined by the Commission unless the

beneficial owner has instructed the Member to vote the proxy in accordance with the beneficial

owner’s instructions. 14 The Exchange also states that this prohibition would continue to apply to

securities and accounts outside the scope of proposed Rule 13.003(c), including securities not

listed on the Exchange and shares otherwise excluded from the proposed proportional allocation

requirement. 15

In addition, proposed Rule 13.003(d) provides that the mandatory proportional allocation

of Uninstructed Shares pursuant to proposed Rule 13.003(c)(2) does not constitute the giving of

a proxy to vote at the Member’s discretion in violation of proposed Rule 13.003(b) or (d) or

Section 6(b)(10) of the Act because the Covered Member exercises no judgment, preference, or

discretion in determining the votes cast for such shares, which would be determined solely by the

formula prescribed by proposed Rule 13.003(c)(2) and proposed Rule 13.003, Interpretation and

Policy .02.

Proposed Rule 13.003, Interpretation and Policy .02(a) would add the following

definitions for purposes of proposed Rule 13.003, Interpretation and Policy .02 and proposed

Rule 13.003(c): “Calculation Date” would mean the date and time by which the Covered

Member customarily closes receipt of voting instructions from beneficial owners in connection

with a shareholder meeting of the applicable issuer, in accordance with the Covered Member’s

standard proxy processing practices as applied to meetings of other issuers whose securities the

Covered Member holds in the same capacity. The Calculation Date shall be no later than the date

the Covered Member submits its final vote tally to the meeting tabulator. If a shareholder

See Notice, supra note 4, at 35594. Under the proposal, existing Rule 13.003(c) and (d) would be relettered as proposed Rule 13.003(d) and (e), respectively.

See id.

meeting is adjourned and reconvened, a new Calculation Date shall apply based on the

reconvened meeting date in accordance with the same standard practices. 16 “Category

Percentage” would mean, for each available voting category on a proposal, the quotient obtained

by dividing the number of Total Instructed Shares allocated to such category by the Total

Instructed Shares. 17 “Covered Member” would have the meaning set forth in proposed Rule

13.003(c). 18 “Instructed Vote Distribution” would have the meaning set forth in proposed Rule

13.003(c)(2). 19 “Total Instructed Shares” would mean, for a given proposal, the aggregate

number of shares of the applicable issuer held in the Covered Member’s custody for which

voting instructions have been received and allocated to a voting category as of the Calculation

Date, excluding shares described in proposed Rule 13.003(c)(2)(B). 20 “Uninstructed Shares”

would have the meaning set forth in proposed Rule 13.003(c). 21

Proposed Rule 13.003, Interpretation and Policy .02(b) would establish the methodology

for calculating the proportional allocation of Uninstructed Shares. 22 The Exchange states that the

calculation would be performed separately for each proposal on the ballot. A beneficial owner

that provides voting instructions on one proposal but not another would be included in the

See proposed Rule 13.003, Interpretation and Policy .02(a)(1).

See proposed Rule 13.003, Interpretation and Policy .02(a)(2).

See proposed Rule 13.003, Interpretation and Policy .02(a)(3).

See proposed Rule 13.003, Interpretation and Policy .02(a)(4).

See proposed Rule 13.003, Interpretation and Policy .02(a)(5).

See proposed Rule 13.003, Interpretation and Policy .02(a)(6).

For each proposal at a shareholder meeting, the Covered Member shall determine the number of

Uninstructed Shares to be voted in each available voting category as follows: (1) Determine the Total

Instructed Shares for such proposal; (2) For each available voting category, calculate the Category

Percentage for such category; (3) Multiply the total number of Uninstructed Shares by the Category

Percentage for each voting category to produce an initial whole-and-fractional allocation for each category;

(4) Round down each initial allocation to the nearest whole share; and (5) Allocate and vote any remainder

shares, being the difference between the total number of Uninstructed Shares and the sum of the rounded

allocations across all voting categories, to ABSTAINING. See proposed Rule 13.003, Interpretation and

Policy .02(b).

instructed vote distribution only for the proposal on which instructions were received, and the

shares would be treated as Uninstructed Shares for each proposal where voting instructions were

not submitted. Any fractional allocation resulting from the allocation formula would be rounded

down to the nearest whole share, and any remainder shares would be allocated to

ABSTAINING. 23

Proposed Rule 13.003, Interpretation and Policy .02(c) provides that the Instructed Vote

Distribution and Total Instructed Shares shall be calculated separately for each proposal on the

ballot. A beneficial owner who has submitted voting instructions with respect to one or more

proposals but not all proposals shall be included in the Total Instructed Shares for each proposal

on which instructions were received, and the shares held for such beneficial owner shall be

treated as Uninstructed Shares for each proposal on which no instructions were received.

Proposed Rule 13.003, Interpretation and Policy .02(d) provides that where the voting

options for a proposal include WITHHOLD AUTHORITY in lieu of, or in addition to,

AGAINST, including in connection with director elections conducted under a plurality voting

standard, the proportional allocation described in paragraph (b) of this Interpretation and Policy

shall be applied to each available voting category in the same manner, substituting WITHHOLD

AUTHORITY for AGAINST, where applicable. Any remainder shares shall be allocated to

ABSTAINING, or to WITHHOLD AUTHORITY if ABSTAINING is not an available voting

category for such proposal.

According to the Exchange, the proposed rule reflects the proportional voting principle

that voting outcomes on matters up for a shareholders vote at companies with securities that have

their primary listing on TXSE should be determined by the voting instructions of participating

See Notice, supra note 4, at 35595.

beneficial owners, with such instructions applied uniformly to the voting of uninstructed shares

for every matter submitted to a shareholder vote. By replacing broker discretionary voting with a

formula-driven allocation tied to instructions actually submitted, the Exchange believes that the

proposed rule eliminates the exercise of broker discretion over shares in which the broker has no

economic interest and also eliminates the inconsistent and proposal-dependent treatment of

uninstructed shares produced by the framework currently in place in the market, while preserving

all existing shareholder voting rights. 24

III.

Proceedings to Determine Whether to Approve or Disapprove SR-TXSE-2026-008 and

Grounds for Disapproval Under Consideration

The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act 25 to

determine whether the Exchange’s proposed rule change should be approved or disapproved.

Institution of proceedings is appropriate at this time in view of the legal and policy issues raised

by the proposed rule change. Institution of proceedings does not indicate that the Commission

has reached any conclusions with respect to any of the issues involved. Rather, as described

below, the Commission seeks and encourages interested persons to provide additional comment

on the proposed rule change to inform the Commission’s analysis of whether to approve or

disapprove the proposed rule change.

Pursuant to Section 19(b)(2)(B) of the Act, 26 the Commission is providing notice of the

grounds for disapproval under consideration. The Commission is instituting proceedings to allow

for additional analysis of, and input from commenters with respect to, the proposed rule change’s

See id. at 35593.

15 U.S.C. 78s(b)(2)(B).

See id.

consistency with the Act and, in particular, (1) Section 6(b)(5) of the Act, 27 which requires,

among other things, that the rules of a national securities exchange be designed to prevent

fraudulent and manipulative acts and practices, 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; and (2) Section

6(b)(10) of the Act, 28 which requires that the rules of a national securities exchange must

prohibit any member that is not the beneficial owner of a security registered under Section 12 of

the Act from granting a proxy to vote the security in connection with a shareholder vote on the

election of a member of the board of directors of an issuer (except for a vote with respect to the

uncontested election of a member of the board of directors of any investment company registered

under the Investment Company Act of 1940), executive compensation, or any other significant

matter, as determined by the Commission, unless the beneficial owner of the security has

instructed the member to vote the proxy in accordance with the voting instructions of the

beneficial owner.

One commenter states that it supports the proposal without modification and that the

current proxy system “plainly is not working,” citing the time and expense of proxy campaigns

and the difficulties of reaching quorum. 29 Another commenter states that the proposal could

result in more efficient and cost-effective exchange-traded fund proxy campaigns and that it

would expect a similar impact for uncontested campaigns for closed-end funds. 30 However, this

15 U.S.C. 78f(b)(5).

15 U.S.C. 78f(b)(10).

See Letter from Neil J. Hennessy, Founder, Chairman and Chief Executive Officer, and Teresa M. Nilsen,

President and Chief Operating Officer, Hennessey Advisors, Inc., dated June 22, 2026, at 1-2.

See Letter from Paul G. Cellupica, General Counsel, and Matt Thornton, Deputy General Counsel,

Investment Company Institute, dated July 2, 2026, at 7.

commenter states that the proposal’s implications for contested matters involving closed-end

funds are harder to assess and that the Exchange should clarify the scope of the rule to ensure

that accounts voted by fiduciaries or other third parties are excluded in the proportional voting

calculation. 31 Another commenter states that it supports the goal of proportional voting to

improve quorum and retail representation but has significant concerns about the proposal’s

operational feasibility. 32 This commenter provides several recommendations, including requests

for clarity on the proposal’s interaction with NYSE Rule 452 and FINRA Rule 2251 to avoid

conflicting broker-dealer obligations across exchanges and on the scope of the fiduciary,

advisory, and ERISA exclusions from proportional voting. 33

Several commenters oppose the proposal. 34 One commenter states that the proposal may

be inconsistent with corporate governance best practices and may perpetuate distortions of proxy

voting results or result in proxy voting abuses. 35 Another commenter states that the proposal

would circumvent majority voting requirements in cases when few shareholders have cast

votes. 36 A third commenter states that the proposal would weaken core investor-rights

protections and distort corporate governance votes. 37

See id. at 7-8.

See Letter from Stephen Byron, Managing Director, Head of Operations, Technology, Cyber & BCP, and

Anthony Macchiarulo, Vice President, Financial Services Operations & Assistant General Counsel,

SIFMA, dated July 13, 2026, at 1.

See id.

See Letters from Jeff Mahoney, General Counsel, Council of Institutional Investors, dated Aug. 13, 2026

(“CII Letter”); Liz Gordon, Executive Director of Corporate Governance, New York State Common

Retirement Fund, dated Aug. 21, 2026 (“NY Fund Letter”); Mark D. Levine, New York City Comptroller,

dated Aug. 31, 2026 (“NYC Comptroller Letter”).

See CII Letter at 1, 2-5.

See NY Fund Letter at 1.

See NYC Comptroller Letter at 1.

The Commission asks that commenters address the sufficiency of the Exchange’s

statements in support of the proposal, which are set forth in the Notice, in addition to any other

comments they may wish to submit about the proposed rule change. In particular, the

Commission seeks comment on whether the proposal to establish a mandatory process for the

proportional allocation and voting of Uninstructed Shares held by Members of the Exchange on

behalf of beneficial owners of TXSE-listed equity securities is designed to be consistent with the

requirements of Section 6(b)(5) and Section 6(b)(10) of the Act. 38

IV.

Procedure: Request for Written Comments

The Commission requests that interested persons provide written submissions of their

views, data, and arguments with respect to the concerns identified above, including the issues

raised by commenters, as well as any other concerns they may have with the proposal. In

particular, the Commission invites the written views of interested persons concerning whether

the proposed rule change is consistent with Sections 6(b)(5), 6(b)(10), or any other provision of

the Act, or the rules and regulations thereunder. Although there do not appear to be any issues

relevant to approval or disapproval that would be facilitated by an oral presentation of views,

data, and arguments, the Commission will consider, pursuant to Rule 19b-4 under the Act, 39 any

request for an opportunity to make an oral presentation. 40

Interested persons are invited to submit written data, views, and arguments regarding

whether the proposed rule change should be approved or disapproved by [INSERT DATE 21

15 U.S.C. 78f(b)(5) and (10).

17 CFR 240.19b-4.

Section 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Public Law 94-29

(June 4, 1975), grants to the Commission flexibility to determine what type of proceeding—either oral or

notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a

self-regulatory organization. See Securities Acts Amendments of 1975, Senate Comm. on Banking,

Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).

DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER]. Any person who

wishes to file a rebuttal to any other person’s submission must file that rebuttal by [INSERT

DATE 35 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER].

Comments may be submitted by any of the following methods:

Electronic Comments:

•

Use the Commission’s internet comment form

(https://www.sec.gov/rules/sro.shtml); or

•

Send an email to rule-comments@sec.gov. Please include file number

SR-TXSE-2026-008 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-TXSE-2026-008. 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 (https://www.sec.gov/rules/sro.shtml). Copies

of the filing 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-TXSE-2026-008 and should be submitted on or

before [INSERT DATE 21 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL

DATE OF PUBLICATION IN THE FEDERAL REGISTER].

For the Commission, by the Division of Trading and Markets, pursuant to delegated

authority. 41

Sherry R. Haywood,

Assistant Secretary.

17 CFR 200.30-3(a)(57).

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.