Notice2021-12477
Order Granting Applications by Nasdaq GEMX, LLC and Nasdaq MRX, LLC for Exemption Pursuant to Section 36(a) of the Exchange Act From the Rule Filing Requirements of Section 19(b) of the Exchange Act With Respect to the Nasdaq Rule 1000 Series Incorporated by Reference
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 15, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 86 Issue 113 (Tuesday, June 15, 2021)</title>
</head>
<body><pre>
[Federal Register Volume 86, Number 113 (Tuesday, June 15, 2021)]
[Notices]
[Pages 31772-31773]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-12477]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92136]
Order Granting Applications by Nasdaq GEMX, LLC and Nasdaq MRX,
LLC for Exemption Pursuant to Section 36(a) of the Exchange Act From
the Rule Filing Requirements of Section 19(b) of the Exchange Act With
Respect to the Nasdaq Rule 1000 Series Incorporated by Reference
June 9, 2021.
Nasdaq GEMX, LLC and Nasdaq MRX, LLC (the ``Exchanges'') have filed
with the Securities and Exchange Commission (the ``Commission'') an
application for an exemption under Section 36(a)(1) of the Securities
Exchange Act of 1934 (``Exchange Act'') \1\ from the rule filing
requirements of Section 19(b) of the Exchange Act \2\ with respect to
certain rules of The Nasdaq Stock Market LLC (``Nasdaq'') that the
Exchanges seek to incorporate by reference (``Nasdaq Rule 1000
Series'').\3\ Section 36(a)(1) of the Exchange Act,\4\ subject to
certain limitations, authorizes the Commission to conditionally or
unconditionally exempt any person, security, or transaction, or any
class thereof, from any provision of the Exchange Act or rule
thereunder, if necessary or appropriate in the public interest and
consistent with the protection of investors.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78mm(a)(1).
\2\ 15 U.S.C. 78s(b).
\3\ See letter from Brett M. Kitt, Principal Associate General
Counsel, Nasdaq Inc., to J. Matthew DeLesDernier, Assistant
Secretary, Commission, dated April 22, 2021 (``Exemptive Request'').
\4\ 15 U.S.C. 78mm(a)(1).
---------------------------------------------------------------------------
The Exchanges each filed a proposed rule change \5\ under Section
19(b) of the
[[Page 31773]]
Exchange Act to replace its existing membership rules, as set forth in
General 3 of their respective rulebooks, with the Rule 1000 Series of
the Nasdaq rulebook, as such rules may be in effect from time to time.
Namely, in the proposed rule changes, the Exchanges each proposed to
incorporate by reference the Nasdaq Rule 1000 Series such that Nasdaq
Rule 1000 Series would be applicable to each of the Exchanges'
respective applicants, members, associated persons, and other persons
subject to the Exchanges' jurisdiction as though such rules were fully
set forth within each of the Exchanges' rulebooks.\6\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release Nos. 91672 (April 26,
2021), 86 FR 23001 (April 30, 2021) (SR-GEMX-2021-02); 91674 (April
26, 2021), 86 FR 23013 (April 30, 2021) (SR-MRX-2021-03). Although
the proposed rule changes were filed pursuant to Section
19(b)(3)(A)(iii) of the Exchange Act, and thereby became effective
upon filing with the Commission, the Exchanges stipulated in their
proposals that the incorporation by reference would not be operative
until such time as the Commission grants this Exemptive Request.
\6\ See note 5, supra.
---------------------------------------------------------------------------
The Exchanges have requested, pursuant to Rule 0-12 under the
Exchange Act,\7\ that the Commission grant the Exchanges an exemption
from the rule filing requirements of Section 19(b) of the Exchange Act
for changes to each of the Exchanges' rules that are effected solely by
virtue of a change to the Nasdaq Rule 1000 Series that are incorporated
by reference. Specifically, the Exchanges request that they be
permitted to incorporate by reference changes made to the Nasdaq Rule
1000 Series that are cross-referenced in each of the Exchanges' rules
without the need for each of the Exchanges to file separately the same
proposed rule change pursuant to Section 19(b) of the Exchange Act.\8\
---------------------------------------------------------------------------
\7\ 17 CFR 240.0-12.
\8\ See Exemptive Request, supra note 3.
---------------------------------------------------------------------------
The Exchanges represent that the Nasdaq Rule 1000 Series are not
trading rules.\9\ Moreover, the Exchanges state that in each instance,
they propose to incorporate by reference a category of rules (rather
than individual rules within a category).\10\ The Exchanges also
represent that, as a condition of this exemption, the Exchanges will
provide written notice to their respective applicants and members
whenever Nasdaq proposes a change to Nasdaq Rule 1000 Series.\11\
---------------------------------------------------------------------------
\9\ Id.
\10\ Id. at 2 n.7.
\11\ Id. at 3. The Exchanges state that they will provide such
notice via a posting on the same website location where the
Exchanges post their own rule filings pursuant to Rule 19b-4(l)
within the timeframe required by such Rule. In addition, the
Exchanges state that the website posting will include a link to the
location on Nasdaq's website where the applicable proposed rule
change is posted. Id. at 3 n.8.
---------------------------------------------------------------------------
According to the Exchanges, this exemption is necessary and
appropriate because it will result in the Exchanges' membership rules
and processes being consistent with the relevant cross-referenced
Nasdaq membership rules and processes at all times.\12\ The Exchanges
states that harmonization of the membership rules and processes between
the Exchanges and Nasdaq will ease compliance burdens for those seeking
membership on the three exchanges and increase internal efficiencies
associated with administering the membership rules and processes of
each exchange.\13\
---------------------------------------------------------------------------
\12\ See id. at 2.
\13\ See id.
---------------------------------------------------------------------------
The Commission has issued exemptions similar to the Exchanges'
request.\14\ In granting similar exemptions, the Commission stated that
it would consider future exemption requests, provided that:
---------------------------------------------------------------------------
\14\ See, e.g., Securities Exchange Act Release Nos. 91202
(February 24, 2021), 86 FR 12250 (March 2, 2021) (order granting
application by Nasdaq ISE, LLC for exemption pursuant to Section
36(a) of the Exchange Act from the rule filing requirements of
section 19(b) of the Exchange Act with respect to the Nasdaq Rule
1000 Series incorporated by reference); 86896 (September 6, 2019),
84 FR 48186 (September 12, 2019) (order granting application by
Nasdaq BX, Inc. for exemption pursuant to section 36(a) of the
Exchange Act from the rule filing requirements of section 19(b) of
the Exchange Act with respect to the Nasdaq Rule 1000 Series
incorporated by reference); 80338 (March 29, 2017), 82 FR 16464
(April 4, 2017) (order granting exemptive request from MIAX PEARL,
LLC relating to rules of Miami International Securities Exchange,
LLC incorporated by reference); 72650 (July 22, 2014), 79 FR 44075
(July 29, 2014) (order granting exemptive requests from NASDAQ OMX
BX, Inc. and the NASDAQ Stock Market LLC relating to rules of NASDAQ
OMX PHLX LLC incorporated by reference); 67256 (June 26, 2012), 77
FR 39277, 39286 (July 2, 2012) (order approving SR-BX-2012-030 and
granting exemptive request relating to rules incorporated by
reference by the BX Options rules); 61534 (February 18, 2010), 75 FR
8760 (February 25, 2010) (order granting BATS Exchange, Inc.'s
exemptive request relating to rules incorporated by reference by the
BATS Exchange Options Market rules) (``BATS Options Market Order'');
and 57478 (March 12, 2008), 73 FR 14521, 14539-40 (March 18, 2008)
(order approving SR-NASDAQ-2007-004 and SR-NASDAQ-2007-080, and
granting exemptive request relating to rules incorporated by
reference by The NASDAQ Options Market).
---------------------------------------------------------------------------
<bullet> A self-regulatory organization (``SRO'') wishing to
incorporate rules of another SRO by reference has submitted a written
request for an order exempting it from the requirement in Section 19(b)
of the Exchange Act to file proposed rule changes relating to the rules
incorporated by reference, has identified the applicable originating
SRO(s), together with the rules it wants to incorporate by reference,
and otherwise has complied with the procedural requirements set forth
in the Commission's release governing procedures for requesting
exemptive orders pursuant to Rule 0-12 under the Exchange Act; \15\
---------------------------------------------------------------------------
\15\ See 17 CFR 240.0-12 and Securities Exchange Act Release No.
39624 (February 5, 1998), 63 FR 8101 (February 18, 1998)
(``Commission Procedures for Filing Applications for Orders for
Exemptive Relief Pursuant to Section 36 of the Exchange Act; Final
Rule'').
---------------------------------------------------------------------------
<bullet> The incorporating SRO has requested incorporation of
categories of rules (rather than individual rules within a category)
that are not trading rules (e.g., the SRO has requested incorporation
of rules such as margin, suitability, or arbitration); and
<bullet> The incorporating SRO has reasonable procedures in place
to provide written notice to its members each time a change is proposed
to the incorporated rules of another SRO.\16\
---------------------------------------------------------------------------
\16\ See BATS Options Market Order, supra note 14 (citing
Securities Exchange Act Release No. 49260 (February 17, 2004), 69 FR
8500 (February 24, 2004) (order granting exemptive request relating
to rules incorporated by reference by several SROs) (``2004
Order'')).
---------------------------------------------------------------------------
The Commission believes that the Exchanges have satisfied each of
these conditions. Further, the Commission also believes that granting
the Exchanges an exemption from the rule filing requirements under
Section 19(b) of the Exchange Act will promote efficient use of the
Commission's and the Exchanges' resources by avoiding duplicative rule
filings based on simultaneous changes to identical rule text sought by
more than one SRO.\17\ The Commission therefore finds it appropriate in
the public interest and consistent with the protection of investors to
exempt the Exchanges from the rule filing requirements under Section
19(b) of the Exchange Act with respect to the above-described rules it
incorporates by reference. This exemption is conditioned upon the
Exchanges promptly providing written notice to their applicants and
members whenever Nasdaq changes a rule that the Exchanges incorporate
by reference.
---------------------------------------------------------------------------
\17\ See BATS Options Market Order, supra note 14, 75 FR at
8761; see also 2004 Order, supra note 16, 69 FR at 8502.
---------------------------------------------------------------------------
Accordingly, it is ordered, pursuant to Section 36 of the Exchange
Act,\18\ that the Exchanges are exempt from the rule filing
requirements of Section 19(b) of the Exchange Act solely with respect
to changes to the rules identified in the Exemptive Request, provided
that the Exchanges promptly provide written notice to their applicants
and members whenever Nasdaq proposes to change a rule that the
Exchanges have incorporated by reference.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78mm.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------
\19\ 17 CFR 200.30-3(a)(76).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-12477 Filed 6-14-21; 8:45 am]
BILLING CODE 8011-01-P
</pre></body>
</html>Indexed from Federal Register on June 15, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.