Notice2021-18553
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend General 9, Section 51, Research Analysts
Primary source
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Published
August 30, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 165 (Monday, August 30, 2021)</title>
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[Federal Register Volume 86, Number 165 (Monday, August 30, 2021)]
[Notices]
[Pages 48455-48456]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-18553]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92738; File No. SR-NASDAQ-2021-064]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend General 9, Section 51, Research Analysts
August 24, 2021.
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 August 12, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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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 proposes to amend General 9, Section 51, Research
Analysts.
The Exchange also proposes to amend General 9, Section 10,
Recommendations to Customers (Suitability).
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules">https://listingcenter.nasdaq.com/rulebook/nasdaq/rules</a>, 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
The Exchange proposes to amend General 9, Section 51, Research
Analysts. Specifically, the Exchange proposes to (1) remove references
to FINRA Rules 1120 \3\ and 1250;\4\ and (2) add references to FINRA
Rules 1240 and 1220(a)(6), (a)(14) and (b)(6).
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\3\ Nasdaq Rule 1050 (subsequently renumbered as General 9,
Section 51) originally referred to NASD Rule 1120, Continuing
Education Requirements. See Securities Exchange Act Release Nos.
58069 (June 30, 3008), 73 FR 39360 (July 9, 2008) (SR-NASDAQ-2008-
054) (Notice of Filing and Immediate Effectiveness of a Proposed
Rule Change Regarding Technical and Conforming Changes to Nasdaq
Rules); and 87778 (December 17, 2019), 84 FR 70590 (December 23,
2019) (SR-NASDAQ-2019-098) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Relocate Rules From Its
Current Rulebook Into Its New Rulebook Shell) (renumbering Nasdaq
Rule 1050 as General 9, Section 51). The SEC approved the adoption
of NASD Rule 1120 (Continuing Education Requirements) as new FINRA
Rule 1250 (Continuing Education Requirements) subject to certain
amendments, effective on October 17, 2011. See Securities Exchange
Act Release No. 64687 (June 16, 2011); 76 FR 36586 (June 22, 2011)
(SR-FINRA-2011-013) (Notice of Filing of Amendment No. 1 and Order
Granting Accelerated Approval of a Proposed Rule Change, as Modified
by Amendment No. 1, Establishing a Registration Category,
Qualification Examination and Continuing Education Requirements for
Certain Operations Personnel, and Adopt FINRA Rule 1250 (Continuing
Education Requirements) in the Consolidated FINRA Rulebook). See
also note 5 below.
\4\ FINRA Rule 1250 was renumbered as FINRA Rule 1240. See note
5 below.
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The Exchange also proposes to amend General 9, Section 10,
Recommendations to Customers (Suitability).
General 9, Section 51
By way of background, FINRA previously deleted in their entirety
the NASD Rule 1000 Series relating to registration of Principals and
Representatives and adopted rules relating to qualification and
registration requirements in the Consolidated FINRA Rulebook.\5\ In
that rule change, FINRA Rule 1250 was renumbered to FINRA Rule 1240.\6\
FINRA Rule 1240 describes continuing education requirements applicable
to registered persons and consists of a Regulatory Element and a Firm
Element.
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\5\ See Securities Exchange Act Release No. 81098 (July 7,
2017), 82 FR 32419 (July 13, 2017) (SR-FINRA-2017-007) (Order
Approving Proposed Rule Change To Adopt Consolidated Registration
Rules, Restructure the Representative-Level Qualification
Examination Program, Allow Permissive Registration, Establish Exam
Waiver Process for Persons Working for Financial Services Affiliate
of Member, and Amend the Continuing Education Requirements).
\6\ Id.
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Nasdaq subsequently filed a rule change \7\ to amend, reorganize
and enhance certain of its corresponding membership, registration and
qualification requirements rules in part in response to the FINRA Rule
Changes,\8\ and also in order to facilitate the adoption of similar
membership, registration and qualification rules by Nasdaq's affiliated
exchanges. In that rule change, Nasdaq amended its Rule 1050 (now
General 9, Section 51) to remove references to NASD Rules 2711, 1050,
1022 and 1120 and it replaced those references with FINRA Rules 1120,
1250, and 2241.\9\ The reference to FINRA Rule 1120 was in error
because, at that time, FINRA Rule 1120 did not exist. NASD Rule 1120
was adopted as FINRA Rule 1250.\10\ Also, the references to FINRA Rule
1250 were in error because FINRA Rule 1250 was renumbered as FINRA Rule
1240.\11\ Of note, NASD Rules 1050 (Registration of Research Analysts)
and 1022 (Categories of Principal Registrations) were superseded by the
FINRA Rule 1200 Series but this was not reflected within SR-FINRA-2018-
078 [sic].\12\
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\7\ See Securities Exchange Act Release No. 84386 (October 9,
2018), 83 FR 51988 (October 15, 2018) (SR-NASDAQ-2018-078) (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend, Reorganize and Enhance Its Membership, Registration and
Qualification Rules).
\8\ See note 5 above.
\9\ See note 7 above.
\10\ See note 3 above.
\11\ See notes 4 and 5 above.
\12\ See note 5 above.
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At this time, Nasdaq proposes to remove the incorrect references to
FINRA Rules 1120 and 1250 as such rules do not exist. The Exchange
proposes to update the reference to FINRA Rule 1250 with a reference to
current FINRA Rule 1240. The Exchange also proposes to add references
to FINRA Rules 1220(a)(6), (a)(14), and (b)(6), because they correspond
to previous NASD Rules 1050 and 1022. These changes would reflect the
current FINRA rules relating to research analysts.
The Exchange proposes to amend General 9, Section 10,
Recommendations to Customers
[[Page 48456]]
(Suitability), to update a citation within subparagraph (b)(3) to NASD
Rule IM-2210-6. In 2011, FINRA replaced NASD IM-2210-6 with FINRA Rule
2214.\13\
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\13\ See Securities Exchange Act Release No. 64984 (June 28,
2011), 76 FR 46870 (August 3, 2011) (SR-FINRA-2011-035) (Notice of
Filing of Proposed Rule Change To Adopt FINRA Rules 2210
(Communications With the Public), 2212 (Use of Investment Companies
Rankings in Retail Communications), 2213 (Requirements for the Use
of Bond Mutual Fund Volatility Ratings), 2214 (Requirements for the
Use of Investment Analysis Tools), 2215 (Communications With the
Public Regarding Security Futures), and 2216 (Communications With
the Public About Collateralized Mortgage Obligations (CMOs)) in the
Consolidated FINRA Rulebook).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\14\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\15\ in particular, in that it is designed to
promote just and equitable principles of trade and to protect investors
and the public interest. The Exchange's proposal to remove inaccurate
FINRA rule references from General 9, Section 51 and replace them with
references to current FINRA rules that apply to research analysts and
[sic] is consistent with the Act. The Exchange's proposal will align
Nasdaq's rule to FINRA rules.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
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The Exchange's proposal to amend General 9, Section 10,
Recommendations to Customers (Suitability), to update a citation within
subparagraph (b)(3) to NASD Rule IM-2210-6 is consistent with the Act.
Replacing NASD IM-2210-6 with FINRA Rule 2214 will bring greater
transparency to the correct FINRA rule.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed amendments do not
impose an undue burden on competition as the proposal will amend the
Exchange's General 9, Section 51 to remove inaccurate FINRA rule
references and replace them with references to current FINRA Rules that
apply to research analysts.
The Exchange's proposal to amend General 9, Section 10,
Recommendations to Customers (Suitability), to update a citation within
subparagraph (b)(3) to NASD Rule IM-2210-6 does not impose an undue
burden on competition. Replacing NASD IM-2210-6 with FINRA Rule 2214
will bring greater transparency to the correct FINRA rule.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) thereunder.\17\
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#91e3e4fdf4bcf2fefcfcf4ffe5e2d1e2f4f2bff6fee7"><span class="__cf_email__" data-cfemail="c8babda4ade5aba7a5a5ada6bcbb88bbadabe6afa7be">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2021-064 on the subject line.
Paper Comments
<bullet> 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-NASDAQ-2021-064. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2021-064 and should be submitted
on or before September 20, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-18553 Filed 8-27-21; 8:45 am]
BILLING CODE 8011-01-P
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