Notice2022-06088
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Harmonize Various Processes Under Options 3, Section 20 Across the Affiliated Nasdaq Options Exchanges
Primary source
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Published
March 23, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 56 (Wednesday, March 23, 2022)</title>
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[Federal Register Volume 87, Number 56 (Wednesday, March 23, 2022)]
[Notices]
[Pages 16502-16504]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-06088]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94447; File No. SR-NASDAQ-2022-023]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Harmonize Various Processes Under Options 3, Section 20 Across the
Affiliated Nasdaq Options Exchanges
March 17, 2022.
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 March 8, 2022, 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, 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 proposes to harmonize its processes and procedures
under Options 3, Section 20 with those of its affiliated options
exchange.
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 harmonize its existing processes for the
review of decisions on appeal under Options 3, Section 20 with those of
its affiliate Nasdaq Phlx LLC (``Phlx''). The Exchange also proposes
several non-substantive, conforming changes in Options 3, Section 1.
Appeal
Today, Options 3, Section 20(k) governs the appeal process for
determinations by Exchange staff made under this Rule, including
obvious error determinations. Specifically, a party to a transaction
affected by a decision made under this section may appeal that decision
to the Exchange Review Council. An appeal must be made in writing, and
must be received by the Exchange within thirty (30) minutes after the
person making the appeal is given the notification of the determination
being appealed.
The Exchange proposes generally to maintain its current appeal
process with certain additions to harmonize its process with that of
its affiliate, Phlx. First, while Phlx similarly requires the parties
to submit a request for review within thirty (30) minutes of being
notified of the determination being appealed, Phlx also provides
parties with additional time to submit their request if the
notification occurs later in the trading day. In particular, if the
notification is made after 3:30 p.m. Eastern Time, either party has
until 9:30 a.m. Eastern Time on the next trading day to submit a
request for review.\3\ Similar to Phlx, the Exchange believes that this
flexibility will be helpful for Participants in submitting their appeal
requests in a timely manner, particularly where notification of the
Official's decision was received later in the trading day, and
therefore proposes to adopt this provision in Options 3, Section 20(k).
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\3\ See Phlx Options 3, Section 20(l).
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Second, the Exchange proposes to add a provision for when the
Exchange Review Council panel must render a decision on requests for
appeal to harmonize to Phlx's process. Specifically, the Exchange
proposes in Options 3, Section 20(k) that the Exchange Review Council
panel shall review the facts and render a decision on the day of the
transaction, or the next trade day in the case where a request is
properly made after 3:30 p.m. on the day of the transaction or where
the request is properly made the next trade day.\4\
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\4\ See Phlx Options 3, Section 20(l) for analogous language.
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Options 3, Section 1
The Exchange proposes non-substantive, conforming amendments to
Options 3, Section 1 (Days and Hours of Business). The Exchange first
proposes to amend the title from ``Days and Hours of Business'' to
``Hours of Business.'' The Exchange recently filed to establish General
3, Section 1030, which governs the days the Exchange will be open for
business.\5\ At this time, the Exchange also proposes to amend Options
3, Section 1(c) which provides, ``NOM shall not be open for business on
any
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holiday observed by The Nasdaq Stock Market, LLC.'' The Exchange
proposes to instead provide, ``NOM shall not be open for business as
provided within General 3, Section 1030.'' This proposed text will make
clear that while General 3, Section 1030 governs the days the Exchange
will be open for business, the remainder of the rule addresses the
hours of operation of the System and specific products. Finally, the
Exchange proposes to update citations to the Options 4 rules related to
Exchange-Traded Fund Shares and Index-Linked Securities.
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\5\ See Securities Exchange Act Release No. 93675 (November 29,
2021), 86 FR 68714 (December 3, 2021) (SR-NASDAQ-2021-69) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To
Include Juneteenth National Independence Day as a Holiday). Rule
1030 of General 3 memorialized all current Exchange holidays and
added a provision to permit the Exchange the authority to halt or
suspend trading or close Exchange facilities for certain
unanticipated closures.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\7\ 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
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that its proposal to amend the current appeal
process to harmonize with Phlx's appeal process is consistent with the
Act because it will continue to afford Participants with due process in
connection with decisions made by Officials under Options 3, Section 20
that the Participant may feel warrants review. As discussed above, the
proposal would allow either party until 9:30 a.m. the next trading to
submit a request for review if notification is made after 3:30 p.m.,
which the Exchange believes will be helpful for Participants in
submitting their appeal requests in a timely manner. Furthermore, the
proposal provides the Exchange Review Council panel additional time and
flexibility to render decisions on requests for appeal in cases where a
request is properly made after 3:30 p.m. on the day of the transaction
or where the request is properly made the next trade day, and is
designed to reduce administrative burden on the Exchange.
Ultimately, the proposed changes to the appeal process are intended
to align certain time frames with those of its affiliate in order to
provide more consistent rules and procedures across the affiliated
options exchanges owned by Nasdaq, Inc. Consistent rules and
procedures, in turn, would simplify and streamline the regulatory
requirements and increase the understanding of the Exchange's
operations for Participants of the Exchange that are also members on
the Exchange's affiliated options exchanges. Greater harmonization
across the affiliated options exchanges will result in greater
uniformity, rules that are easier to follow and understand, and more
efficient regulatory compliance, thereby contributing to the protection
of investors and the public interest. As such, the proposed rule change
would foster cooperation and coordination with persons engaged in
facilitating transactions in securities and would remove impediments to
and perfect the mechanism of a free and open market and a national
market system.
Lastly, the Exchange's proposal to amend Options 3, Section 1 (Days
and Hours of Business) as described above will bring greater clarity,
and ensure that this Rule conforms to the changes made in the recent
filing to establish General 3, Section 1030, which governs the days the
Exchange will be open for business.\8\ The Exchange believes that
market participants would benefit from the increased clarity, thereby
reducing potential confusion, and ensuring that market participants and
investors can more easily navigate and understand the Exchange's rules.
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\8\ See supra note 5.
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For these reasons, the Exchange believes that the proposal is
consistent with the Act.
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. As it relates to the proposed
changes to the appeal process under Options 3, Section 20(k), the
changes are designed to provide greater harmonization among similar
rules and processes across the Exchange's affiliated options exchanges,
resulting in more efficient regulatory compliance for common members.
For these reasons, the Exchange believes that the proposed rule change
reflects this competitive environment and does not impose any undue
burden on intermarket competition.
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)(iii) of the Act \9\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#ee9c9b828bc38d8183838b809a9dae9d8b8dc0898198"><span class="__cf_email__" data-cfemail="047671686129676b6969616a7077447761672a636b72">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2022-023 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-2022-023. 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/
[[Page 16504]]
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 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-2022-
023 and should be submitted on or before April 13, 2022.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06088 Filed 3-22-22; 8:45 am]
BILLING CODE 8011-01-P
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