Notice2022-06192
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend General 3, Rule 1002, Qualifications of Exchange Members and Associated Persons; Registration of Branch Offices and Designation of Office of Supervisory Jurisdiction
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
March 24, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 57 (Thursday, March 24, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 57 (Thursday, March 24, 2022)]
[Notices]
[Pages 16804-16805]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-06192]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94473; File No. SR-NASDAQ-2022-022]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend General 3, Rule 1002, Qualifications of Exchange Members and
Associated Persons; Registration of Branch Offices and Designation of
Office of Supervisory Jurisdiction
March 18, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend General 3, Rule 1002, Qualifications
of Exchange Members and Associated Persons; Registration of Branch
Offices and Designation of Office of Supervisory Jurisdiction.
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 3, Rule 1002, Qualifications
of Exchange Members and Associated Persons; Registration of Branch
Offices and Designation of Office of Supervisory Jurisdiction.
Specifically, General 3, Rule 1002(b) provides for ineligibility of
certain persons for Membership or Association. General 3, Rule
1002(b)(2) provides,
Subject to such exceptions as may be explicitly provided
elsewhere in the Rules, no person shall become associated with a
Member, continue to be associated with a Member, or transfer
association to another Member, if such person fails or ceases to
satisfy the qualification requirements established by the Rules, or
if such person is or becomes subject to a statutory
disqualification; and no broker or dealer shall be admitted to
membership, and no Member shall be continued in membership, if any
person associated with it is ineligible to be an Associated Person
under this subsection.
For purposes of statutory disqualification, as such term is defined
in Section 3(a)(39) of the Act,\3\ the Exchange proposes to
specifically define the terms ``person associated with a member'' and
``associated person'' to align those terms with FINRA's By-Laws. FINRA
defines the terms ``person associated with a member'' or ``associated
person of a member'' at paragraph (ee) of Article I, Definitions, of
those By-Laws.\4\ Nasdaq currently defines an ``Associated Person''
within General 3, Section 1011(b) to mean any partner, officer,
director, or branch manager of a Member or Applicant (or person
occupying a similar status or performing similar functions), any person
directly or indirectly controlling, controlled by, or under common
control with such Member or Applicant, or any employee of such Member
or Applicant, except that any person associated with a Member or
Applicant whose functions are solely clerical or ministerial shall not
be included in the meaning of such term for purposes of the Rules.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78c(a)(39).
\4\ FINRA By-Law Article I(ee) provides, ``person associated
with a member'' or ``associated person of a member'' means: (1) A
natural person who is registered or has applied for registration
under the Rules of the Corporation; (2) a sole proprietor, partner,
officer, director, or branch manager of a member, or other natural
person occupying a similar status or performing similar functions,
or a natural person engaged in the investment banking or securities
business who is directly or indirectly controlling or controlled by
a member, whether or not any such person is registered or exempt
from registration with FINRA under these By-Laws or the Rules of the
Corporation; and (3) for purposes of Rule 8210, any other person
listed in Schedule A of Form BD of a member.
---------------------------------------------------------------------------
At this time, Nasdaq proposes to adopt FINRA's definitions of
``person associated with a member'' and ``associated person'' as
provided within FINRA By-Law Article I(ee), for purposes of statutory
disqualification, within new Nasdaq General 3, Rule 1002(b)(2)(A). As
proposed, General 3, Rule 1002(b)(2)(A) would provide,
For purposes of ``statutory disqualification'' as such term is
defined in Section 3(a)(39) of the Exchange Act the terms ``person
associated with a member'' and ``associated person'' shall mean (1)
a natural person who is registered or has applied for registration
under the Rules of the Exchange; (2) a sole proprietor, partner,
officer, director, or branch manager of a member, or other natural
person occupying a similar status or performing similar functions,
or a natural person engaged in the investment banking or securities
business who is directly or indirectly controlling or controlled by
a member, whether or not any such person is registered or exempt
from registration with the Exchange under its Rules; and (3) for
purposes of Nasdaq General 5, Rule 8210, any other person listed in
Schedule A of Form BD of a member.
By defining the terms ``person associated with a member'' and
``associated person'' substantively identical \5\ to FINRA, for
purposes of statutory disqualification, the Exchange would align its
application of statutory disqualification with FINRA's process. This
proposal would avoid potentially different outcomes for members of both
FINRA and Nasdaq with respect to ineligibility for membership and
association.
---------------------------------------------------------------------------
\5\ References to ``Corporation'' within FINRA By-Law Article
I(ee) were amended to ``Exchange'' and references to ``By-Laws and
Rules of FINRA'' were amended to reference Nasdaq's Rules.
---------------------------------------------------------------------------
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 and to protect investors and the
public interest. The Exchange's proposal to adopt FINRA's definitions
of ``person
[[Page 16805]]
associated with a member'' and ``associated person'' as provided within
FINRA By-Law Article I(ee), for purposes of statutory disqualification
pursuant to Section 3(a)(39) of Act,\8\ within new Nasdaq General 3,
Rule 1002(b)(2)(A) is consistent with the Act. Aligning the terms
``person associated with a member'' and ``associated person'' with
paragraph (ee) of Article I, Definitions, of FINRA's By-Laws would
avoid potentially different outcomes for members of both FINRA and
Nasdaq with respect to ineligibility for membership and association as
a result of statutory disqualification.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ 15 U.S.C. 78c(a)(39).
---------------------------------------------------------------------------
The Exchange believes its proposal will promote just and equitable
principles of trade and protect investors and the public interest by
ensuring market participants that are members of both FINRA and Nasdaq
are held to the same standard with respect to statutory
disqualification.
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 Exchange's proposal to
adopt FINRA's definitions of ``person associated with a member'' and
``associated person'' as provided within FINRA By-Law Article I(ee)
within General 3, Rule 1002(b)(2)(A), for purposes of statutory
disqualification pursuant to Section 3(a)(39) of Act,\9\ does not
impose an undue burden on competition. Aligning the terms ``person
associated with a member'' and ``associated person'' with paragraph
(ee) of Article I, Definitions, of FINRA's By-Laws would avoid
potentially different outcomes for members of both FINRA and Nasdaq
with respect to ineligibility for membership and association as a
result of statutory disqualification and ensure that all FINRA and
Nasdaq members are held to the same standard with respect to statutory
disqualification. Today, all Nasdaq members are subject to the General
3 rules.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78c(a)(39).
---------------------------------------------------------------------------
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 \10\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 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.
---------------------------------------------------------------------------
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="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#6715120b024a04080a0a020913142714020449000811"><span class="__cf_email__" data-cfemail="6c1e190009410f0301010902181f2c1f090f420b031a">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2022-022 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-2022-022. 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; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.
All submissions should refer to File Number SR-NASDAQ-2022-022 and
should be submitted on or before April 14, 2022.
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06192 Filed 3-23-22; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on March 24, 2022.
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.