Notice2022-08181
Order Granting Application by The Nasdaq Stock Market LLC and Five Affiliated National Securities Exchanges 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 Certain Rules 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
April 18, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 74 (Monday, April 18, 2022)</title>
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[Federal Register Volume 87, Number 74 (Monday, April 18, 2022)]
[Notices]
[Pages 22962-22963]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-08181]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94707]
Order Granting Application by The Nasdaq Stock Market LLC and
Five Affiliated National Securities Exchanges 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 Certain Rules
Incorporated by Reference
April 12, 2022.
The Nasdaq Stock Market LLC (``Nasdaq'') and its affiliated
national securities exchanges Nasdaq PHLX LLC (``Phlx''), Nasdaq BX,
Inc. (``BX''), Nasdaq ISE, LLC (``ISE''), Nasdaq GEMX, LLC (``GEMX''),
and Nasdaq MRX, LLC (``MRX'') (each a ``Nasdaq Exchange'' and
collectively the ``Nasdaq Exchanges'') have filed with the Securities
and Exchange Commission (the ``Commission'' or ``SEC'') an application
\1\ for exemption under Section 36(a) of the Securities Exchange Act of
1934 (``Exchange Act'') \2\ and Rule 0-12 thereunder \3\ from the rule
filing requirements of Section 19(b) of the Exchange Act \4\ with
respect to the rules of the Nasdaq Exchanges relating to arbitration.
Section 36 of the Exchange Act authorizes the Commission to
conditionally or unconditionally exempt any person, security, or
transaction, or any class or classes of persons, securities, or
transactions, from any provision or provisions of the Exchange Act or
of any rule or regulation thereunder, to the extent that such exemption
is necessary or appropriate in the public interest, and is consistent
with the protection of investors.
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\1\ See Letter from Stephen Matthews, Principal Associate
General Counsel, Nasdaq, to J. Matthew DeLesDernier, Assistant
Secretary, SEC, dated February 12, 2021 (``Exemptive Request'').
\2\ 15 U.S.C. 78mm.
\3\ 17 CFR 240.0-12 (Commission procedures for filing
applications for orders for exemptive relief under Section 36 of the
Exchange Act).
\4\ 15 U.S.C. 78s(b).
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The Nasdaq Exchanges have requested that the Commission: (i) Grant
Nasdaq an exemption from the rule filing requirements of Section 19(b)
of the Exchange Act for changes to rules on arbitration in the
``General 6'' section of Nasdaq's rulebook (the ``General 6 Rules'')
effected solely by virtue of changes to rules on arbitration in the
Rule 12000 Series and Rule 13000 Series of the Financial Industry
Regulatory Authority, Inc. (``FINRA'') Manual (Code of Arbitration
Procedures for Customer Disputes and Code of Arbitration Procedures for
Industry Disputes) (``FINRA Arbitration Rules'') that are incorporated
by reference into the General 6 Rules; and (ii) grant the remaining
Nasdaq Exchanges an exemption from the rule filing requirements of
Section 19(b) of the Exchange Act for changes to their rules on
arbitration that are effected solely by virtue of a change to the
General 6 Rules that are incorporated into the remaining Nasdaq
Exchanges' rules by reference. Specifically, the Nasdaq Exchanges
request that they be permitted to incorporate by reference changes made
to the FINRA Arbitration Rules and Nasdaq General 6 Rules (as
applicable) that are incorporated by reference into the Nasdaq
Exchanges' rules without the need for each Nasdaq Exchange to
separately file, pursuant to Section 19(b) of the Exchange Act, a
proposed rule change similar to the one filed by FINRA or Nasdaq (as
applicable). The Nasdaq Exchanges believe that these exemptions are
appropriate because they will promote consistency among the Nasdaq
Exchanges' rules pertaining to arbitration, which are not trading
rules.\5\
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\5\ Exemptive Request, supra note 1, at 2-3. An SRO wishing to
incorporate rules of another SRO by reference may submit 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, if, among other things, the
rules to be incorporated are 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). See Exchange Act Release No. 49260
(Feb. 17, 2004), 69 FR 8500 (Feb. 24, 2004).
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As a condition of the requested exemption, the Nasdaq Exchanges
have agreed to provide written notice to their members whenever a
change is proposed to FINRA Arbitration Rules or Nasdaq General 6 Rules
(as applicable) that are incorporated by reference into the rules of
the Nasdaq Exchanges.\6\ Such notice will alert the Nasdaq Exchanges'
members to the proposed FINRA or Nasdaq rule change and give them an
opportunity to comment on the proposal.\7\ The Nasdaq Exchanges will
similarly inform members in writing when the Commission approves any
such proposed changes.\8\
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\6\ The Nasdaq Exchanges will provide such notice via a posting
on the same website location where they post their own rule filings
pursuant to and within the timeframe required by Rule 19b-4(1) under
the Exchange Act. The website posting will include a link to the
location on Nasdaq's website where the applicable proposed rule
change is posted. Exemptive Request, supra note 1, at 3 & n.7.
\7\ Exemptive Request, supra note 1, at 3.
\8\ Id.
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The Commission has issued exemptions similar to the Nasdaq
Exchanges' request.\9\ In granting one such exemption in 2010, the
Commission repeated an earlier Commission statement that it would
consider similar future exemption requests from other self-regulatory
organizations (``SROs''), provided that:
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\9\ See, e.g., Release No. 34-83040 (Apr. 12, 2018), 83 FR 17198
(Apr. 18, 2018) (order granting MIAX PEARL, LLC, an exemption under
Section 36(a) of the Exchange Act from the rule filing requirements
of Section 19(b) of the Exchange Act with respect to certain of its
rules incorporating by reference rules of the Miami International
Securities Exchange, LLC); Release No. 34-61534 (Feb. 18, 2010), 75
FR 8760 (Feb. 25, 2010) (order granting BATS Exchange, Inc., an
exemption under Section 36(a) of the Exchange Act from the rule
filing requirements of Section 19(b) of the Exchange Act with
respect to certain of its rules incorporating by reference rules of
the Chicago Board Options Exchange, Incorporated, Financial Industry
Regulatory Authority, Inc., and the New York Stock Exchange, LLC)
(``BATS Order'').
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<bullet> An 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;
<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.\10\
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\10\ See Release No. 34-83040, supra note 17, at 75 FR 17199
(footnotes omitted).
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The Commission believes that the Nasdaq Exchanges have satisfied
each of these conditions. The Commission also believes that granting
the Nasdaq Exchanges an exemption from the rule filing requirements
under Section 19(b) of the Exchange Act will promote efficient use of
Commission and exchange resources by avoiding duplicative rule filings
based on simultaneous changes to identical rule text sought by more
than one SRO.\11\ The Commission therefore finds it appropriate in the
public interest, and consistent with the protection of investors, to
exempt the Nasdaq
[[Page 22963]]
Exchanges from the rule filing requirements under Section 19(b) of the
Exchange Act with respect to the above-described rules they have
incorporated by reference.
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\11\ Id. at 75 FR 17199 & n.15.
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Accordingly, it is ordered, pursuant to Section 36 of the Exchange
Act,\12\ that the Nasdaq Exchanges are exempt from the rule filing
requirements of Section 19(b) of the Exchange Act with respect to
changes to their rules on arbitration resulting solely from changes
made to the FINRA Arbitration Rules or the Nasdaq General 6 Rules (as
applicable) that are incorporated by reference into the Nasdaq
Exchanges' rules without the need for each Nasdaq Exchange to
separately file, pursuant to Section 19(b) of the Exchange Act, a
proposed rule change similar to the one filed by FINRA or Nasdaq,
provided that the Nasdaq Exchanges promptly provide written notice to
their members whenever a change is proposed to the FINRA Arbitration
Rules or the Nasdaq General 6 Rules, and provided that they inform
their members in writing when the Commission approves any such proposed
change.
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\12\ 15 U.S.C. 78mm.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(76).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-08181 Filed 4-15-22; 8:45 am]
BILLING CODE 8011-01-P
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