Notice2022-28599
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Implementation Date for Certain Risk Checks of Rule Nasdaq Equity 6, Section 5 Risk Settings That Provide Participants With Additional Optional Settings
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
January 5, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 3 (Thursday, January 5, 2023)</title>
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[Federal Register Volume 88, Number 3 (Thursday, January 5, 2023)]
[Notices]
[Pages 892-893]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-28599]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96592; File No. SR-NASDAQ-2022-080]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend the Implementation Date for Certain Risk Checks of Rule Nasdaq
Equity 6, Section 5 Risk Settings That Provide Participants With
Additional Optional Settings
December 29, 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 December 20, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``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 extend the implementation date for certain
risk checks of Rule Nasdaq Equity 6, Section 5 (Risk Settings) that
provide Participants with additional optional settings.
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
Nasdaq is filing this proposal to extend the implementation date of
Rule Nasdaq Equity 6, Section 5 (Risk Settings) that provide
Participants with additional optional settings to Q1 2023; and to make
certain technical modification without changing the substance of the
rules.
Nasdaq proposed rule changes under Rule Nasdaq Equity 6, Section 5
(Risk Settings) to provide Participants \3\ with additional optional
settings to assist them in their efforts to manage risk on their order
flow. These additional settings provide participants with extra
oversight and controls on orders coming into the exchange. Once the
optional risk controls are set, the Exchange is authorized to take
automated action if a designated risk level for a Participant is
exceeded. Such risk settings would provide Participants with enhanced
abilities to manage their risk with respect to orders on the Exchange.
All proposed risk settings are optional for Participants and afford
flexibility to Participants to select their own risk tolerance levels.
These changes were filed by Nasdaq on August 8, 2022, and published in
the Federal Register on August 18, 2022.\4\
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\3\ Pursuant to Rule Nasdaq Equity 1, Section 1(a)(5), a
``Participant'' is defined as an entity that fulfills the
obligations contained in Equity 2, Section 3 regarding participation
in the System, and shall include: (1) ``Nasdaq ECNs,'' members that
meet all of the requirements of Equity 2, Section 14, and that
participates in the System with respect to one or more System
Securities; (2) ``Nasdaq Market Makers'' or ``Market Makers'',
members that are registered as Nasdaq Market Makers for purposes of
participation in the System on a fully automated basis with respect
to one or more System securities; and (3) ``Order Entry Firms,''
members that are registered as Order Entry Firms for purposes of
entering orders in System Securities into the System. This term
shall also include any Electronic Communications Network or
Alternative Trading System (as such terms are defined in Regulation
NMS) that fails to meet all the requirements of Equity 2, Section
14.
\4\ See Securities Exchange Act Release No. 95495 (August 12,
2022), 86 FR 24685 (August 18, 2022) (SR-NASDAQ-2022-047) (the
``Proposal'').
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Nasdaq indicated that it intends to implement the proposed rule
changes on or before December 30, 2022. Due to re-prioritization,
Nasdaq is delaying the implementation of the additional, optional risk
checks, as described in the Proposal, until March 31, 2023. The
Exchange will issue an Equity Trader Alert to members announcing the
exact date the Exchange will implement the risk protections.
Nasdaq also proposes to modify the risk setting titled ``Restricted
Stock List.'' As described in the Proposal, this control allows a
Participant to restrict the types of securities transacted by setting a
list of symbols for which orders cannot be entered. This control also
allows Participants to set an easy to borrow list, which is a list of
symbols for which short sale orders may be entered. Short sale orders
for symbols not on the easy to borrow list will not be accepted;
however, Participants will have an option to indicate that short sales
orders are permitted for all symbols.
Nasdaq proposes to modify this risk check to such that a
Participant can set a hard to borrow list, which is a list of symbols
for which short sale orders may not be entered, rather than an easy to
borrow list. Short sale orders for symbols not on the hard to borrow
list will be accepted; however, Participants will have an option to
indicate that short sales orders are permitted for all symbols by not
maintaining a hard to borrow list. Nasdaq believes that this
modification does not substantively change the Restricted Stock List
risk setting. This setting continues to be similar to Interpretations
and Policies .01(d) of BZX Rule 11.13.\5\
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\5\ See Securities Exchange Act Release No. 80611 (May 5, 2017)
82 FR 22045 (May 11, 2017) (SR-BatsBZX-2017-24).
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Nasdaq also proposes to modify Market Impact Check and Gross
Exposure Check to correct typographical errors and clarify the rule
language without substantively changing it.
Implementation
As stated above, the Exchange intends to implement the proposed
rule changes on or before March 31, 2023. The Exchange will issue an
Equity Trader Alert to members announcing the exact date the Exchange
will implement the risk protections.
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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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The purpose of this proposal is to modify the timing of the planned
implementation for the optional risk checks, described above, and to
inform
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the SEC and market participants of that change. The introduction of the
optional additional risk checks was proposed in a rule filing that was
submitted to the SEC, and the Exchange is now modifying the
implementation date for this product. Nasdaq is delaying the
implementation date in order to complete testing in line with Nasdaq's
re-prioritized product pipeline.
Nasdaq believes that the proposed changes to modify the risk
setting titled ``Restricted Stock List'' is a technical modification
that does not change the substance of this rule. Similarly, Nasdaq
believes that the proposal to modify Market Impact Check and Gross
Exposure Check to correct typographical errors and clarify the rule
language without substantively changing it is ministerial.
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 explained above, the purpose
of this proposal is to modify the timing of the planned implementation
for the optional additional risk checks and to inform the SEC and
market participants of that change. The existing Nasdaq products will
continue to be available, and the implementation delay will impact all
market participants equally. The Exchange does not expect the date
change to place any burden on competition. Similarly, Nasdaq believes
that correction of typographical errors, technical changes, and
clarifications of existing rules do not place any burden on competition
because these changes do not affect the substance of the existing
rules.
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 \8\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A)(iii).
\9\ 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="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#6113140d044c020e0c0c040f1512211204024f060e17"><span class="__cf_email__" data-cfemail="7b090e171e56181416161e150f083b081e18551c140d">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2022-080 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-2022-080. 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-2022-080 and should be submitted
on or before January 26, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-28599 Filed 1-4-23; 8:45 am]
BILLING CODE 8011-01-P
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