Notice2023-03333
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Market Maker Requirements in Equity 2 Section 5 and Equity 2 Section 11
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
February 17, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 33 (Friday, February 17, 2023)</title>
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[Federal Register Volume 88, Number 33 (Friday, February 17, 2023)]
[Notices]
[Pages 10419-10420]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-03333]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96903; File No. SR-NASDAQ-2023-001]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Market Maker Requirements in Equity 2 Section 5 and Equity 2
Section 11
February 13, 2023.
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 January 31, 2023, 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 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 Equity 2, 5 and Section 11 related
to certain Market Maker requirements, as described further below.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/bx/rules">https://listingcenter.nasdaq.com/rulebook/bx/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
On December 2, 2022, Nasdaq proposed changes to amend certain
Nasdaq Market Maker requirements. These changes were published in the
Federal Register on December 21, 2022 (``Initial Filing'') and were
immediately effective on January 2, 2023.\3\ However, the system
updates necessary to implement the changes in the Initial Filing have
not been completed. The updates will be completed by Q3 2023.
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\3\ See Securities Exchange Act Release No. 96507 (December 15,
2022), 87 FR 78154 (December 21, 2022) (``Initial Filing'').
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Due to the delay in these system updates, Nasdaq is proposing to
reinsert certain rule text changes into Equity 2 Section 5(a)(2) and
Section 11(a). More specifically, the Exchange is reinserting
previously deleted references to a Market Maker's and an Electronic
Communications Network's (``ECN'') use of a Primary MPID and additional
MPIDs (``Supplemental MPIDs'') in Equity 2, Section 5(a)(2)(J) and
Section 5(a)(2)(K). Although the Exchange has eliminated the
distinction between Primary and Supplemental MPIDs, the technology
updates that are required to remove the distinction from its system are
expected to be completed in Q3 2023. To ensure that the rulebook is
compliant with current system operations, the Exchange is proposing to
reinsert the previously deleted references.
Additionally, the Exchange is proposing to amend Equity 2, Section
11(a). Specifically, the Exchange is proposing to amend the re-
registration waiting period for Nasdaq Market Makers that terminate
registration in a security. In the Initial Filing, the Exchange reduced
the re-registration waiting period from twenty business days to 5
business days.\4\ However, the Exchange is proposing to roll back the
rule text language to twenty business days because the system updates
that are required to reduce the re-registration waiting period to 5
business days are not expected to be completed until Q3 2023. The
Exchange represents that a rollback of the re-registration waiting
period will not have an impact on any Nasdaq Market Maker because none
have terminated registration in a security since the Initial Filing
became effective. The Exchange also represents that no Nasdaq Market
Maker will be affected by the rollback of the distinction between
Primary and Secondary MPIDs because the Exchange has eliminated the
distinction between Primary and Supplemental MPIDs.\5\ The proposed
changes are identical to the rules previously removed from Equity 2,
Section 5(a)(2)(J) and Section 5(a)(2)(K) in the Initial Filing.
Similarly, the proposed change to the re-registration waiting period
reinstates the time period that was previously removed from Equity 2,
Section 11(a).
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\4\ See Initial Filing at 78154.
\5\ Id. at 78155.
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The Exchange is not proposing to modify any other aspect of the
Initial Filing and no market participants has been affected by the
proposed amendments to reinstate the rule text related to a Market
Maker's and an ECN's use of a Primary MPID and Supplemental MPIDs.
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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As discussed above, the Exchange has already eliminated the
distinction between Primary and Supplemental MPIDs. Because the
Exchange has an obligation to ensure that its rule text aligns with the
operation of its system, the proposed rule changes are intended to
remove any potential impediments to a free and open market and a
national market system by keeping the previous rule text in place until
technology updates to remove the distinction from our system are
finalized.
Similarly, no market participants have been affected by the
proposal to revert the re-registration waiting period for Nasdaq Market
Makers that terminate registration in a security.\8\ The proposed rule
change will remove any potential impediments to a free and open market
and a national market system by allowing the Exchange to maintain
compliance with its obligation to ensure that its rule text aligns with
the operation of its system. When the system updates are ready, the
Exchange will submit a subsequent rule filing to reinstate the reverted
changes from the Initial Filing.
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\8\ Since the Initial Filing became effective, no market makers
have terminated registration from a security.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes 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
[[Page 10420]]
add certain rule text changes that were prematurely removed from Equity
2 Section 5(a)(2) and Section 11(a). Furthermore, as discussed above,
the Exchange has represented that no Market Maker has been affected by
the distinction between Primary and Supplemental MPIDs because the
Exchange has eliminated the distinction between Primary and
Supplemental MPIDs, and no market maker has terminated registration or
attempted to re-register in a security since the Initial Filing became
operative on January 2, 2023. Therefore, the Exchange does not expect
reinserting the proposed rule text to place any burden on 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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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of filing. Rule
19b-4(f)(6)(iii), however, permits the Commission to designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the operative delay so that the proposal may become
operative upon filing in order to permit the Exchange to immediately
reflect rules that align with Nasdaq's current system capabilities
until Nasdaq system updates are completed. The Commission thus believes
that waiver of the operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission hereby
waives the operative delay and designates the proposal operative upon
filing.\11\
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\11\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act.
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#ec9e998089c18f8381818982989fac9f898fc28b839a"><span class="__cf_email__" data-cfemail="1c6e697079317f7371717972686f5c6f797f327b736a">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2023-001 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-2023-001. 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-2023-001, and should be submitted
on or before March 10, 2023.
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\12\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-03333 Filed 2-16-23; 8:45 am]
BILLING CODE 8011-01-P
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