Notice2023-09445
Order Granting Application by Long-Term Stock Exchange, Inc. for an 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
May 4, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 86 (Thursday, May 4, 2023)</title>
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[Federal Register Volume 88, Number 86 (Thursday, May 4, 2023)]
[Notices]
[Pages 28650-28651]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-09445]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97399]
Order Granting Application by Long-Term Stock Exchange, Inc. for
an 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 28, 2023.
The Long-Term Stock Exchange, Inc. (``LTSE'' or ``Exchange'') filed
with the Securities and Exchange Commission (the ``Commission'' or
``SEC'') an application \1\ for an 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 Exchange relating
to continuing education. 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 James G. Buckley, Chief Regulatory Officer,
LTSE, to Vanessa Countryman, Office of the Secretary, SEC, dated
April 19, 2023 (``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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LTSE has requested that the Commission grant the Exchange an
exemption from the rule filing requirements of Section 19(b) of the
Exchange Act for changes to LTSE Rule 2.154 (Continuing Education)
effected solely by virtue of changes to Financial Industry Regulatory
Authority, Inc. (``FINRA'') Rule 1240 (Continuing Education) that are
incorporated by reference into LTSE Rule 2.154. Specifically, the
Exchange requests that it be permitted to incorporate by reference a
change made to FINRA Rule 1240 without the need for the Exchange to
separately file a similar proposed rule change pursuant to Section
19(b) of the Exchange Act. The Exchange believes that this exemption is
appropriate because it will promote consistency between LTSE and FINRA
rules pertaining to continuing education, which are not trading
rules.\5\
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\5\ Exemptive Request, supra note 1, at pp. 1-2. A self-
regulatory organization (``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 also 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, LTSE has agreed to
provide written notice to its members whenever a change is proposed to
FINRA continuing education rules that are incorporated by reference
into LTSE's continuing education rules.\6\ Such notice would alert the
Exchange's members to the FINRA proposed rule change and give them an
opportunity to comment on the proposal.\7\ The Exchange would similarly
inform members in writing when the Commission approves any such
proposed rule change.\8\
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\6\ LTSE will provide such notice via a posting on the same
website location where it posts its 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
FINRA's website where the applicable proposed rule change is posted.
Exemptive Request, supra note 1, at p. 2, n.7.
\7\ Exemptive Request, supra note 1, at p. 2.
\8\ Id.
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The Commission has issued exemptions similar to LTSE's request.\9\
In granting one such exemption in 2022, the Commission repeated an
earlier Commission statement that it would consider similar future
exemption requests from other SROs, provided that:
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\9\ See, e.g., Exchange Act Release No. 94707 (Apr. 12, 2022),
87 FR 22962 (Apr. 18, 2022) (order granting The Nasdaq Stock Market
LLC and five affiliated national securities exchanges 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 FINRA rules);
Exchange Act Release No. 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); Exchange Act Release No. 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, Inc., FINRA, and the New York
Stock Exchange, LLC).
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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
[[Page 28651]]
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 Exchange Act Release No. 94707 (Apr. 12, 2022), 87 FR
22962 (Apr. 18, 2022).
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The Exchange has satisfied each of these conditions. Moreover,
granting LTSE 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 Exchange from the rule filing requirements under Section
19(b) of the Exchange Act with respect to the above-described rule the
Exchange has incorporated by reference.
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\11\ See, e.g., 83 FR 17198, 17199 & n.15.
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Accordingly, it is ordered, pursuant to Section 36 of the Exchange
Act,\12\ that LTSE is exempt from the rule filing requirements of
Section 19(b) of the Exchange Act with respect to a change to LTSE Rule
2.154 resulting solely from changes made to FINRA Rule 1240 without the
need for LTSE to separately file, pursuant to Section 19(b) of the
Exchange Act, a proposed rule change similar to the one filed by FINRA,
provided that LTSE promptly provides written notice to its members
whenever a change is proposed to FINRA Rule 1240, and provided that it
informs its 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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-09445 Filed 5-3-23; 8:45 am]
BILLING CODE 8011-01-P
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