[Federal Register Volume 86, Number 39 (Tuesday, March 2, 2021)]
[Notices]
[Pages 12250-12251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04219]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91202]


Order Granting Application by Nasdaq ISE, LLC 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 the 
Nasdaq Rule 1000 Series Incorporated by Reference

February 24, 2021.
    Nasdaq ISE, LLC (the ``Exchange'') has filed with the Securities 
and Exchange Commission (the ``Commission'') an application for an 
exemption under Section 36(a)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\ from the rule filing requirements of Section 
19(b) of the Exchange Act \2\ with respect to certain rules of The 
Nasdaq Stock Market LLC (``Nasdaq'') that the Exchange seeks to 
incorporate by reference (``Nasdaq Rule 1000 Series'').\3\ Section 
36(a)(1) of the Exchange Act,\4\ subject to certain limitations, 
authorizes the Commission to conditionally or unconditionally exempt 
any person, security, or transaction, or any class thereof, from any 
provision of the Exchange Act or rule thereunder, if necessary or 
appropriate in the public interest and consistent with the protection 
of investors.
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    \1\ 15 U.S.C. 78mm(a)(1).
    \2\ 15 U.S.C. 78s(b).
    \3\ See letter from Brett M. Kitt, Principal Associate General 
Counsel, Nasdaq Inc., to J. Matthew DeLesDernier, Assistant 
Secretary, Commission, dated December 30, 2020 (``Exemptive 
Request'').
    \4\ 15 U.S.C. 78mm(a)(1).
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    The Exchange filed a proposed rule change \5\ under Section 19(b) 
of the Exchange Act to replace its existing membership rules, as set 
forth in General 3 of its rulebook, with the Rule 1000 Series of the 
Nasdaq rulebook, as such rules may be in effect from time to time. 
Namely, in the proposed rule change, the Exchange proposed to 
incorporate by reference the Nasdaq Rule 1000 Series such that Nasdaq 
Rule 1000 Series would be applicable to the Exchange's applicants, 
members, associated persons, and other persons subject to the 
Exchange's jurisdiction as though such rules were fully set forth 
within the Exchange's rulebook.\6\
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    \5\ See Securities Exchange Act Release No. 90903 (January 12, 
2021), 86 FR 5284 (January 19, 2021) (SR-ISE-2020-43). Although the 
proposed rule change was filed pursuant to Section 19(b)(3)(A)(iii) 
of the Exchange Act, and thereby became effective upon filing with 
the Commission, the Exchange stipulated in its proposal that the 
incorporation by reference would not be operative until such time as 
the Commission grants this Exemptive Request.
    \6\ See note 5, supra.

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[[Page 12251]]

    The Exchange has requested, pursuant to Rule 0-12 under the 
Exchange Act,\7\ that the Commission grant the Exchange an exemption 
from the rule filing requirements of Section 19(b) of the Exchange Act 
for changes to the Exchange's rules that are effected solely by virtue 
of a change to the Nasdaq Rule 1000 Series that are incorporated by 
reference. Specifically, the Exchange requests that it be permitted to 
incorporate by reference changes made to the Nasdaq Rule 1000 Series 
that are cross-referenced in the Exchange's rules without the need for 
the Exchange to file separately the same proposed rule change pursuant 
to Section 19(b) of the Exchange Act.\8\
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    \7\ 17 CFR 240.0-12.
    \8\ See Exemptive Request, supra note 3.
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    The Exchange represents that the Nasdaq Rule 1000 Series are not 
trading rules.\9\ Moreover, the Exchange states that it proposes to 
incorporate by reference a category of rules (rather than individual 
rules within a category).\10\ The Exchange also represents that, as a 
condition of this exemption, the Exchange will provide written notice 
to its applicants and members whenever Nasdaq proposes a change to 
Nasdaq Rule 1000 Series.\11\
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    \9\ Id.
    \10\ Id. at 2 n.7.
    \11\ Id. at 3. The Exchange states that it will provide such 
notice via a posting on the same website location where the Exchange 
posts its own rule filings pursuant to Rule 19b-4(l) within the 
timeframe required by such Rule. In addition, the Exchange states 
that the website posting will include a link to the location on 
Nasdaq's website where the applicable proposed rule change is 
posted. Id. at 3 n.8.
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    According to the Exchange, this exemption is necessary and 
appropriate because it will result in the Exchange's membership rules 
and processes being consistent with the relevant cross-referenced 
Nasdaq membership rules and processes at all times.\12\ The Exchange 
states that harmonization of the membership rules and processes between 
the Exchange and Nasdaq will ease compliance burdens for those seeking 
membership on both exchanges and increase internal efficiencies 
associated with administering the membership rules and processes of 
each exchange.\13\
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    \12\ See id. at 2.
    \13\ See id.
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    The Commission has issued exemptions similar to the Exchange's 
request.\14\ In granting similar exemptions, the Commission stated that 
it would consider future exemption requests, provided that:
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    \14\ See, e.g., Securities Exchange Act Release Nos. 86896 
(September 6, 2019), 84 FR 48186 (September 12, 2019) (order 
granting application by Nasdaq BX, Inc. 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 the Nasdaq Rule 
1000 Series incorporated by reference); 80338 (March 29, 2017), 82 
FR 16464 (April 4, 2017) (order granting exemptive request from MIAX 
PEARL, LLC relating to rules of Miami International Securities 
Exchange, LLC incorporated by reference); 72650 (July 22, 2014), 79 
FR 44075 (July 29, 2014) (order granting exemptive requests from 
NASDAQ OMX BX, Inc. and the NASDAQ Stock Market LLC relating to 
rules of NASDAQ OMX PHLX LLC incorporated by reference); 67256 (June 
26, 2012), 77 FR 39277, 39286 (July 2, 2012) (order approving SR-BX-
2012-030 and granting exemptive request relating to rules 
incorporated by reference by the BX Options rules); 61534 (February 
18, 2010), 75 FR 8760 (February 25, 2010) (order granting BATS 
Exchange, Inc.'s exemptive request relating to rules incorporated by 
reference by the BATS Exchange Options Market rules) (``BATS Options 
Market Order''); and 57478 (March 12, 2008), 73 FR 14521, 14539-40 
(March 18, 2008) (order approving SR-NASDAQ-2007-004 and SR-NASDAQ-
2007-080, and granting exemptive request relating to rules 
incorporated by reference by The NASDAQ Options Market).
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    <bullet> A self-regulatory organization (``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; \15\
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    \15\ See 17 CFR 240.0-12 and Securities Exchange Act Release No. 
39624 (February 5, 1998), 63 FR 8101 (February 18, 1998) 
(``Commission Procedures for Filing Applications for Orders for 
Exemptive Relief Pursuant to Section 36 of the Exchange Act; Final 
Rule'').
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    <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.\16\
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    \16\ See BATS Options Market Order, supra note 14 (citing 
Securities Exchange Act Release No. 49260 (February 17, 2004), 69 FR 
8500 (February 24, 2004) (order granting exemptive request relating 
to rules incorporated by reference by several SROs) (``2004 
Order'')).
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    The Commission believes that the Exchange has satisfied each of 
these conditions. Further, the Commission also believes that granting 
the Exchange an exemption from the rule filing requirements under 
Section 19(b) of the Exchange Act will promote efficient use of the 
Commission's and the Exchange's resources by avoiding duplicative rule 
filings based on simultaneous changes to identical rule text sought by 
more than one SRO.\17\ 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 rules it 
incorporates by reference. This exemption is conditioned upon the 
Exchange promptly providing written notice to its applicants and 
members whenever Nasdaq changes a rule that the Exchange incorporates 
by reference.
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    \17\ See BATS Options Market Order, supra note 14, 75 FR at 
8761; see also 2004 Order, supra note 16, 69 FR at 8502.
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    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act,\18\ that the Exchange is exempt from the rule filing requirements 
of Section 19(b) of the Exchange Act solely with respect to changes to 
the rules identified in the Exemptive Request, provided that the 
Exchange promptly provides written notice to its applicants and members 
whenever Nasdaq proposes to change a rule that the Exchange has 
incorporated by reference.
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    \18\ 15 U.S.C. 78mm.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(76).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-04219 Filed 3-1-21; 8:45 am]
BILLING CODE 8011-01-P