Federal Register / Vol. 88, No. 218 / Tuesday, November 14, 2023 / Notices 78081 

27 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 98489 

(Sept. 22, 2023), 88 FR 66913 (Sept. 28, 2023) (SR– 

NASDAQ–2023–036) (‘‘Notice’’). 

4 In Amendment No. 1, the Exchange makes nonsubstantive clarifying changes and provides 

additional justification for the proposal. 

Amendment No. 1 to the proposed rule change is 

available at https://www.sec.gov/comments/srnasdaq-2023-036/srnasdaq2023036-283339- 

691882.pdf. 

5The ‘‘Nasdaq Halt Cross’’ is the process for 

determining the price at which Eligible Interest 

shall be executed at the open of trading for a halted 

security and for executing that Eligible Interest. See 

Rule 4753(a)(4). ‘‘Eligible Interest’’ shall mean any 

quotation or any order that has been entered into 

the system and designated with a time-in-force that 

would allow the order to be in force at the time of 

the Halt Cross. See Nasdaq Rule 4753(a)(5). 

6Rule 5550(a)(2) specifies that a Company that 

has its Primary Equity Security listed on the Capital 

Market must have a minimum bid price of at least 

$1 per share. See also Rule 5450(a)(1) (Global and 

Global Select Markets). Companies are afforded a 

grace period pursuant to Rule 5810(c)(3)(A) to 

regain compliance. 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

PEARL–2023–60 on the subject line. 

Paper Comments 

• 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–PEARL–2023–60. 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 (https://www.sec.gov/ 

rules/sro.shtml). 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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–PEARL–2023–60 and should be 

submitted on or before December 5, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Christina Z. Milnor, 

Assistant Secretary. 

[FR Doc. 2023–25007 Filed 11–13–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98878; File No. SR– 

NASDAQ–2023–036] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing of Amendment No. 1 and Order 

Granting Accelerated Approval of 

Proposed Rule Change, as Modified by 

Amendment No. 1, Relating to Nasdaq 

Rules 4120 and 4753 

November 7, 2023. 

I. Introduction 

On September 12, 2023, The Nasdaq 

Stock Market LLC (‘‘Nasdaq’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend Rule 4120 (Limit Up-Limit Down 

and Trading Halts) and Rule 4753 

(Nasdaq Halt Cross) to set forth specific 

requirements for halting and resuming 

trading in a security that is subject to a 

reverse stock split. The proposed rule 

change was published for comment in 

the Federal Register on September 28, 

2023.3

On October 27, 2023, the Exchange 

filed Amendment No. 1 to the proposed 

rule change, which replaced and 

superseded the proposed rule change as 

originally filed.4 The Commission has 

received no comments on the proposal. 

The Commission is publishing this 

notice to solicit comments on 

Amendment No. 1 from interested 

persons, and is approving the proposed 

rule change, as modified by Amendment 

No. 1, on an accelerated basis. 

II. Self-Regulatory Organization’s 

Description of the Proposal, as 

Modified by Amendment No. 1 

In its filing with the Commission, the 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

In conjunction with the increase in 

overall reverse stock splits in recent 

years, Nasdaq proposes to amend Rule 

4120 and Rule 4753 to set forth specific 

requirements for halting trading in a 

security that is subject to a reverse stock 

split and resuming trading using the 

Nasdaq Halt Cross.5 Current Rule 4120 

does not specifically list rule reverse 

stock splits in the enumerated 

circumstances in which Nasdaq may 

halt trading in a security. The proposed 

amendments will be specific to the 

automatic initiation, pre-market trading 

and opening of a Nasdaq-listed security 

undergoing a reverse stock split. 

Background 

Nasdaq has observed that the current 

market environment has led to an 

increase in reverse stock split activity. 

In 2022, Nasdaq processed 196 reverse 

stock splits, compared to 35 in 2021 and 

98 in 2020. Just in the first quarter of 

2023, Nasdaq processed 78 reverse stock 

splits, and projects significantly more 

throughout 2023. Reverse stock splits 

are often effected by smaller companies 

that do not have broad media or 

research coverage. In most cases, the 

companies are listed on the Capital 

Market tier and are conducting reverse 

stock splits to achieve compliance with 

Nasdaq’s $1 minimum bid price 

requirement.6

Nasdaq believes that the increase in 

companies effecting reverse stock splits 

warrants amendments to the trading halt 

rules to allow for Nasdaq to help reduce 

the potential for errors resulting in a 

material effect on the market resulting 

from market participants’ processing of 

the reverse stock split, including 

incorrect adjustment or entry of orders. 

Nasdaq currently processes reverse 


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7 In a separate filing, Nasdaq also proposed 

changes to adopt specific notification and 

disclosure requirements for reverse stock splits. See 

Securities Exchange Act Release No. 98014 (July 28, 

2023), 88 FR 51376 (August 3, 2023) (SR–Nasdaq– 

2023–21). 

8The term ‘‘Post-Market Hours’’ means the period 

of time beginning immediately after the end of 

Market Hours and ending at 8 p.m. ET. See Nasdaq 

Rule Equity 1, Section 1(a)(9). 

9Primary Listing Market is defined in Section 

X.A.8 of the Joint Self-Regulatory Organization Plan 

Governing the Collection, Consolidation and 

Dissemination of Quotation and Transaction 

Information for Nasdaq-Listed Securities Traded on 

Exchanges on an Unlisted Trading Privileges Basis 

(‘‘UTP Plan’’) as ‘‘the national securities exchange 

on which an Eligible Security is listed. If an Eligible 

Security is listed on more than one national 

securities exchange, Primary Listing Market means 

the exchange on which the security has been listed 

the longest.’’ 

10 Initiating the halt at approximately 7:50 p.m. 

will provide Nasdaq with a limited buffer to ensure 

that trading in a security that is undergoing a 

reverse stock split will not continue after the close 

of post-market trading. While the Exchange does 

not anticipate halting a security that undergoes a 

reverse stock split sooner than 7:50 p,m., the 

Exchange may halt trading sooner than 7:50 p.m. for 

other reasons as described in Nasdaq Equity 4, 

Section 4120. Nasdaq will provide notice of the halt 

through NasdaqTrader.com available at, https://

www.nasdaqtrader.com/Trader.aspx?id=Trade

Halts. 

11Nasdaq may change the resumption time if, for 

example, there was an Extraordinary Market 

Activity that could interfere with a fair and orderly 

9:00 a.m. resumption. ‘‘Extraordinary Market 

Activity’’ is defined in the UTP Plan. Nasdaq will 

provide notice of the re-opening of the security 

through NasdaqTrader.com available at, https://

www.nasdaqtrader.com/Trader.aspx?id=Trade

Halts. 

12Trading in a security that has undergone a 

reverse stock split will have a delayed opening 

because following the reverse stock split, the 

security will not re-open until the end of pre-market 

trading. Orders that have been entered for execution 

prior to the opening cross would be able to execute 

in the halt cross at 9 a.m. 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(5). 

stock splits overnight, with the security 

opening for trading at 4 a.m. ET in the 

pre-market hours (i.e., the trading 

session between 4 a.m. to 9:30 a.m. ET) 

on a split-adjusted basis. Recently, 

market participants have expressed 

concerns with allowing trading on an 

adjusted basis at 4 a.m., noting that it is 

not optimal because system errors or 

problems with orders may go unnoticed 

for a period of time when a security that 

has undergone a reverse stock split 

opens for trading with the other 

thousands of securities. These errors 

have the potential to adversely affect 

investors, market participants and the 

issuer.7 For example, in one recent 

instance problems in connection with 

the processing of a reverse stock split 

resulted in a broker executing trades 

selling more shares than customers held 

in their accounts, resulting in a 

temporary short position. 

As such, Nasdaq believes it is 

appropriate to impose a trading halt, 

which would prohibit pre-market 

trading immediately after a reverse stock 

split and open trading in such securities 

using the Nasdaq Halt Cross Process set 

forth in Rule 4753. The proposed new 

rule will allow for Nasdaq and market 

participants to better detect any errors 

or problems with orders for the security 

resulting from the reverse stock split 

before trading in the security begins and 

thereby avoid any material effect on the 

market. 

Description of the Proposed 

Amendment 

Nasdaq is proposing to: (1) amend 

Rule 4120(a) to provide the Exchange 

with explicit authority to declare a 

trading halt before the end of PostMarket Hours 8 on the day immediately 

before the market effective date of a 

reverse stock split; and (2) amend Rule 

4120(c) to include this halt in the 

existing procedures for initiating and 

terminating a trading halt. More 

specifically, proposed Rule 4120(a)(14) 

provides that Nasdaq shall halt trading 

of a security for which Nasdaq is the 

Primary Listing Market 9 before the end 

of the Post-Market Hours on the day 

immediately before the market effective 

date of a reverse stock split. A trading 

halt due to a reverse stock split will be 

mandatory pursuant to proposed Rule 

4120(a)(14). Nasdaq also proposes to 

modify Rule 4120(c)(7)(A) to include the 

new halt authority proposed in Rule 

4120(a)(14) in the reopening process 

currently applicable to halts under 

Rules 4120(a)(1), (4), (5), (6), (9), (10) 

and (11). In general, Nasdaq expects to 

initiate the halt at 7:50 p.m., prior to the 

close of post-market trading at 8 p.m. on 

the day immediately before the split in 

the security becomes effective,10 and 

resume trading at 9 a.m. on the day the 

split is effective.11 Nasdaq believes that 

this halt and delayed opening 12 will 

give sufficient time for investors to 

review their orders and the quotes for 

the security and allow market 

participants to ensure that their systems 

have properly adjusted for the reverse 

stock split. Once post-market trading 

closes at 8:00 p.m. all orders for a halted 

security will be cancelled. 

Nasdaq is also proposing to update 

Rule 4753(b) to include proposed Rule 

4120(a)(14) in the list of numerated 

provisions that would be subject to the 

Nasdaq Halt Cross. As such, any 

security that is subject to a reverse stock 

split will be reopened using the Nasdaq 

Halt Cross prior to trading during 

market hours. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the 

Act.13 Specifically, the proposal is 

consistent with Section 6(b)(5) of the 

Act 14 because it would promote just 

and equitable principles of trade, 

remove impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. 

As described above, the Exchange is 

seeking to amend rules related to halting 

and resuming trading in U.S.-listed 

equity securities for which Nasdaq is 

the Primary Listing Market that is 

subject to a reverse stock split. The 

Exchange believes that establishing a 

reverse stock split trading halt rule will 

protect investors by giving the Exchange 

authority to act in situations where it is 

necessary to maintain fair and orderly 

markets, such as when a security is 

subject to a reverse stock split and 

companies have not updated their 

system to account for the new stock 

price. The Exchange also believes that it 

is reasonable and appropriate to use the 

Nasdaq Halt Cross process under Rule 

4753 to re-open trading in a security 

that has been halted due to a reverse 

stock split because it is consistent with 

the process that is typically used by 

Nasdaq when reopening a security that 

has been halted under Rule 4120. It will 

also ensure that the process for 

resuming trading following a reverse 

stock split halt is consistent with other 

types of halts initiated by Nasdaq. 

Currently, none of the provisions in 

Rule 4120 provide authority to preemptively declare a trading halt in a 

security undergoing a significant 

corporate action that could lead to 

investor or market confusion. 

The Exchange believes that the 

proposed amendments will provide 

greater transparency and clarity with 

respect to the manner in which trading 

will be halted due to a reverse stock 

split, and the process through which 

that halt will be implemented and 

terminated. Particularly, Nasdaq will 

not have the discretion of determining 

whether to declare a trading halt in a 

security that is subject to a reverse stock 

split. Rather, following the reverse stock 

split of the security for which Nasdaq is 

the Primary Listing Market, trading in 

the security will halt prior to the end of 

Post-Market Hours on the day 

immediately before the market effective 

date of a reverse stock split. Nasdaq also 


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Federal Register / Vol. 88, No. 218 / Tuesday, November 14, 2023 / Notices 78083 

15 15 U.S.C. 78f(b)(5). 

16 In approving this proposed rule change, the 

Commission has considered the proposed rule 

change’s impact on efficiency, competition, and 

capital formation. See 15 U.S.C. 78c(f). 

17 15 U.S.C. 78f(b)(5). 

18See supra, note 9 and accompanying text 

(defining the term ‘‘Primary Listing Market’’). 

19Current Nasdaq Rule 4120 does not include 

reverse stock splits in the enumerated 

circumstances in which Nasdaq may halt trading in 

a security. See supra, Section II. 

20See supra, note 10 (discussing notice of the 

regulatory halt to market participants). 

21See supra, note 8 and accompanying text 

(defining the term ‘‘Post-Market Hours’’). The 

Exchange represents that, while it does not 

anticipate halting a security that is undergoing a 

reverse stock split sooner than 7:50 p.m. on the day 

immediately before the market effective date of the 

reverse stock split in the security, the Exchange 

may halt trading sooner than 7:50 p.m. for other 

reasons as described in Nasdaq Equity 4, Section 

4120. See supra, note 10. 

22See proposed Nasdaq Rule 4120(a)(14). The 

Exchange represents that once post-market trading 

closes at 8:00 p.m. all orders for the halted security 

will be cancelled. See supra, Section II. 

23See supra, note 11 (discussing notice of 

termination of the regulatory halt to market 

participants). The Exchange represents that Nasdaq 

may change the resumption time if, for example, 

there was an Extraordinary Market Activity that 

could interfere with a fair and orderly 9:00 a.m. 

resumption. See supra, note 11. 

24See supra, note 5 and accompanying text 

(discussing the Nasdaq Halt Cross). 

25See proposed Nasdaq Rule 4753(b). The 

Exchange also proposes to modify Rule 

4120(c)(7)(A) to include the non-discretionary 

regulatory halt authority proposed in Rule 

4120(a)(14) in the reopening process currently 

applicable to trading halts under Rules 4120(a)(1), 

(4), (5), (6), (9), (10) and (11). See supra, Section II. 

believes it is appropriate to re-open the 

security at 9:00 a.m. because it gives the 

Exchange an opportunity to review its 

order book and root out any orders in 

a security that has undergone a reverse 

stock split, that have not correctly 

adjusted to the security’s new stock 

price. The proposed changes seek to 

achieve consistency with respect to the 

initiation and termination of a trading 

halt with respect to securities that are 

subject to a reverse stock split, while 

maintaining a fair and orderly market, 

protecting investors and protecting the 

public interest. 

Additionally, establishing a 

mandatory trading halt for securities 

that are subject to a reverse stock split 

and resuming trading thereafter 

promotes fair and orderly markets and 

the protection of investors, because it 

allows Nasdaq to protect the broader 

interests of the national market system 

and addresses potential concerns that 

system errors may affect immediate 

trading in those securities. Nasdaq 

believes that given the increase in 

companies effecting reverse stock splits, 

the proposed trading halt rules will help 

Nasdaq reduce the potential for errors 

resulting in a material effect on the 

market resulting from market 

participants’ processing of the reverse 

stock split, including incorrect 

adjustment or entry of orders. 

Additionally, resuming trading at 9:00 

a.m. also promotes fair and orderly 

markets and the protection of investors 

by allowing time to remove any orders 

that have not adjusted for the security’s 

new reverse stock split price. 

Based on the foregoing, the Exchange 

believes that the proposed rules are 

consistent with Section 6(b)(5) of the 

Act 15 because they will promote just 

and equitable principles of trade and 

will remove any impediments to a free 

and open market and a national market 

system by allowing sufficient time for 

investors to review their orders and the 

quotes for a security that are subject to 

a reverse stock split, and allow market 

participants to ensure that their systems 

have properly accounted for the reverse 

stock split. As discussed previously, the 

Exchange believes that the proposed 

amendments establishing the authority 

and process for reverse stock split 

trading halts and the resumption of 

trading is consistent with the Act, 

which itself imposes obligations on 

exchanges with respect to issuers that 

are listed. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes the proposal is 

consistent with Section 6(b)(8) of the 

Act in that it does not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act as explained 

below. 

The Exchange believes the proposal 

will not impose a burden on intermarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act because the 

proposed rule change is designed to 

protect investors and facilitate a fair and 

orderly market, which are both 

important purposes of the Act. To the 

extent that there is any impact on 

intermarket competition, it is incidental 

to these objectives. 

The Exchange does not believe that 

the proposed rule change imposes a 

burden on intra-market competition 

because the provisions apply to all 

market participants and issuers equally. 

In addition, information regarding the 

halting and resumption of trading will 

be disseminated using several freely 

accessible sources to ensure broad 

availability of information offered by the 

Exchange that are available to 

subscribers. 

In addition, the proposals include 

provisions related to the declaration and 

timing of trading halts and the 

resumption of trading designed to avoid 

any advantage to those who can react 

more quickly than other participants. 

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. Discussion and Commission 

Findings 

The Commission is approving the 

proposed rule change, as modified by 

Amendment No. 1, for the reasons 

discussed below.16 The Commission 

finds that the proposed rule change, as 

modified by Amendment No. 1, is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange, including Section 

6(b)(5) of the Exchange Act,17 which 

requires, among other things, that the 

rules of a national securities exchange 

be designed to prevent fraudulent and 

manipulative acts and practices, 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; and 

are not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

As noted above, the proposal, as 

modified by Amendment No.1, would 

extend the Exchange’s non-discretionary 

authority to declare a regulatory halt to 

cases where a security for which Nasdaq 

is the Primary Listing Market 18 is 

undergoing a reverse stock split.19 As 

proposed, the Exchange will declare a 

regulatory halt 20 for which Nasdaq is 

the Primary Listing Market before the 

end of Post-Market Hours 21 on the day 

immediately before the market effective 

date of the reverse stock split in the 

security.22 The Exchange also proposes 

to terminate the regulatory halt and 

resume trading 23 in the halted security 

using the Nasdaq Halt Cross 

procedure 24 in Nasdaq Rule 4753.25

The Exchange represents that 

declaring a regulatory halt before the 

end of Post Market Hours on the day 

immediately before the market effective 

date of the reverse stock split in a 

security for which Nasdaq is the 

Primary Listing Market is appropriate 

because it would provide the Exchange 


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26The Exchange represents that none of the 

provisions in Nasdaq Rule 4120 currently provide 

the Exchange with authority to declare a trading 

halt under such circumstances. See supra, Section 

II. 

27See supra, note 12 and accompanying text 

(discussing the proposed delayed opening for a 

Nasdaq-listed security undergoing a reverse stock 

split). 

28See supra, note 5 and accompanying text. 

29The Exchange represents that it currently 

processes reverse stock splits overnight, with the 

security undergoing a reverse stock split opening 

for trading at 4:00 a.m. ET in the pre-market hours 

(i.e., the trading session between 4:00 a.m. to 9:30 

a.m. ET) on a split-adjusted basis. The Exchange 

further represents that it is appropriate to re-open 

the security at 9:00 a.m. using the Nasdaq Halt 

Cross process, as proposed, because it gives the 

Exchange an opportunity to review its order book 

and root out any orders for a security that has 

undergone a reverse stock split that have not 

correctly adjusted to the security’s new stock price. 

See supra, Section II. 

30The Exchange represents that market 

participants have expressed concerns with allowing 

trading on an adjusted basis at 4:00 a.m. because 

system errors or problems with orders may go 

unnoticed for some time when a security that has 

undergone a reverse stock split opens for trading 

together with all other securities. The Exchange 

represents that in 2022, Nasdaq processed 196 

reverse stock splits, compared to 35 in 2021 and 98 

in 2020, and that in the first quarter of 2023, Nasdaq 

processed 78 reverse stock splits, with significantly 

more projected throughout 2023. See supra, Section 

II. 

31See supra, Section II. 

32See supra, Section II. 

33See supra, note 4. 

34 15 U.S.C. 78s(b)(2). 

35 15 U.S.C. 78s(b)(2). 

with explicit, non-discretionary 

authority to declare a regulatory halt in 

cases where a security is undergoing a 

significant corporate action that could 

cause investor or market confusion, 

such as where a security for which 

Nasdaq is the Primary Listing Market is 

undergoing a reverse stock split.26 The 

Exchange represents that the proposed 

regulatory halt and delayed 27 reopening 

of the security subject to a reverse stock 

split using the Nasdaq Halt Cross 28

procedure under Nasdaq Rule 4753 

would provide Nasdaq 29 and market 

participants 30 with the time necessary 

to adjust for, as well as detect and 

correct order entry or other system 

errors associated with, the reverse stock 

split, thus preventing such errors from 

disrupting or otherwise having a 

material effect on the market.31 The 

Exchange further represents that using 

the Nasdaq Halt Cross process under 

Nasdaq Rule 4753 for terminating the 

proposed halt and resuming trading on 

the security is consistent with the 

process used for other securities halted 

under Nasdaq Rule 4120.32

The Commission finds that the 

proposed rule change is reasonably 

designed to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, protect 

investors and the public interest by 

providing greater transparency and 

certainty with respect to the manner in 

which trading in a security for which 

Nasdaq is the Primary Listing Market 

will be halted due to a reverse stock 

split in the security, as well as the 

process through which the regulatory 

halt for the security will be 

implemented and terminated. The 

Commission also finds the proposal is 

reasonably designed to promote fair and 

orderly trading on the Exchange by 

reducing the potential for order entry or 

other system-related errors associated 

with a reverse stock split in a security 

for which Nasdaq is the Primary Listing 

Market. Finally, the Commission finds 

that using the Nasdaq Halt Cross process 

under Rule 4753 to terminate the 

proposed regulatory halt and reopen the 

security, as proposed, raises no novel 

regulatory issues, as it is consistent with 

the process generally used by Nasdaq to 

terminate a trading halt and reopen 

trading in a security halted for other 

reasons under Nasdaq Rule 4120. 

For the forgoing reasons, the 

Commission finds that the proposed 

rule change, as modified by Amendment 

No. 1, is consistent with the Act. 

IV. Solicitation of Comments on 

Amendment No. 1 to the Proposed Rule 

Change 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether Amendment No. 1 is 

consistent with the Act. Comments may 

be submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NASDAQ–2023–036 on the subject line. 

Paper Comments 

• 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–2023–036. 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 (https://www.sec.gov/ 

rules/sro.shtml). 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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–NASDAQ–2023–036 and should be 

submitted on or before December 5, 

2023. 

V. Accelerated Approval of 

Amendment No. 1 

The Commission finds good cause to 

approve the proposed rule change, as 

modified by Amendment No. 1, prior to 

the thirtieth day after the date of 

publication of notice of the filing of 

Amendment No. 1 in the Federal 

Register. As noted above, Amendment 

No. 1 makes non-substantive clarifying 

changes and provides additional 

justification for the proposed rule 

change.33 The Commission finds that 

Amendment No. 1 provides greater 

clarity to and justification for the 

proposal but does not materially alter 

the substance of the proposed rule 

change. These changes raise no novel 

issues and assist the Commission in 

finding that the proposal is consistent 

with the Act. Accordingly, the 

Commission finds good cause, pursuant 

to Section 19(b)(2) of the Act,34 to 

approve the proposed rule change, as 

modified by Amendment No. 1, on an 

accelerated basis. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,35 that the 

proposed rule change (SR–NASDAQ– 

2023–036), as modified by Amendment 

No. 1, be, and hereby is, approved on an 

accelerated basis. 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 88, No. 218 / Tuesday, November 14, 2023 / Notices 78085 

36 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release Nos. 77241 

(February 26, 2016), 81 FR 11311 (March 3, 2016) 

(SR–NYSEMKT–2016–30) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

Adopting Investigation, Disciplinary, Sanction, and 

Other Procedural Rules Modeled on the Rules of the 

New York Stock Exchange LLC and Certain 

Conforming and Technical Changes). 

4See NYSE MKT Information Memorandum 16– 

02 (March 14, 2016). 

5See Securities Exchange Act Release No. 90344 

(November 4, 2020), 85 FR 71695 (November 10, 

2020) (SR–FINRA–2020–039) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Amend FINRA Rules To Reflect Name Changes 

to Two FINRA Departments: The Office of Dispute 

Resolution and the Department of Registration and 

Disclosure). 

6 15 U.S.C. 78f(b)(5). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.36

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–25013 Filed 11–13–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98880; File No. SR– 

NYSEAMER–2023–53] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Rules 9521 

and 9522 To Correct Obsolete 

References To a FINRA Department 

November 7, 2023. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (‘‘Act’’) 

and Rule 19b–4 thereunder,2 notice is 

hereby given that, on October 26, 2023, 

NYSE American LLC (‘‘NYSE 

American’’ or the ‘‘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 self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rules 9521 (Purposes and Definitions) 

and 9522 (Initiation of Eligibility 

Proceeding; Member Regulation 

Consideration) to correct an obsolete 

reference to a department of the 

Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’). The 

proposed rule change is available on the 

Exchange’s website at www.nyse.com, 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 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to proposes to 

amend Rules 9521 (Purposes and 

Definitions) and 9522 (Initiation of 

Eligibility Proceeding; Member 

Regulation Consideration) to correct an 

obsolete reference to a FINRA 

department. 

Background and Proposed Rule Change 

In 2016, NYSE American (then known 

as NYSE MKT LLC) adopted 

disciplinary rules that are, with certain 

exceptions, substantially the same as the 

Rule 8000 Series and Rule 9000 Series 

of its affiliate the New York Stock 

Exchange LLC (‘‘NYSE’’), and which set 

forth rules for conducting investigations 

and enforcement actions and FINRA.3

The NYSE American disciplinary rules 

were implemented on April 15, 2016.4

In adopting disciplinary rules 

modeled on FINRA’s rules, NYSE 

American adopted the procedures set 

forth in the Rule 9520 Series for a 

covered person to become or remain 

associated with a member organization 

or ATP Holder notwithstanding the 

existence of a statutory disqualification 

as defined in Section 3(a)(39) of the Act, 

and for a current member organization 

or covered person to obtain relief from 

the eligibility or qualification 

requirements of the Exchange’s Rules, 

which the rule refers to as ‘‘eligibility 

proceedings.’’ Rule 9521 sets forth 

certain definitions relating to eligibility 

proceedings. Rule 9521(b)(1) defines the 

term ‘‘Application’’ to mean FINRA’s 

Form MC–400 for covered persons or 

Form MC–400A for member 

organizations filed with FINRA’s 

Department of Registration and 

Disclosure’’ (abbreviated as ‘‘RAD’’ in 

the Exchange’s rules). Rule 9522, which 

governs initiation of an eligibility 

proceeding by the Exchange, contains 

references to RAD in subdivisions (b)(1), 

(c) and (e)(3)(A). 

In 2020, FINRA changed RAD’s name 

to ‘‘Credentialing, Registration, 

Education and Disclosure’’ (abbreviated 

as ‘‘CRED’’ in FINRA’s rules) and 

amended, among others, FINRA Rules 

9521 and 9522 to reflect the name 

change.5 The Exchange proposes to 

conform the references in the 

Exchange’s rules. To effectuate this 

change, the Exchange would retain the 

reference to ‘‘FINRA’s Department’’ in 

Rule 9521(b)(1) and change the capital 

‘‘D’’ in department to lowercase [sic]. 

The Exchange would replace 

‘‘Registration and Disclosure (‘RAD’)’’ in 

Rule 9521(b)(1) with ‘‘Credentialing, 

Registration, Education and Disclosure 

(‘CRED’)’’. The Exchange would also 

replace ‘‘RAD’’ with ‘‘CRED’’ in Rules 

9522(b)(1) (one reference), (c) (two 

references) and (e)(3)(A) (one reference). 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b)(5) of the Exchange Act,6 in 

that it is designed to prevent fraudulent 

and manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 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. 

The Exchange believes that the 

proposed change to Rules 9521 and 

9522 to update and replace obsolete 

references to a FINRA department 

would increase the clarity and 

transparency of the Exchange’s rules 

and remove impediments to and perfect 

the mechanism of a free and open 

market by ensuring that persons subject 

to the Exchange’s jurisdiction, 

regulators, and the investing public 

could more easily navigate and 

understand the Exchange rules. The 

Exchange further believes that the 

proposed change would not be 

inconsistent with the public interest and 

the protection of investors because 

investors will not be harmed and in fact 

would benefit from increased clarity, 

thereby reducing potential confusion. 


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