5926 Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices 

17See supra note 13. 

18Based on a compilation of OCC data for 

monthly volume of equity-based options and 

monthly volume of ETF-based options, see id., the 

Exchange’s market share in multiply-listed equity 

and ETF options the Exchange’s market share in 

equity-based options decreased from 9.09% for the 

month of November 2020 to 7.06% for the month 

of November 2021. 

19 15 U.S.C. 78s(b)(3)(A). 

20 17 CFR 240.19b–4(f)(2). 21 15 U.S.C. 78s(b)(2)(B). 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Citations herein to the Nasdaq Rule 4000 Series 

shall refer to Equity 4. 

equity and ETF options trades.17

Therefore, currently no exchange 

possesses significant pricing power in 

the execution of multiply-listed equity 

and ETF options order flow. More 

specifically, in November 2021, the 

Exchange had less than 8% market 

share of executed volume of multiplylisted equity and ETF options trades.18

The Exchange believes that the 

proposed rule change reflects this 

competitive environment because it 

modifies the Exchange’s fees in a 

manner designed to continue to 

encourage Market Makers to direct 

trading interest to the Exchange, to 

provide liquidity and to attract order 

flow. Specifically, the Exchange 

believes that the modifications to the 

Sliding Scale would continue to offer a 

significant reduction in overall 

transaction rates for Market Makers, as 

well as additional reductions for Market 

Makers that participate in the 

Prepayment Program. To the extent that 

this purpose is achieved, all the 

Exchange’s market participants should 

benefit from the improved market 

quality and increased opportunities for 

price improvement. 

The Exchange also believes that the 

proposed change would promote 

competition between the Exchange and 

other execution venues, by encouraging 

additional orders to be sent to the 

Exchange for execution. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 19 of the Act and 

subparagraph (f)(2) of Rule 19b–4 20

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such 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 

under Section 19(b)(2)(B) 21 of the Act to 

determine whether the proposed rule 

change 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 

• 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– 

NYSEAMER–2022–07 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–NYSEAMER–2022–07. 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 

10:00 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–NYSEAMER–2022–07, and 

should be submitted on or before 

February 23, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02080 Filed 2–1–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94076; File No. SR– 

NASDAQ–2022–006] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing of Proposed Rule Change To 

Enable Exchange Members To Enter 

Midpoint Extended Life Orders and M– 

ELO Plus Continuous Book Orders 

With an Immediate-or-Cancel Time-inForce Instruction 

January 27, 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 January 

19, 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 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to enable 

Exchange members to enter Midpoint 

Extended Life Orders (‘‘M–ELOs’’) and 

M–ELO Plus Continuous Book (‘‘M– 

ELO+CB’’) Orders with an immediateor-cancel (‘‘IOC’’) Time-in-Force (‘‘TIF’’) 

instruction.3

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, at the principal 


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Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices 5927 

4See Securities Exchange Act Release No. 34– 

82825 (Mar. 7, 2018), 83 FR 10937 (Mar. 13, 2018) 

(order approving SR–NASDAQ–2017–074). 

5 In 2020, the Commission issued an order 

approving the Exchange’s proposal to shorten the 

Holding Period for M–ELO and M–ELO+CB Orders 

from one half second to 10 milliseconds. See 

Securities Exchange Act Release No. 34–88743 

(April 24, 2020), 85 FR 24068 (April 30, 2020) 

(order approving SR–NASDAQ–2020–011). If a 

member modifies a MELO or M–ELO+CB during the 

Holding Period, other than to decrease the size of 

the order or to modify the marking of a sell order 

as long, short, or short exempt, then such 

modification will cause the Holding Period to reset. 

6 If a member modifies a M–ELO or M–ELO+CB 

after the Holding Period elapses, other than to 

decrease the size of the order or to modify the 

marking of a sell order as long, short, or short 

exempt, then such modification will trigger a new 

Holding Period for the order. 

7A M–ELO+CB is eligible to execute against a 

Midpoint Order if: (i) The Midpoint Order has the 

Midpoint Trade Now Attribute enabled; (ii) no 

other order is resting on the Continuous Book that 

has a more aggressive price than the current 

midpoint of the NBBO; (iii) the Midpoint Order has 

rested on the Exchange’s Continuous Book for a 

minimum of 10 milliseconds after the NBBO 

midpoint falls within the limit set by the 

participant; and (iv) the Midpoint Order satisfies 

any minimum quantity requirement of the M– 

ELO+CB. A buy (sell) M–ELO+CB is ranked in time 

order at the midpoint among other buy (sell) M– 

ELO+CBs, buy (sell) Midpoint Extended Life 

Orders, and buy (sell) Midpoint Orders, as of the 

time when such Orders become eligible to execute. 

See Rule 4702(a)(15); see also Securities Exchange 

Act Release No. 34–86938 (September 11, 2019), 84 

FR 48978 (September 17, 2019) (order approving 

SR–NASDAQ–2019–048). 

8Rule 4703(a)(1). 

9See Securities Exchange Act Release No. 34– 

81311 (August 3, 2017), 82 FR 37248 (August 9, 

2017) (SR–NASDAQ–2017–074). 

10The Exchange understands that some 

participants representing institutional investor 

orders have developed methods that mimic the 

functions of IOC. 

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 

The Exchange proposes to amend 

Rule 4702(b)(14) and (by implication) 

4702(b)(15) to enable Exchange 

members to enter M–ELO and M– 

ELO+CB Orders with an IOC time-inforce instruction. 

On March 7, 2018, the Commission 

issued an order approving the 

Exchange’s proposal to adopt the M– 

ELO as a new Order Type.4 A M–ELO 

is a non-displayed order that is available 

to all members but interacts only with 

other M–ELOs and M–ELO+CBs. It is 

priced at the midpoint between the 

National Best Bid and Offer (‘‘NBBO’’) 

and it does not become eligible for 

execution until at least 10 milliseconds 

elapse after its entry (the ‘‘Holding 

Period’’).5 Once the Holding Period 

elapses, a M–ELO becomes eligible for 

execution against other M–ELOs and M– 

ELO+CBs on a time-priority basis.6

A M–ELO+CB is an Order Type that 

has all the characteristics and attributes 

of a M–ELO Order, except that a M– 

ELO+CB that satisfies the Holding 

Period is eligible to execute (at the 

midpoint of the NBBO) against other 

eligible M–ELO+CBs, eligible M–ELOs, 

and also eligible non-displayed Orders 

with Midpoint Pegging and Midpoint 

Peg Post-Only Orders (‘‘Midpoint 

Orders’’) resting on the Exchange’s 

Continuous Book.7

Presently, neither M–ELO nor M– 

ELO+CB Orders may be entered with a 

TIF of IOC. An Order with a TIF of IOC 

is one that is designated to deactivate 

immediately after determining whether 

the Order is marketable.8 In the 

Exchange’s proposal to establish the M– 

ELO Order Type, the Exchange 

explained that it decided to exclude 

IOCs from M–ELOs since it deemed the 

IOC TIF, by its nature, to be 

‘‘inconsistent with the Holding Period 

requirement of the proposal.’’ 9 That is, 

the Exchange designed M–ELO to 

provide a space where investors with 

longer time horizons, including 

institutional investors, can interact 

exclusively with each other—by virtue 

of a mutually-applicable Holding 

Period—without fear that aggressive 

order types could trade with M–ELOs or 

M–ELO+CBs to the detriment of such 

M–ELOs and M–ELO+CBs immediately 

upon entry and without waiting 10 

milliseconds before doing so, such as 

immediately before a change in the 

NBBO for a particular security (i.e., risk 

of adverse selection). Nevertheless, 

institutional investors—which again are 

the primary beneficiaries and users of 

M–ELO and M–ELO+CB—have 

approached the Exchange recently to 

request the ability to enter IOC 

instructions for their M–ELO and M– 

ELO+CB Orders as a means of assisting 

them in sourcing liquidity on the 

Exchange’s M–ELO/M–ELO+CB Book so 

that they can minimize the opportunity 

costs of utilizing M–ELO and M– 

ELO+CB Orders and thus render use of 

M–ELO and M–ELO+CB more efficient 

and productive for participants. 

That is, the functionality would 

provide users with an indication as to 

whether eligible contra-side liquidity 

would be available to their M–ELO or 

M–ELO+CB Orders and allow these 

users to streamline their decisionmaking process of whether to send 

additional M–ELO or M–ELO+CB 

Orders to the Exchange or to seek 

liquidity elsewhere.10 It would also 

enable participants whose M–ELO or 

M–ELO+CB Orders do not satisfy the 

conditions for a Holding Period to 

commence upon Order entry to have 

those Orders cancel immediately rather 

than be held by the System until such 

time as the conditions are met, which 

would allow these participants to assess 

whether they wish to submit new M– 

ELO or M–ELO+CB Orders that would 

satisfy the conditions to commence a 

Holding Period upon entry. 

To avoid introducing the risks of 

adverse selection associated with 

enabling IOC in these contexts 

(discussed above), brokers representing 

institutional investors requested that 

when they enter M–ELO and M– 

ELO+CB Orders (which are eligible to 

commence a Holding Period upon entry) 

with an IOC instruction, the IOC 

instruction should activate only at the 

expiration of the 10 millisecond 

Holding Period, rather than immediately 

upon Order entry. In other words, only 

after the 10 millisecond Holding Period 

elapses would the System check to see 

if a M–ELO or M–ELO+CB Order with 

an IOC TIF is able to execute 

immediately against contra-side resting 

liquidity; if so, the Order will execute as 

it would currently, but if not, the 

System will automatically cancel the 

Order rather than keep it on the Book. 

If the Order at the time of entry is 

unable to begin the Holding Period 

(because, for example, it is entered with 

a limit price that is not at or better than 

the midpoint of the NBBO, if there is no 

NBB or NBO at the time of entry, or the 

NBBO is crossed at the time of entry), 

then the Order will be automatically 

cancelled immediately. 

The Exchange agrees with the 

participants that requested this IOC 

functionality that when modified in this 

manner, its use with M–ELO and M– 

ELO+CB would serve a beneficial 

purpose that is not inconsistent with the 

Exchange’s intentions and designs for 

these Order Types. That is, it would 


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5928 Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices 

11Nasdaq reiterates that by design, spreadcrossing orders do not interact with MELO or M– 

ELO+CB Orders. 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(5). 

14The existence of resting interest on the M–ELO/ 

M–ELO+CB Book is not a prerequisite for the Order 

to enter the Holding Period. Therefore, the 

cancellation of these M–ELOs and M–ELO+CBs 

only indicate that such Orders are not eligible to 

enter the Holding Period (i.e., the NBBO is crossed 

at the time of entry, there is no NBB or NBO at the 

time of entry, or the Order is entered with a limit 

price that is not at or better than the NBBO 

midpoint) and does not indicate whether there are 

available contra-side M–ELOs or M–ELO+CBs at the 

time of entry on Nasdaq. Consequently, the IOC 

instruction cannot be exploited to check the Book 

for liquidity in a riskless fashion (e.g., by cancelling 

before the Holding Period expires). 

permit IOC users to check the M–ELO 

or M–ELO+CB Book for contra-side 

liquidity, but not in an aggressive or 

riskless fashion.11 Users of the IOC 

functionality in this context would still 

need to endure the Holding Period 

before utilizing it, and then execute 

against contra-side interest if it is 

available upon expiration of that 

Holding Period. While the proposal 

would provide for immediate 

cancellation of M–ELO and M–ELO+CB 

Orders that do not meet the conditions 

for a Holding Period to commence upon 

entry, the cancellation of these M–ELOs 

and M–ELO+CBs would only indicate 

that such Orders are not eligible to enter 

the Holding Period (i.e., the NBBO is 

crossed at the time of entry, there is no 

NBB or NBO at the time of entry, or the 

Order is entered with a limit price that 

is not at or better than the NBBO 

midpoint) and would not indicate 

whether there are available contra-side 

M–ELOs or M–ELO+CBs at the time of 

entry on Nasdaq. The Exchange also 

notes that, in other contexts, the use of 

IOCs is routine and recognized as a 

prudent way to seek liquidity in a 

fragmented market, and its use in this 

context, as modified, should not be 

controversial. 

Accordingly, the Exchange now 

proposes to amend Rule 4702(b)(14) 

(and implicitly, Rule 4702(b)(15)), 

because it would incorporate 

amendments to Rule 4702(b)(14)) to 

permit members to enter M–ELO and 

M–ELO+CB Orders with a TIF 

instruction of IOC, with the caveat that, 

when used for these Order Types, the 

IOC instruction will activate upon the 

expiration of the Holding Period, unless 

the Order is unable to begin the Holding 

Period upon entry, in which case it will 

cancel immediately. 

As part of the surveillance the 

Exchange currently performs, M–ELOs 

and M–ELO+CBs with IOC would be 

subject to real-time surveillance to 

determine if they are being abused by 

market participants. In addition, as is 

the case for ordinary M–ELOs and M– 

ELO+CBs, the Exchange will monitor 

the use of M–ELOs and M–ELO+CBs 

with IOC with the intent to apply 

additional measures, as necessary, to 

ensure their usage is appropriately tied 

to the intent of the Order Types. The 

Exchange is committed to determining 

whether there is opportunity or 

prevalence of behavior that is 

inconsistent with normal risk 

management behavior, such as excessive 

cancellations. Manipulative abuse is 

subject to potential disciplinary action 

under the Exchange’s Rules, and other 

behavior that is not necessarily 

manipulative but nonetheless frustrates 

the purposes of the M–ELO or M– 

ELO+CB Order Types may be subject to 

penalties or other participant 

requirements to discourage such 

behavior, should it occur. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,12 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,13

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. 

The proposal will assist market 

participants in sourcing liquidity on the 

Exchange’s M–ELO/M–ELO+CB Book so 

that they can minimize the opportunity 

costs associated with utilizing M–ELO 

and M–ELO+CB Orders and thus render 

use of M–ELO and M–ELO+CB more 

efficient and productive. At the same 

time, the proposal avoids exposing M– 

ELO and M–ELO+CB orders to the risks 

of adverse selection associated with 

aggressive IOC by proposing that, when 

used in the contexts of M–ELO and M– 

ELO+CB Orders, the IOC instruction 

will activate only at the expiration of 

the 10 millisecond Holding Period, 

rather than immediately upon Order 

entry, as orders with a TIF of IOC do in 

other contexts. The exception to this is 

if the M–ELO or M–ELO+CB Order with 

an IOC instruction is unable to begin the 

Holding Period upon entry, as will 

occur if the Market is crossed at the time 

of entry, there is no NBB or NBO at the 

time of entry, or the Order is entered 

with a limit price that is not at or better 

than the NBBO midpoint. In such cases, 

the Order will be cancelled immediately 

upon entry. Doing so is consistent with 

the spirit of the IOC instruction, in that 

the market participant is indicating a 

desire for their Order to persist for the 

minimum period possible, while a M– 

ELO or M–ELO+CB Order that is 

ineligible to begin the Holding Period 

upon entry could potentially persist in 

a held state until it is cancelled by the 

System at the end of Market Hours. 

Crucially, the immediate cancel of an 

Order that is ineligible to begin the 

Holding Period upon entry does not 

provide information to the participant 

about the underlying state of the M– 

ELO/M–ELO+CB Book.14 When used in 

this context, IOC will not be useful to 

participants engaging in strategies that 

are time sensitive. Thus, this proposal 

will not frustrate the underlying design 

of M–ELO and M–ELO+CB Orders, 

which again is to provide investors, 

including institutional investors, with 

longer time horizons to safely interact 

with each other without interacting with 

aggressive or time sensitive orders. 

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. To the 

contrary, the proposal will enhance the 

utility and efficiency of the M–ELO and 

M–ELO+CB Order Types, which in turn 

will render the Exchange a more 

attractive venue for market participants 

that stand to benefit from these Order 

Types. The proposed IOC instruction 

will not burden intra-market 

competition as it will be available for 

use by all market 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. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices 5929 

15 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78mm(a)(1). 

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

3See Letter from Angela S. Dunn, Principal 

Associate General Counsel, Phlx, to J. Matthew 

DeLesDernier, Assistant Secretary, Commission, 

dated August 26, 2021 (‘‘Exemptive Request’’). 

4 17 CFR 240.0–12. 

5See Exemptive Request, supra note 3, at 2. 

6See id. at 2, n.8. The Exchange also states that 

it is not ‘‘cherry picking’’ because the Exchange 

would be incorporating categories of rules. See id. 

7See id. at 2–3. The Exchange represents 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 

time frame required by such rule. See id. at 3, n.9. 

The website posting will include a link to the 

location on FINRA’s website where the applicable 

proposed rule change is posted. See id. 

8See id. at 3. 

9See id. 

10See id. at 2. 

11See id. 

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 

• 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–2022–006 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–2022–006. 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 

10:00 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–2022–006 and 

should be submitted on or before 

February 23, 2022. 

For the Commission, by the Division 

of Trading and Markets, pursuant to 

delegated authority.15

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–02077 Filed 2–1–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94091] 

Order Granting Application by Nasdaq 

PHLX LLC 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 

January 27, 2022. 

Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) has filed with the 

Securities and Exchange Commission 

(‘‘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 Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

that the Exchange seeks to incorporate 

by reference.3 Section 36 of the 

Exchange Act, 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. 

The Exchange has requested, pursuant 

to Rule 0–12 under the Exchange Act,4

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 a crossreferenced FINRA rule. Specifically, the 

Exchange requests that it be permitted 

to incorporate by reference changes 

made to the FINRA rules that are crossreferenced in the Exchange’s rules 

identified below, without the need for 

the Exchange to file separately similar 

proposed rule changes pursuant to 

Section 19(b) of the Exchange Act: 5

• General 9, Section 1(a) (Prohibition 

Against Trading Ahead of Customer 

Orders) cross-references FINRA Rule 

5320 (except for FINRA Rule 5320.02(b) 

and the reference to FINRA Rule 6420 

in FINRA Rule 5320). 

• Options 10, Section 20 (Options 

Communications) cross-references 

FINRA Rule 2220 (except for FINRA 

Rule 2220(c)). 

The Exchange represents that the 

FINRA rules listed above are regulatory 

rules and not trading rules.6 The 

Exchange represents that, as a condition 

to the requested exemption from Section 

19(b) of the Exchange Act, the Exchange 

will provide written notice to its 

members and member organizations 

whenever FINRA proposes a change to 

FINRA Rule 2220 or 5320.7 The 

Exchange states that such notice will 

alert its members, member 

organizations, and associated persons to 

the proposed FINRA rule change and 

give them an opportunity to comment 

on the proposal.8 The Exchange further 

represents that it will inform members, 

member organizations, and associated 

persons in writing when the 

Commission approves any such 

proposed rule changes.9

According to the Exchange, this 

exemption is appropriate because it 

would result in the Exchange’s rules 

pertaining to prohibition against trading 

ahead of customer orders and options 

communications being consistent with 

the relevant cross-referenced FINRA 

rules at all times, thus ensuring 

consistent regulation of joint members 

of Phlx and FINRA.10 The Exchange 

further states that, even if members are 

not joint members of Phlx and FINRA, 

the exemption is appropriate because it 

will permit its rules to remain 

consistent with FINRA’s rules and 

ensure consistent treatment of industry 

members with respect to the 

aforementioned rules.11

The Commission has issued 

exemptions similar to the Exchange’s 


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