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[Federal Register Volume 89, Number 235 (Friday, December 6, 2024)]
[Notices]
[Pages 97151-97154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28540]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101783; File No. SR-NASDAQ-2024-075]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
List and Trade Shares of the Hennessy Stance ESG ETF Under Nasdaq Rule 
5750 (Proxy Portfolio Shares)

December 2, 2024.
    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 November 25, 2024, 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 The Exchange proposes to list and trade 
shares of the Hennessy Stance ESG ETF (the ``Fund'') under Nasdaq Rule 
5750 (``Proxy Portfolio Shares''). Currently, the shares of the Fund 
are listed and traded on NYSE Arca, Inc. (``Arca''). The shares of the 
Fund are referred to herein as the ``Shares.''
    The text of the proposed rule change is set forth below.

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 list and trade Shares of the Fund under 
Nasdaq Rule 5750.\3\ Currently, the Shares of the Fund are listed and 
traded on Arca under Arca Rule 8.601-E (Active Proxy Portfolio 
Shares).\4\ The Shares of the Fund are issued by Hennessy Funds Trust 
(the ``Issuer''), a statutory trust organized under the laws of the 
State of Delaware and registered with the Commission as an open-end 
management investment company. The Fund's investment adviser is 
Hennessy Advisors, Inc. (the ``Adviser''). Stance Capital, LLC and 
Vident Advisory, LLC are the sub-advisers (the ``Sub-Advisers'') for 
the Fund.
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    \3\ The Exchange adopted Nasdaq Rule 5750 in Securities Exchange 
Act Release No. 89110 (June 22, 2020), 85 FR 38461 (June 26, 2020) 
(SR-NASDAQ-2020-032).
    \4\ The SEC previously approved Stance Equity ESG Large Cap Core 
ETF, which was the predecessor of the Fund before it was reorganized 
and renamed as Hennessy Stance ESG Large Cap ETF. The Fund 
subsequently filed to amend its investment strategy and change its 
name to Hennessy Stance ESG ETF. See Securities Exchange Act Release 
Nos. 91266 (March 5, 2021), 86 FR 13930 (March 11, 2021) (SR-
NYSEArca-2020-104) (Order Approving a Proposed Rule Change, as 
Modified by Amendment No. 2, to List and Trade Shares of the Stance 
Equity ESG Large Cap Core ETF under NYSE Arca Rule 8.601-E) (``2020 
Filing''); 34-94961 (May 23, 2022), 87 FR 32215 (May 27, 2022) 
(Notice of filing and Immediate Effectiveness of Proposed Rule 
Change to facilitate the use of custom baskets by certain series of 
Active Proxy Portfolio Shares) (``Custom Basket Filing''); 96559 
(December 21, 2022), 87 FR 79919 (December 28, 2022) (SR-NYSEARCA-
2022-84) (Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change to Amend Certain Representations, including renaming the 
Fund from Stance Equity ESG Large Cap Core ETF to Hennessy Stance 
ESG Large Cap ETF) (``2022 Filing''); and 97378 (April 25, 2023), 88 
FR 26636 (May 1, 2023) (SR-NYSEARCA-2023-34) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Amend Certain 
Representations Relating to the Hennessy Stance ESG Large Cap ETF) 
(``2023 Filing'') (2020 Filing, as amended by Custom Basket Filing, 
2022 Filing and 2023 Filing, will be referred to hereinafter as 
``Fund Filing'').
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    All descriptions, representations, and information provided with 
respect to the Fund and the operation of the Fund in the Fund Filing 
remain unchanged with the exception of the Nasdaq listing rules that 
would apply as discussed herein.
    Nasdaq Rule 5750(b) provides that if the investment adviser to the 
investment company issuing Proxy Portfolio Shares \5\ is registered as 
a broker-dealer or is affiliated with a broker-dealer, such investment 
adviser will erect and maintain a ``fire wall'' between the investment 
adviser and personnel of the broker-dealer or broker-dealer affiliate, 
as applicable, with respect to access to information concerning the 
composition of and/or changes to the Fund Portfolio,\6\ the

[[Page 97152]]

Proxy Basket \7\ and/or Custom Basket,\8\ as applicable. In addition, 
Nasdaq Rule 5750(b)(5) further requires that any person related to the 
investment adviser or Investment Company who makes decisions pertaining 
to the Investment Company's Fund Portfolio, the Proxy Basket, and/or 
Custom Basket, as applicable, or has access to nonpublic information 
regarding the Fund Portfolio, the Proxy Basket, and/or Custom Basket, 
as applicable, or changes thereto must be subject to procedures 
designed to prevent the use and dissemination of material nonpublic 
information regarding the Fund Portfolio and/or the Proxy Basket, and/
or Custom Basket, as applicable, or changes thereto.
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    \5\ The term ``Proxy Portfolio Share'' means a security that: 
(A) represents an interest in an investment company registered under 
the Investment Company Act of 1940 (``Investment Company'') 
organized as an open-end management investment company, that invests 
in a portfolio of securities selected by the Investment Company's 
investment adviser consistent with the Investment Company's 
investment objectives and policies; (B) is issued in a specified 
aggregate minimum number in return for a deposit of a specified 
Proxy Basket or Custom Basket, as applicable, and/or a cash amount 
with a value equal to the next determined net asset value; (C) when 
aggregated in the same specified minimum number, may be redeemed at 
a holder's request, which holder will be paid specified Proxy Basket 
or Custom Basket, as applicable, and/or a cash amount with a value 
equal to the next determined net asset value; and (D) the portfolio 
holdings for which are disclosed within at least 60 days following 
the end of every fiscal quarter. See Nasdaq Rule 5750(c)(1).
    \6\ The term ``Fund Portfolio'' means the identities and 
quantities of the securities and other assets held by the Investment 
Company that will form the basis for the Investment Company's 
calculation of net asset value at the end of the business day. See 
Nasdaq Rule 5750(c)(2).
    \7\ The term ``Proxy Basket'' means the identities and 
quantities of the securities and other assets included in a basket 
that is designed to closely track the daily performance of the Fund 
Portfolio, as provided in the exemptive relief under the 1940 Act 
applicable to a series of Proxy Portfolio Shares. The website for 
each series of Proxy Portfolio Shares shall disclose the following 
information regarding the Proxy Basket as required under this Rule 
5750, to the extent applicable: (A) Ticker symbol; (B) CUSIP or 
other identifier; (C) Description of holding; (D) Quantity of each 
security or other asset held; and (E) Percentage weight of the 
holding in the portfolio. See Nasdaq Rule 5750(c)(5).
    \8\ For purposes of this rule, the term ``Custom Basket'' means 
a portfolio of securities that is different from the Proxy Basket 
and is otherwise consistent with the exemptive relief issued 
pursuant to the Investment Company Act of 1940 applicable to a 
series of Proxy Portfolio Shares. See Nasdaq Rule 5750(c)(6).
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    In addition, in accordance with Nasdaq Rule 5750(b)(6), any person 
or entity, including a custodian, Reporting Authority,\9\ distributor, 
or administrator, who has access to nonpublic information regarding the 
Fund Portfolio, the Proxy Basket or Custom Basket, as applicable, or 
changes thereto, must be subject to procedures designed to prevent the 
use and dissemination of material nonpublic information regarding the 
applicable Fund Portfolio, the Proxy Basket or Custom Basket, as 
applicable, or changes thereto. Moreover, if any such person or entity 
is registered as a broker-dealer or affiliated with a broker-dealer, 
such person or entity will erect and maintain a ``fire wall'' between 
the person or entity and the broker-dealer with respect to access to 
information concerning the composition of and/or changes to such Fund 
Portfolio, Proxy Basket or Custom Basket, as applicable, or changes 
thereto.
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    \9\ The term ``Reporting Authority'' in respect of a particular 
series of Proxy Portfolio Shares means the Exchange, an institution, 
or a reporting service designated by the Exchange or by the exchange 
that lists a particular series of Proxy Portfolio Shares (if the 
Exchange is trading such series pursuant to unlisted trading 
privileges) as the official source for calculating and reporting 
information relating to such series, including, but not limited to, 
the Proxy Basket; the Fund Portfolio; Custom Basket; the amount of 
any cash distribution to holders of Proxy Portfolio Shares, net 
asset value, or other information relating to the issuance, 
redemption or trading of Proxy Portfolio Shares. A series of Proxy 
Portfolio Shares may have more than one Reporting Authority, each 
having different functions. See Nasdaq Rule 5750(c)(3).
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    The Adviser and Sub-Advisers are not registered as broker-dealers 
and are not affiliated with a broker-dealer. In the event (a) the 
Adviser or Sub-Adviser(s) becomes registered as a broker-dealer or 
becomes newly affiliated with a broker-dealer, or (b) any new adviser 
or sub-adviser is a registered broker-dealer, or becomes affiliated 
with a broker-dealer, it will implement and maintain a ``fire wall'' 
with respect to its relevant personnel or its broker-dealer affiliate 
regarding access to information concerning the composition and/or 
changes to the Fund Portfolio, Proxy Basket or Custom Basket, as 
applicable, and will be subject to procedures designed to prevent the 
use and dissemination of material non-public information regarding the 
Fund Portfolio, Proxy Basket or Custom Basket, as applicable, or 
changes thereto. Any person related to the Adviser, Sub-Adviser(s), or 
the Fund who makes decisions pertaining to the Fund Portfolio, Proxy 
Basket or Custom Basket, as applicable, or has access to non-public 
information regarding the Fund Portfolio, Proxy Basket or Custom 
Basket, as applicable, or changes thereto are subject to procedures 
reasonably designed to prevent the use and dissemination of material 
non-public information regarding the Fund Portfolio, Proxy Basket or 
Custom Basket, as applicable, or changes thereto.
Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares. The Exchange will halt trading in the Shares 
under the conditions specified in Nasdaq Rules 4120 and 4121, including 
without limitation the conditions specified in Nasdaq Rule 4120(a)(9) 
and (10) and the trading pauses under Nasdaq Rules 4120(a)(11) and 
(12).
    Trading may be halted because of market conditions or for reasons 
that, in the view of the Exchange, make trading in the Shares 
inadvisable. These may include: (1) the extent to which trading is not 
occurring in the securities and/or financial instruments composing the 
Proxy Basket or Fund Portfolio; or (2) whether other unusual conditions 
or circumstances detrimental to the maintenance of a fair and orderly 
market are present. Trading in the Shares also will be subject to Rule 
5750(d)(2)(D), which sets forth circumstances under which a series of 
Proxy Portfolio Shares may be halted.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. The Exchange will 
allow trading in the Shares from 4:00 a.m. to 8:00 p.m. ET. The 
Exchange has appropriate rules to facilitate transactions in the Shares 
during all trading sessions. As provided in Nasdaq Rule 5750(b)(3), the 
minimum price variation for quoting and entry of orders in Proxy 
Portfolio Shares traded on the Exchange is $0.01. The Shares of the 
Fund will conform to the initial and continued listing criteria set 
forth in Nasdaq Rule 5750.
    With respect to Proxy Portfolio Shares, all of the Exchange member 
obligations relating to product description and prospectus delivery 
requirements will continue to apply in accordance with Exchange rules 
and federal securities laws, and the Exchange and FINRA will continue 
to monitor Exchange members for compliance with such requirements.
Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of the Shares on the Exchange during 
all trading sessions and to deter and detect violations of Exchange 
rules and the applicable federal securities laws. Additionally, Nasdaq 
Rule 5750(b)(4) provides that the Exchange will implement and maintain 
written surveillance procedures for Proxy Portfolio Shares. As part of 
these surveillance procedures, the Investment Company's investment 
adviser will upon request by the Exchange or FINRA, on behalf of the 
Exchange, make available to the Exchange or FINRA the daily Fund 
Portfolio of each series of Proxy Portfolio Shares.
    Trading of Shares on the Exchange will be subject to the Exchange's 
surveillance program for derivative products, as well as cross-market 
surveillances administered by FINRA, on behalf of the Exchange pursuant 
to a regulatory services agreement, which are also designed to detect 
violations of Exchange rules and applicable federal securities laws. 
The Exchange is responsible for FINRA's performance under this 
regulatory services agreement.

[[Page 97153]]

    Prior to the commencement of trading, the Exchange will require the 
Fund to represent to the Exchange that it will advise the Exchange of 
any failure by the Fund to comply with the continued listing 
requirements, and, pursuant to its obligations under Section 19(g)(1) 
of the Exchange Act, the Exchange will surveil for compliance with the 
continued listing requirements. In addition, the Exchange will require 
the issuer to represent that it will notify the Exchange of any failure 
to comply with the terms of applicable exemptive and no-action relief. 
If the Fund is not in compliance with the applicable listing 
requirements, the Exchange will commence delisting procedures under the 
Nasdaq 5800 Series. In addition, the Exchange also has a general policy 
prohibiting the distribution of material, non-public information by its 
employees.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares with other 
markets and other entities that are members of the Intermarket 
Surveillance Group (``ISG''), and the Exchange or FINRA, on behalf of 
the Exchange, or both, may obtain trading information regarding trading 
in the Shares from such markets and other entities.\10\ The Exchange 
also may obtain information regarding trading in the Shares via the 
ISG, from other exchanges who are members or affiliates of the ISG, or 
with which the Exchange has entered into a comprehensive surveillance 
sharing agreement.
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    \10\ For a list of the current members of ISG, see 
www.isgportal.com.
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Additional Information
    The Exchange represents that the Shares will conform to the initial 
and continued listing criteria under Nasdaq Rule 5750, including the 
dissemination of key information such as the Proxy Basket, the Custom 
Basket, the Fund Portfolio, and NAV, suspension of trading or removal, 
trading halts, surveillance, minimum price variation for quoting and 
order entry, an information circular informing members of the special 
characteristics and risks associated with trading in the series of 
Proxy Portfolio Shares, and firewalls as set forth in the proposed 
Exchange rules applicable to Proxy Portfolio Shares.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\12\ 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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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change to switch the 
listing of the Fund from Arca to Nasdaq is consistent with the Act. In 
particular, Nasdaq's Rules and procedures as described above are 
designed to prevent fraudulent and manipulative acts and practices and 
to protect investors and the public interest in that the Shares would 
be listed and traded on the Exchange pursuant to the initial and 
continued listing criteria for Proxy Portfolio Shares in Nasdaq Rule 
5750.
    The Exchange has in place surveillance procedures that are adequate 
to properly monitor trading in the Shares in all trading sessions and 
to deter and detect violations of Exchange rules and applicable federal 
securities laws. Additionally, Nasdaq Rule 5750(b)(4) provides that the 
Exchange will implement and maintain written surveillance procedures 
for Proxy Portfolio Shares. As part of these surveillance procedures, 
the Investment Company's investment adviser will upon request by the 
Exchange or FINRA, on behalf of the Exchange, make available to the 
Exchange or FINRA the daily Fund Portfolio of each series of Proxy 
Portfolio Shares.
    Trading of Shares on the Exchange will be subject to the Exchange's 
surveillance program for derivative products, as well as cross-market 
surveillances administered by FINRA, on behalf of the Exchange pursuant 
to a regulatory services agreement, which are also designed to detect 
violations of Exchange rules and applicable federal securities laws. 
The Exchange is responsible for FINRA's performance under this 
regulatory services agreement.
    The Exchange will require the Fund to represent to the Exchange 
that it will advise the Exchange of any failure by the Fund to comply 
with the continued listing requirements, and, pursuant to its 
obligations under Section 19(g)(1) of the Exchange Act, the Exchange 
will surveil for compliance with the continued listing requirements. If 
the Fund is not in compliance with the applicable listing requirements, 
the Exchange will commence delisting procedures under the Nasdaq 5800 
Series. In addition, the Exchange also has a general policy prohibiting 
the distribution of material, non-public information by its employees.
    The Exchange will communicate as needed regarding trading in the 
Shares with other markets and other entities that are members of the 
ISG, and the Exchange may obtain trading information regarding trading 
in the Shares from such markets and other entities.
    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

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. The Exchange notes that the 
proposed rule change will facilitate the listing and trading of the 
Shares, which are Proxy Portfolio Shares and that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace.

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) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of 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 pursuant to Rule 19b-4(f)(6) under the 
Act normally does not become operative for 30 days after the date of 
its filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the Commission 
to designate a shorter time if such action is consistent with the 
protection of investors and the public

[[Page 97154]]

interest. The Exchange has requested that the Commission waive the 30-
day operative delay so that the proposal may become operative 
immediately upon filing. The Exchange represents that all descriptions, 
representations, and information provided with respect to the Fund and 
the operation of the Fund in the Fund Filing remain unchanged except 
that the Nasdaq listing rules referenced above would apply instead of 
the rules referenced in the Fund Filing.\16\ In addition, the Exchange 
represents that the Shares will be subject to Nasdaq's surveillance 
procedures and the trading halts and trading rules described 
herein.\17\ Therefore, the Commission believes that the proposal raises 
no novel legal or regulatory issues and that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Accordingly, the Commission hereby waives the 30-day 
operative delay and designates the proposed rule change operative upon 
filing.\18\
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    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra Item II.
    \17\ See id.
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 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.

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 [email protected]. Please include 
file number SR-NASDAQ-2024-075 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-2024-075. 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-2024-075 and should 
be submitted on or before December 27, 2024.

    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)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-28540 Filed 12-5-24; 8:45 am]
BILLING CODE 8011-01-P
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