[Federal Register Volume 87, Number 74 (Monday, April 18, 2022)]
[Notices]
[Pages 22962-22963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08181]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94707]


Order Granting Application by The Nasdaq Stock Market LLC and 
Five Affiliated National Securities Exchanges for Exemption, Pursuant 
to Section 36(a) of the Exchange Act, From the Rule Filing Requirements 
of Section 19(b) of the Exchange Act With Respect to Certain Rules 
Incorporated by Reference

April 12, 2022.
    The Nasdaq Stock Market LLC (``Nasdaq'') and its affiliated 
national securities exchanges Nasdaq PHLX LLC (``Phlx''), Nasdaq BX, 
Inc. (``BX''), Nasdaq ISE, LLC (``ISE''), Nasdaq GEMX, LLC (``GEMX''), 
and Nasdaq MRX, LLC (``MRX'') (each a ``Nasdaq Exchange'' and 
collectively the ``Nasdaq Exchanges'') have filed with the Securities 
and Exchange Commission (the ``Commission'' or ``SEC'') an application 
\1\ for exemption under Section 36(a) of the Securities Exchange Act of 
1934 (``Exchange Act'') \2\ and Rule 0-12 thereunder \3\ from the rule 
filing requirements of Section 19(b) of the Exchange Act \4\ with 
respect to the rules of the Nasdaq Exchanges relating to arbitration. 
Section 36 of the Exchange Act authorizes the Commission to 
conditionally or unconditionally exempt any person, security, or 
transaction, or any class or classes of persons, securities, or 
transactions, from any provision or provisions of the Exchange Act or 
of any rule or regulation thereunder, to the extent that such exemption 
is necessary or appropriate in the public interest, and is consistent 
with the protection of investors.
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    \1\ See Letter from Stephen Matthews, Principal Associate 
General Counsel, Nasdaq, to J. Matthew DeLesDernier, Assistant 
Secretary, SEC, dated February 12, 2021 (``Exemptive Request'').
    \2\ 15 U.S.C. 78mm.
    \3\ 17 CFR 240.0-12 (Commission procedures for filing 
applications for orders for exemptive relief under Section 36 of the 
Exchange Act).
    \4\ 15 U.S.C. 78s(b).
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    The Nasdaq Exchanges have requested that the Commission: (i) Grant 
Nasdaq an exemption from the rule filing requirements of Section 19(b) 
of the Exchange Act for changes to rules on arbitration in the 
``General 6'' section of Nasdaq's rulebook (the ``General 6 Rules'') 
effected solely by virtue of changes to rules on arbitration in the 
Rule 12000 Series and Rule 13000 Series of the Financial Industry 
Regulatory Authority, Inc. (``FINRA'') Manual (Code of Arbitration 
Procedures for Customer Disputes and Code of Arbitration Procedures for 
Industry Disputes) (``FINRA Arbitration Rules'') that are incorporated 
by reference into the General 6 Rules; and (ii) grant the remaining 
Nasdaq Exchanges an exemption from the rule filing requirements of 
Section 19(b) of the Exchange Act for changes to their rules on 
arbitration that are effected solely by virtue of a change to the 
General 6 Rules that are incorporated into the remaining Nasdaq 
Exchanges' rules by reference. Specifically, the Nasdaq Exchanges 
request that they be permitted to incorporate by reference changes made 
to the FINRA Arbitration Rules and Nasdaq General 6 Rules (as 
applicable) that are incorporated by reference into the Nasdaq 
Exchanges' rules without the need for each Nasdaq Exchange to 
separately file, pursuant to Section 19(b) of the Exchange Act, a 
proposed rule change similar to the one filed by FINRA or Nasdaq (as 
applicable). The Nasdaq Exchanges believe that these exemptions are 
appropriate because they will promote consistency among the Nasdaq 
Exchanges' rules pertaining to arbitration, which are not trading 
rules.\5\
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    \5\ Exemptive Request, supra note 1, at 2-3. An SRO wishing to 
incorporate rules of another SRO by reference may submit a written 
request for an order exempting it from the requirement in Section 
19(b) of the Exchange Act to file proposed rule changes relating to 
the rules incorporated by reference, if, among other things, the 
rules to be incorporated are categories of rules (rather than 
individual rules within a category) that are not trading rules 
(e.g., the SRO has requested incorporation of rules such as margin, 
suitability, or arbitration). See Exchange Act Release No. 49260 
(Feb. 17, 2004), 69 FR 8500 (Feb. 24, 2004).
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    As a condition of the requested exemption, the Nasdaq Exchanges 
have agreed to provide written notice to their members whenever a 
change is proposed to FINRA Arbitration Rules or Nasdaq General 6 Rules 
(as applicable) that are incorporated by reference into the rules of 
the Nasdaq Exchanges.\6\ Such notice will alert the Nasdaq Exchanges' 
members to the proposed FINRA or Nasdaq rule change and give them an 
opportunity to comment on the proposal.\7\ The Nasdaq Exchanges will 
similarly inform members in writing when the Commission approves any 
such proposed changes.\8\
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    \6\ The Nasdaq Exchanges will provide such notice via a posting 
on the same website location where they post their own rule filings 
pursuant to and within the timeframe required by Rule 19b-4(1) under 
the Exchange Act. The website posting will include a link to the 
location on Nasdaq's website where the applicable proposed rule 
change is posted. Exemptive Request, supra note 1, at 3 & n.7.
    \7\ Exemptive Request, supra note 1, at 3.
    \8\ Id.
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    The Commission has issued exemptions similar to the Nasdaq 
Exchanges' request.\9\ In granting one such exemption in 2010, the 
Commission repeated an earlier Commission statement that it would 
consider similar future exemption requests from other self-regulatory 
organizations (``SROs''), provided that:
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    \9\ See, e.g., Release No. 34-83040 (Apr. 12, 2018), 83 FR 17198 
(Apr. 18, 2018) (order granting MIAX PEARL, LLC, an exemption under 
Section 36(a) of the Exchange Act from the rule filing requirements 
of Section 19(b) of the Exchange Act with respect to certain of its 
rules incorporating by reference rules of the Miami International 
Securities Exchange, LLC); Release No. 34-61534 (Feb. 18, 2010), 75 
FR 8760 (Feb. 25, 2010) (order granting BATS Exchange, Inc., an 
exemption under Section 36(a) of the Exchange Act from the rule 
filing requirements of Section 19(b) of the Exchange Act with 
respect to certain of its rules incorporating by reference rules of 
the Chicago Board Options Exchange, Incorporated, Financial Industry 
Regulatory Authority, Inc., and the New York Stock Exchange, LLC) 
(``BATS Order'').
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    <bullet> An SRO wishing to incorporate rules of another SRO by 
reference has submitted a written request for an order exempting it 
from the requirement in Section 19(b) of the Exchange Act to file 
proposed rule changes relating to the rules incorporated by reference, 
has identified the applicable originating SRO(s), together with the 
rules it wants to incorporate by reference, and otherwise has complied 
with the procedural requirements set forth in the Commission's release 
governing procedures for requesting exemptive orders pursuant to Rule 
0-12 under the Exchange Act;
    <bullet> The incorporating SRO has requested incorporation of 
categories of rules (rather than individual rules within a category) 
that are not trading rules (e.g., the SRO has requested incorporation 
of rules such as margin, suitability, or arbitration); and
    <bullet> The incorporating SRO has reasonable procedures in place 
to provide written notice to its members each time a change is proposed 
to the incorporated rules of another SRO.\10\
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    \10\ See Release No. 34-83040, supra note 17, at 75 FR 17199 
(footnotes omitted).
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    The Commission believes that the Nasdaq Exchanges have satisfied 
each of these conditions. The Commission also believes that granting 
the Nasdaq Exchanges an exemption from the rule filing requirements 
under Section 19(b) of the Exchange Act will promote efficient use of 
Commission and exchange resources by avoiding duplicative rule filings 
based on simultaneous changes to identical rule text sought by more 
than one SRO.\11\ The Commission therefore finds it appropriate in the 
public interest, and consistent with the protection of investors, to 
exempt the Nasdaq

[[Page 22963]]

Exchanges from the rule filing requirements under Section 19(b) of the 
Exchange Act with respect to the above-described rules they have 
incorporated by reference.
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    \11\ Id. at 75 FR 17199 & n.15.
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    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act,\12\ that the Nasdaq Exchanges are exempt from the rule filing 
requirements of Section 19(b) of the Exchange Act with respect to 
changes to their rules on arbitration resulting solely from changes 
made to the FINRA Arbitration Rules or the Nasdaq General 6 Rules (as 
applicable) that are incorporated by reference into the Nasdaq 
Exchanges' rules without the need for each Nasdaq Exchange to 
separately file, pursuant to Section 19(b) of the Exchange Act, a 
proposed rule change similar to the one filed by FINRA or Nasdaq, 
provided that the Nasdaq Exchanges promptly provide written notice to 
their members whenever a change is proposed to the FINRA Arbitration 
Rules or the Nasdaq General 6 Rules, and provided that they inform 
their members in writing when the Commission approves any such proposed 
change.
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    \12\ 15 U.S.C. 78mm.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(76).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-08181 Filed 4-15-22; 8:45 am]
BILLING CODE 8011-01-P