Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Notices 27683 

9The Exchange will also provide information 

regarding the ATS(s) to which a Directed Order may 

be designated to route by Trader Update. 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(5). 

12See notes 7 & 8, supra. 13See note 8, supra. 14 17 CFR 200.30–3(a)(12). 

implementation date by Trader Update.9

Subject to effectiveness of this proposed 

rule change, the Exchange anticipates 

that the proposed change will be 

implemented in the second quarter of 

2022. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Securities Exchange Act of 1934,10 in 

general, and furthers the objectives of 

Section 6(b)(5),11 in particular, because 

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 rule change is designed to 

remove impediments to and perfect the 

mechanism of a free and open market 

and promote just and equitable 

principles of trade because the Directed 

Order would offer Participants access to 

additional trading opportunities by 

permitting them to designate orders 

submitted to the Exchange to be routed 

directly to a specified ATS for 

execution. The Exchange further 

believes that the proposed change 

would remove impediments to and 

perfect the mechanism of a free and 

open market by offering Participants the 

option to send orders that they wish to 

route to an alternate destination for 

execution through the Exchange, which 

would create efficiencies to the extent 

Participants are able to leverage existing 

protocols and specifications. Finally, 

the Exchange notes that the proposed 

functionality is not novel, as both the 

Exchange and other exchanges offer 

their members functionality whereby an 

exchange routes orders on behalf of a 

member to a specified trading center 

without such order interacting with the 

exchange’s book.12

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes that the proposed 

rules governing Directed Orders would 

promote competition because they 

would provide for an order type on the 

Exchange that would facilitate 

additional trading opportunities for 

market participants. The Exchange 

further believes that the proposed rules 

would allow it to offer Participants 

functionality similar to order types and 

routing options that exist on other 

equities exchanges, thereby enabling the 

Exchange to compete with such 

exchanges.13

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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or 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 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSECHX–2022–06 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–NYSECHX–2022–06. 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 (http://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–NYSECHX–2022–06 and 

should be submitted on or before May 

31, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–09854 Filed 5–6–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94838; File No. SR– 

NASDAQ–2022–017] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing of Amendment No. 1 to 

Proposed Rule Change To Modify 

Equity 4, Section 4120 To Add 

Categories of Regulatory and 

Operational Halts, To Reorganize the 

Remaining Text of the Rule, and To 

Make Conforming Changes to Related 

Rules 

May 3, 2022. 

On February 22, 2022, The Nasdaq 

Stock Market LLC (‘‘Nasdaq’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 


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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 94370 

(March 7, 2022), 87 FR 14071. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 94778, 

87 FR 25069 (April 27, 2022). The Commission 

designated June 9, 2022 as the date by which the 

Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

disapprove, the proposed rule change. 

6On February 11, 2021, the Nasdaq UTP Plan 

participants filed Amendment 50 to the Plan, to 

revise provisions governing regulatory and 

operational halts. See Letter from Robert Brooks, 

Chairman, UTP Operating Committee, Nasdaq UTP 

Plan, to Vanessa Countryman, Secretary, Securities 

and Exchange Commission, dated February 11, 

2021. The Nasdaq UTP Plan subsequently filed two 

partial amendments to the 50th Amendment, on 

March 31, 2021 and on April 7, 2021. The SEC 

approved the amendments on May 28, 2021. See 

Securities Exchange Act Release No. 34–92071 

(May 28, 2021), 86 FR 29846 (June 3, 2021) (S7–24– 

89). The Amended Nasdaq UTP Plan includes 

provisions requiring participant self-regulatory 

organizations (‘‘SROs’’) to honor a Regulatory Halt 

declared by the Primary Listing Market. The 

provisions in the Nasdaq UTP Plan, and the plan 

for consolidation of data for non-Nasdaq-listed 

securities, the Consolidated Tape System and 

Consolidated Quotations System (collectively, the 

‘‘CTA/CQS Plan’’), include provisions similar to the 

changes proposed by the Exchange in this filing. 

7References herein to Nasdaq Rules in the 4000 

Series shall mean Rules in Nasdaq Equity 4. 

8Each transaction reporting plan has a securities 

information processor (‘‘SIP’’) responsible for 

consolidation of information for the plan’s 

securities, pursuant to Rule 603 of Regulation NMS. 

The transaction reporting plan for Nasdaq-listed 

securities is known as 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 Privilege Basis or the ‘‘Nasdaq UTP Plan.’’ 

Pursuant to the Nasdaq UTP Plan, the UTP SIP, 

which is Nasdaq, consolidates order and trade data 

from all markets trading Nasdaq-listed securities. 

The Exchange uses the term ‘‘UTP SIP’’ herein 

when referring specifically to the SIP responsible 

for consolidation of information in Nasdaq-listed 

securities. 

9Nasdaq is proposing to adopt Primary Listing 

Market as a new term, defined in Nasdaq UTP Plan, 

Section X.A.8, as follows: ‘‘[T]he 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 In addition, securities may also be listed on the 

New York Stock Exchange (‘‘dually-listed’’). See 

Rules 5005(a)(11), 5220 and IM–5220. 

11See proposed Rule 4120(a)(11). 

‘‘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 

modify Equity 4, Section 4120 to add 

categories of regulatory and operational 

halts, to reorganize the remaining text of 

the rule, and to make conforming 

changes to related rules. The proposed 

rule change was published for comment 

in the Federal Register on March 11, 

2022.3 On April 21, 2022, pursuant to 

Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.5

On April 29, 2022, the Exchange filed 

Amendment No. 1 to the proposed rule 

change, which amended and superseded 

the proposed rule change as originally 

filed. Amendment No. 1 is 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 Amendment No. 1 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify 

Equity 4, Section 4120 to add categories 

of regulatory and operational halts and 

to reorganize the remaining text of the 

rule, and to make conforming changes to 

related rules. 

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 

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 

In conjunction with adoption of an 

amended Nasdaq UTP Plan proposed by 

its participants (‘‘Amended Nasdaq UTP 

Plan’’),6 Nasdaq is amending Rule 

4120 7 to integrate several definitions 

and concepts from the Amended Nasdaq 

UTP Plan and to reorganize the rule in 

light of Nasdaq’s experience with 

applying the rule over fifteen years as a 

national securities exchange. Nasdaq 

proposes to reorganize and amend Rule 

4120 entitled Limit Up-Limit Down Plan 

and Trading Halts. The rule sets forth 

Nasdaq’s authority to halt trading under 

various circumstances. The Exchange is 

a participant of the transaction reporting 

plan governing Tape C Securities 

(‘‘Nasdaq UTP Plan’’).8 As part of these 

changes, Nasdaq will add categories of 

regulatory and operational halts, 

improve the rule’s clarity, adopt defined 

terms from the Amended Nasdaq UTP 

Plan and delete parts of the rule that are 

no longer needed. Last, Nasdaq is 

updating cross references in other rules 

that are affected by the proposed 

changes. 

Background 

The Exchange has been working with 

other SROs to establish common criteria 

and procedures for halting and 

resuming trading in equity securities in 

the event of regulatory or operational 

issues. These common standards are 

designed to ensure that events which 

might impact multiple exchanges are 

handled in a consistent manner that is 

transparent. The Exchange believes that 

implementation of these common 

standards will assist the SROs in 

maintaining fair and orderly markets. 

Notwithstanding the development of 

these common standards, Nasdaq will 

retain discretion in certain instances as 

to whether and how to handle halts, as 

is discussed below. 

Every U.S.-listed equity security has 

its primary listing on a specific stock 

exchange that is responsible for a 

number of regulatory functions.9 These 

include confirming that the security 

continues to meet the exchange’s listing 

standards, monitoring trading in that 

security and taking action to halt trading 

in the security when necessary to 

protect investors and to ensure a fair 

and orderly market. While these core 

responsibilities remain with the primary 

listing venue, trading in the security can 

occur on multiple exchanges that have 

unlisted trading privileges for the 

security 10 or in the over-the-counter 

market, regulated by the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’). The exchanges and FINRA 

are responsible for monitoring activity 

on the markets over which they have 

oversight, but also must abide by the 

regulatory decisions made by the 

Primary Listing Market. For example, a 

venue trading a security pursuant to 

unlisted trading privileges must halt 

trading in that security during a 

Regulatory Halt, which is a defined term 

under the proposed rules,11 and may 

only trade the security once the Primary 

Listing Market has cleared the security 

to resume trading. 

All SROs have rules that require them 

to honor a Regulatory Halt. Nasdaq, as 

a Primary Listing Market, also has rules 


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12Nasdaq’s current Rule 4120 establishes a 

limited number of reasons for instituting a 

Regulatory Halt for a Nasdaq-listed security. These 

reasons are: To permit the dissemination of material 

news concerning a listed company (Rule 

4120(a)(1)); with respect to an American Depository 

Receipt (‘‘ADR’’) listed on Nasdaq, where another 

U.S. or foreign exchange that lists the security or 

the security underlying the ADR imposes a 

Regulatory Halt on the security listed on its market 

(Rule 4120(a)(4)); where Nasdaq requests 

information from the issuer relating to material 

news, the issuer’s ability to meet Nasdaq’s listing 

standards, or to protect investors (Rule 4120(a)(5)); 

in the event that extraordinary market activity in 

the security is occurring, ‘‘such as the execution of 

a series of transactions for a significant dollar value 

at prices substantially unrelated to the current 

market for the security’’ that is ‘‘likely to have a 

material effect on the market for the security’’ and 

the Exchange believes it is ‘‘caused by the misuse 

or malfunction of an electronic quotation, 

communication, reporting or execution system 

operated by, or linked to,’’ Nasdaq or another 

market (Rule 4120(a)(6)); in the event of an initial 

public offering (‘‘IPO’’) (Rule 4120(a)(7)); with 

respect to an index warrant, under certain specified 

conditions, or when appropriate in the interests of 

a fair and orderly market (Rule 4120(a)(8)); with 

respect to certain ‘‘Derivative Securities Products’’ 

(defined in Rule 4120(b)(4)(A)) when certain pricing 

information concerning the instrument is not 

available or is not being disseminated to all market 

participants at the same time (Rules 4120(a)(9) and 

(10)); for securities not covered by the Limit UpLimit Down Plan, in the event a single stock trading 

pause is triggered (Rule 4120(a)(11)); and for 

securities covered by the Limit Up-Limit Down 

Plan, in the event of a trading pause (Rule 

4120(a)(12)). 13The proposed definition of Extraordinary 

Market Activity encompasses a market event that 

affects multiple markets. See proposed Rule 

4120(a)(2) (incorporating by reference Nasdaq UTP 

Plan, Section X.A.1. Thus, such cross-market events 

could be considered Extraordinary Market Activity. 

14The Exchange will consider these factors for all 

Regulatory Halts, not simply those caused by 

Extraordinary Market Activity. 

15See proposed Rule 4120(a)(11) and Amended 

Nasdaq UTP Plan, Section X.A.10. 

outlining the circumstances in which it 

will halt trading in its listed securities, 

including situations in which such halts 

are for regulatory purposes 12—and 

therefore are applicable to all markets 

trading the security—or for operational 

purposes, which would not halt trading 

on other markets. However, the trading 

halt rules are not consistent across 

SROs. Consequently, events that might 

constitute a Regulatory Halt for 

securities listed on one Primary Listing 

Market theoretically might not be 

grounds for a Regulatory Halt in 

securities listed on another Primary 

Listing Market. Such inconsistency 

among exchange rules could lead to 

confusion in circumstances such as a 

cross market event, which could be 

deemed ‘‘Extraordinary Market 

Activity.’’ 13

While the existing rule generally has 

worked as intended to afford the 

Exchange authority to initiate a 

Regulatory Halt in appropriate cases, 

Nasdaq’s experience is that the current 

rule may not contemplate some 

situations where a Regulatory Halt 

would help to maintain fair and orderly 

markets. For example, the current 

definition of ‘‘Extraordinary Market 

Activity’’ focuses on events where 

trading occurs significantly away from 

pre-event market prices. However, there 

may be other situations where trading 

proceeds in an orderly fashion despite 

a computer error that causes duplicative 

orders, bad data or other erroneous 

information that could impact investors’ 

understanding of the market or their 

trading activity. The Exchange believes 

it would facilitate fair and orderly 

markets to give Primary Listing Markets 

greater flexibility to consider the facts 

and circumstances of each case and 

decide whether a Regulatory Halt is 

appropriate. 

The complex and interconnected 

market structure in the United States 

also relies on consolidated market data 

processed and disseminated by the SIPs. 

In certain circumstances, the loss of this 

information or issues with the accuracy 

or timeliness of the information might 

cause a Primary Listing Market to 

determine that a trading halt is 

appropriate. The Exchange believes that 

further guidance in the rules will assist 

market participants in better 

understanding how various scenarios 

would be handled. 

The Exchange believes that the crossmarket proposed changes would address 

these concerns by: (1) Adopting uniform 

rules regarding the trigger points for 

regulatory trading halts in situations 

most likely to have an impact across 

markets and multiple listing venues; (2) 

addressing more scenarios in the 

uniform rule where a Primary Listing 

Market may need to implement a 

Regulatory Halt to maintain fair and 

orderly markets; and (3) adding 

provisions that apply to SIP-related 

issues to increase transparency into how 

these situations would be handled. 

As noted above, the proposed changes 

that would be uniformly applied across 

SROs are those that relate to crossmarket events as set forth in the 

Amended Nasdaq UTP Plan. However, 

there will still be situations where 

personnel at the Primary Listing Market 

will need to determine the impact of the 

cross-market event on the securities 

listed on its market and use discretion 

in deciding whether to halt trading in 

some or all securities during a crossmarket event that affects securities 

listed on different markets. In making a 

determination as to whether to declare 

a Regulatory Halt for Extraordinary 

Market Activity, the Primary Listing 

Market will consider the totality of 

information available concerning the 

severity of the issue, its likely duration, 

potential impact on members and other 

market participants, and it will make a 

good-faith determination that the 

criteria for declaring a Regulatory Halt 

have been satisfied and that a 

Regulatory Halt is appropriate.14

Moreover, the Primary Listing Market 

will consult, if feasible, with the 

affected Trading Center(s), other Plan 

Participants, or the Processor, as 

applicable, regarding the scope of the 

issue and what steps are being taken to 

address the issue. Exchanges may also 

declare a Regulatory Halt when it 

determines that it is necessary to 

maintain a fair and orderly market.15

While the Exchange and the other 

SROs intend to harmonize certain 

aspects of their trading halt rules, other 

elements of the rules will continue to be 

unique to each market. The Exchange 

believes that this is appropriate to 

reflect different products listed or 

traded on each market and the unique 

relationship of the Primary Listing 

Market to its listed companies. It is 

anticipated that these unique rules 

would most likely be invoked in cases 

where the Primary Listing Market’s 

decision on whether to institute a 

Regulatory Halt turns on specific 

information related to an individual 

security or issuer, such as the 

dissemination of news and the issuer’s 

ability to meet listing standards, rather 

than broader market issues stemming 

from Extraordinary Market Activity or 

loss of consolidated market data from a 

SIP. 

In addition to the changes noted 

above, the Exchange is deleting 

provisions that are no longer needed 

and reorganizing the rule to improve its 

clarity. The Exchange is also making a 

handful of non-substantive changes to 

rule text to improve its clarity. The 

Exchange will implement all of the 

changes proposed herein in conjunction 

with other SROs implementing the 

necessary rule changes. The Exchange 

will publish an Equity Trader alert at 

least 30 business days prior to 

implementing the proposed changes. 

Definitions 

The Exchange proposes adding a 

definitions section as Rule 4120(a) to 

consolidate the various definitions that 

will be used in the Rule, some of which 

are taken from the Amended Nasdaq 

UTP Plan. Nasdaq is adopting the 

following terms from the Amended 

Nasdaq UTP Plan: ‘‘Extraordinary 

Market Activity,’’ ‘‘Material SIP 

Latency,’’ ‘‘Operating Committee,’’ 

‘‘Operational Halt,’’ ‘‘Primary Listing 


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16The Exchange proposes to also define the term 

‘‘SIP’’ to have the same meaning as the term 

‘‘Processor’’ as set forth in the Amended Nasdaq 

UTP Plan. Because the terms ‘‘Processor’’ and ‘‘SIP’’ 

are also used throughout the Rules, at times, to 

apply to processors of information furnished 

pursuant to the Consolidated Tape Association Plan 

(‘‘CTA Plan’’), the term ‘‘Processor’’ may, in those 

applicable circumstances, refer to the processor of 

transactions in Tape A and B securities, as set forth 

in the CTA Plan. 

17The Exchange notes that pursuant to existing 

Rule 4120(b)(4), the Regular Market Session occurs 

until 4:00 p.m. or 4:15 p.m., and the Post-Market 

Session begins at 4:00 p.m. or 4:15 p.m. 

18As noted above, the Exchange is adopting 

several new terms that have the same meaning as 

those terms are defined in the Amended Nasdaq 

UTP Plan. Each of the national market system plans 

governing the single plan processors has identical 

definitions of these terms, thus there will be 

uniformity in the meaning of the terms among such 

plans as well as among the rules of the SROs. 

19See proposed Rule 4120(a)(9). 20See proposed Rule 4120(a)(2). 

21 ‘‘Extraordinary Market Activity’’ means a 

disruption or malfunction of any electronic 

quotation, communication, reporting, or execution 

system operated by, or linked to, the Processor or 

a Trading Center or a member of such Trading 

Center that has a severe and continuing negative 

impact, on a market-wide basis, on quoting, order, 

or trading activity or on the availability of market 

information necessary to maintain a fair and orderly 

market. For purposes of this definition, a severe and 

continuing negative impact on quoting, order, or 

trading activity includes (i) a series of quotes, 

orders, or transactions at prices substantially 

unrelated to the current market for the security or 

securities; (ii) duplicative or erroneous quoting, 

order, trade reporting, or other related message 

traffic between one or more Trading Centers or their 

members; or (iii) the unavailability of quoting, 

order, or transaction information for a sustained 

period. 

Market,’’ ‘‘Processor,’’ 16 ‘‘Regulatory 

Halt,’’ ‘‘Regular Trading Hours,’’ 17 ‘‘SIP 

Halt,’’ ‘‘SIP Halt Resume Time,’’ and 

‘‘SIP Outage.’’ The definitions of 

‘‘Derivatives Securities Product,’’ ‘‘IPO,’’ 

‘‘Pre-Market Session’’ and ‘‘Required 

Value’’ have been moved into the 

definitions section from elsewhere in 

the current rule without change. The 

definition of ‘‘Post-Market Session’’ has 

been moved from elsewhere in the rule 

with a minor change deleting the 

alternative closing time of 4:15 p.m. as 

all securities traded on Nasdaq 

commence their closing cross process at 

4:00 p.m.18

First, the Exchange proposes to add 

the definition of ‘‘Primary Listing 

Market’’ 19 to Rule 4120, which will 

have the same meaning as in the 

Amended Nasdaq UTP Plan, Section 

X.A.8. As is currently the case under 

Rule 4120 and under the Nasdaq UTP 

Plan, all Regulatory Halt decisions are 

made by the market on which the 

security has its primary listing. This 

reflects the regulatory responsibility that 

the Primary Listing Market has for fair 

and orderly trading in the securities that 

list on its market and its direct access 

to its listed companies, which are 

required to advise it of certain events 

and maintain lines of communication 

with the Primary Listing Market. The 

proposed definition makes clear that if 

a security is listed on more than one 

market (a dually-listed security), the 

Primary Listing Market means the 

exchange on which the security has 

been listed the longest. This provision 

matches language used in the definition 

of ‘‘Primary Listing Exchange’’ in the 

Limit-Up Limit-Down Plan and will 

avoid conflict in the event of duallylisted securities. 

Second, the Exchange proposes to 

replace the definition of ‘‘Extraordinary 

Market Activity’’ with a broader 

definition of the term taken from 

Section X.A.1. of the Amended Nasdaq 

UTP Plan.20 The current rule establishes 

a three-part test for Extraordinary 

Market Activity: 

(1) Extraordinary Market Activity 

must be occurring in the security—the 

sole example of such activity included 

in the rule is ‘‘the execution of a series 

of transactions for a significant dollar 

value at prices substantially unrelated to 

the current market for the security, as 

measured by the national best bid and 

offer,’’ and 

(2) The Exchange must determine that 

such Extraordinary Market Activity is 

likely to have a material effect on the 

market for the security, and 

(3) The Exchange believes that either: 

(i) Such activity is caused by the misuse 

or malfunction of an electronic 

quotation, communication, reporting or 

execution system operated by, or linked 

to, the Exchange; (ii) after consultation 

with another national securities 

exchange trading the security on an 

unlisted trading privileges basis, that 

such activity is caused by the misuse or 

malfunction of an electronic quotation, 

communication, reporting or execution 

system operated by, or linked to, such 

other national securities exchange; or 

(iii) after consultation with FINRA 

regarding a FINRA facility trading the 

security, such activity is caused by the 

misuse or malfunction of such FINRA 

facility or an electronic quotation, 

communication, reporting, or execution 

system linked to such FINRA facility. 

Although the single scenario in 

element (1) of the test is not exclusive, 

the Exchange believes that market 

participants would benefit from the 

inclusion of other scenarios that might 

constitute ‘‘Extraordinary Market 

Activity.’’ For example, experience 

indicates that significant market events 

do not always result in price 

dislocation. In some cases, trading may 

remain orderly. Moreover, price 

discovery—at least when measured by 

the absence of large price changes—may 

appear to be orderly, but in fact there 

may be confusion or information 

missing (e.g., quote or transaction 

information) that is important to 

participants. The absence of accurate 

information could make it difficult for 

market participants to properly confirm 

the positions they own, the impact of 

the event, or the correct prices for 

securities. 

The proposed definition of 

Extraordinary Market Activity is the 

same definition in Section X.A.1. of the 

Amended Nasdaq UTP Plan.21 The new 

definition updates and consolidates the 

terminology and broadens applicability 

of the term in comparison to the current 

definition, by making it clear that 

Extraordinary Market Activity may 

occur solely on the Exchange or 

multiple markets, referred to as 

‘‘Trading Centers’’ in the proposed rule 

change. A ‘‘Trading Center,’’ which is 

defined in Rule 600(b)(95) of Regulation 

NMS, refers to a ‘‘national securities 

exchange or national securities 

association that operates an SRO trading 

facility, an alternative trading system, 

an exchange market maker, an OTC 

market maker, or any other broker or 

dealer that executes orders internally by 

trading as principal or crossing orders as 

agent.’’ The Amended Nasdaq UTP Plan 

definition of Extraordinary Market 

Activity also explicitly refers to 

disruptions or malfunctions at a SIP or 

a member of a Trading Center, whereas 

the current rule, as discussed above, 

does not. To qualify as Extraordinary 

Market Activity, the event must have a 

‘‘severe and continuing negative 

impact’’ on a market-wide basis on 

quoting, order, or trading activity or the 

availability of market information 

necessary to maintain a fair and orderly 

market. 

The new definition of Extraordinary 

Market Activity also explains what 

constitutes a ‘‘severe and continuing 

negative impact.’’ In addition to the 

scenario in the current rule involving 

significant price movement, the 

proposed change adds two new 

scenarios to provide additional 

transparency to member firms: 

• Duplicative or erroneous quoting, 

order trade reporting, or other related 

message traffic between one or more 

Trading Centers or their members; and 

• The unavailability of quoting, order 

or transaction information, or regulatory 

messages, for a sustained period. 

These problems may cause market 

participants to change their trading 

behavior or withdraw from the market 


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22See proposed Rule 4120(a)(10). 

23See proposed Rule 4120(a)(17). 

24See proposed Rule 4120(a)(5). 

25See proposed Rule 4120(a)(14). 

26See proposed Rule 4120(a)(16). 

27See https://www.utpplan.com/DOC/UTP_SIP_

Emergency_Procedures.pdf. 

entirely. When serious enough, this can 

affect the fair and orderly operation of 

the market. In determining whether to 

initiate a trading halt, Nasdaq would, as 

set forth in the Amended Nasdaq UTP 

Plan and in proposed Rule 

4120(b)(2)(D), consider the totality of 

information available concerning the 

severity of the issue, its likely duration, 

potential impact on members and other 

market participants, and will make a 

good-faith determination that the 

criteria for declaring a Regulatory Halt 

has been satisfied and that a Regulatory 

Halt is appropriate. Therefore, the 

Exchange, acting as the Primary Listing 

Market, in consultation with the 

affected trading centers, other SIP Plan 

participants, or the Processor, as 

applicable, where feasible, will retain 

discretion to evaluate the magnitude of 

each situation to determine whether the 

event meets the definition of 

Extraordinary Market Activity. 

As with the current rule, the three 

scenarios included by reference in the 

new definition would not be exhaustive. 

This enables the Primary Listing Market 

to act in the best interests of the market 

when confronted with unexpected 

events. However, the Exchange believes 

that the three scenarios included in the 

rule cover many of the most likely 

events that may occur. As is currently 

the case, the Exchange anticipates 

providing public notice of Extraordinary 

Market Activity as soon as it is 

practicable, with updates as necessary, 

to assist firms in monitoring the status 

of issues. These notices, coupled with 

the proposed rule, will assist 

participants by alerting them to the 

situations most likely to result in 

trading halts. 

The third set of new proposed 

definitions would be specific to events 

involving the SIP. While Nasdaq 

recognizes that many events involving 

the SIP would also meet the definition 

of ‘‘Extraordinary Market Activity,’’ the 

Exchange believes that the critical role 

of the SIPs in market infrastructure 

factors in favor of additional guidance 

on how such events will be handled. 

The definitions of ‘‘SIP Outage,’’ 

‘‘Material SIP Latency,’’ ‘‘SIP Halt 

Resume Time,’’ and ‘‘SIP Halt’’ are 

intended to provide additional guidance 

and specific processes to address this 

subset of potential market issues. In 

addition, the Exchange is proposing to 

define terms related to SIP governance 

needed in order to understand these 

definitions: 

• ‘‘Processor’’ or ‘‘SIP’’ 22 have the 

same meaning as the term ‘‘Processor’’ 

set forth in the Nasdaq UTP Plan, 

namely the entity selected by the 

Participants to perform the processing 

functions set forth in the Plan. Because 

the terms ‘‘Processor’’ and ‘‘SIP’’ are 

also used throughout the Rules, at times, 

to apply to processors of information 

furnished pursuant to the CTA Plan, the 

term ‘‘Processor’’ and ‘‘SIP’’ may, in 

those applicable circumstances, refer to 

the processor of transactions in Tape A 

and B securities, as set forth in the CTA 

Plan. 

• ‘‘SIP Plan’’ 23 is defined as the 

Nasdaq UTP Plan. 

• ‘‘Operating Committee’’ 24 is 

defined as having the same meaning as 

in the Nasdaq UTP Plan, namely the 

committee charged with administering 

the Nasdaq UTP Plan. 

The Exchange is proposing to adopt a 

category of Regulatory Halt, called a 

‘‘SIP Halt,’’ 25 which will have the same 

meaning as that term is defined in 

Section X.A.11. of the Nasdaq UTP Plan, 

namely ‘‘a Regulatory Halt to trading in 

one or more securities that a Primary 

Listing Market declares in the event of 

a SIP Outage or Material SIP Latency.’’ 

This new category of Regulatory Halt 

will address situations where the 

Primary Listing Market declares a 

Regulatory Halt in one or more 

securities as a result of a SIP Outage or 

Material SIP Latency (each is discussed 

below). While a SIP Halt may be 

declared in a single stock, Nasdaq 

anticipates that most events will impact 

multiple securities or even all securities 

with their primary listing on a particular 

market. Because of the complexities 

inherent in these types of halts, the 

Exchange is proposing special 

procedures for the halting and resuming 

of trading as a result of a SIP Halt. These 

are discussed in more detail later. 

The Exchange is proposing to define 

a ‘‘SIP Outage’’ 26 as having the same 

meaning as in Section X.A.13 of the 

Amended Nasdaq UTP Plan. 

Specifically, the Exchange is proposing 

to define SIP Outage to mean a situation 

in which the Processor has ceased, or 

anticipates being unable, to provide 

updated and/or accurate quotation or 

last sale price information in one or 

more securities for a material period 

that exceeds the time thresholds for an 

orderly failover to backup facilities 

established by mutual agreement among 

the Processor, the Primary Listing 

Market for the affected securities, and 

the Operating Committee unless the 

Primary Listing Market, in consultation 

with the Processor and the Operating 

Committee, determines that resumption 

of accurate data is expected in the near 

future. 

Recent experience with events 

involving a loss of consolidated data 

from the SIP has shown that in many 

cases, the least disruptive outcome in 

the event of a brief interruption in data 

is to not halt trading in the affected 

securities if the market is fair and 

orderly. For example, in August 2013, 

Nasdaq halted trading in Nasdaq-listed 

securities due to an interruption in UTP 

SIP data due to uncertainty about the 

impact the loss of data would have on 

market participants. Although the UTP 

SIP successfully restarted the system 

within its primary data center and was 

operational within 17 minutes, the 

market remained halted for 3 hours at 

the request of market participants so 

that they could manage their books, 

clear stale orders and reconnect to the 

system. By contrast, the New York Stock 

Exchange (‘‘NYSE’’), benefitting from 

this prior experience, did not halt 

trading during a loss of CTA/CQS data 

in October 2014 and failed over to backup facilities within 30 minutes of the 

loss of SIP data. Because NYSE did not 

halt trading, firms did not need to 

reconnect and clear order books. As a 

result, the duration of the NYSE event— 

measured from loss of SIP data to end 

of the issue—was shorter and caused 

less disruption to the market even 

though the scope of the underlying 

problem that caused the loss of data 

from both SIPs was comparable. 

At the direction of the Operating 

Committees, each processor has 

invested significant money and effort 

into improving the resiliency of the 

SIPs. This will increase the likelihood 

that SIPs will failover rapidly and 

commence disseminating valid data. Of 

course, there could still be situations 

where the failover does not work as 

expected, or the problem is not cured 

despite the redundancy available in the 

backup center. It is in these situations 

that the Exchange and the other SROs 

believe that the need for a SIP Halt is 

most likely to arise. 

For this reason, the proposed 

definition focuses on the agreed time 

frames for an orderly failover. 

Emergency procedures applicable to the 

Processor provide that when a 

determination is made to failover to the 

secondary data center, the Processor 

shall endeavor to complete the failover 

within 10 minutes.27

Accordingly, the Primary Listing 

Market would be expected to consider a 

SIP Halt in the event of the loss of SIP 


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28See proposed Rule 4120(a)(4). 

29See https://www.utpplan.com/DOC/UTP_SIP_

Emergency_Procedures.pdf. 

30See proposed Rule 4120(a)(11). 

31The Exchange’s authority to declare a 

Regulatory Halt to maintain a fair and orderly 

market is explicitly included in the definition of 

Regulatory Halt. The Exchange will institute a 

Regulatory Halt if it makes a determination that it 

is necessary to maintain a fair and orderly market. 

The Exchange believes that the addition of this 

basis to declare a Regulatory Halt will protect 

investors by giving the Exchange explicit authority 

to act in unforeseen situations not covered by other 

provisions of Rule 4120. 

32As provided for in the Nasdaq UTP Plan, the 

Proposed Rule would permit the Exchange to 

declare a Regulatory Halt for a security for which 

it is the Primary Listing Market, in the event of 

national, regional, or localized disruption that 

necessitates a Regulatory Halt to maintain a fair and 

orderly market. 

33See proposed Rule 4120(a)(6). 

34See By-Laws of the Nasdaq Stock Market LLC, 

Section 5 (‘‘Authority to Take Action Under 

Emergency or Extraordinary Market Conditions’’), 

available at https://listingcenter.nasdaq.com/assets/ 

rulebook/nasdaq/rules/NASDAQ_Corporate_

Organization_Nasdaq_LLC.pdf. 

data once the loss in data extends or is 

anticipated to extend for a material 

period that exceeds the same agreedupon 10 minute failover thresholds, 

unless the Primary Listing Market, in 

consultation with the Processor and the 

responsible Operating Committee, 

determines that resumption of accurate 

data is expected in the near future. The 

Exchange, in consultation with the other 

SROs, considered and rejected 

specifying a numerical time limit after 

which a SIP Halt would be required. 

Because of the significant impact a 

broad trading halt can have on market 

confidence, the Exchange believes 

Primary Listing Markets should retain 

discretion to consider the facts of the 

incident in evaluating a SIP Halt to 

avoid having to halt trading despite 

knowing that the SIP is about to resume 

data dissemination. Instead, the Primary 

Listing Market, in consultation with 

other SROs, SIPs and market 

participants where feasible, would 

continually re-evaluate whether a SIP 

Halt is appropriate and take action 

when, in its judgment, the thresholds in 

the definition have been passed. The 

Primary Listing Market retains 

discretion throughout the process to 

institute a Regulatory Halt in good 

faith—even within the 10 minute 

failover window—if trading appears 

disorderly, price discovery has been 

impacted, or it is otherwise in the 

interests of a fair and orderly market to 

halt trading. 

In addition to situations where a SIP 

is no longer disseminating data, 

circumstances may arise where 

quotation or last sale price information 

from the SIP is delayed or stale due to 

a significant increase in latency. Minor 

latency in the data will always exist 

given the nature of a consolidated feed, 

where data from multiple markets is 

validated, normalized, consolidated and 

then distributed. However, significant 

latency can impact trading decisions 

and market confidence if participants 

are unsure whether data accurately 

reflects the current state of the market. 

The Exchange is proposing to define 

‘‘Material SIP Latency’’ 28 as having the 

same meaning as in Section X.A.5 of the 

Amended Nasdaq UTP Plan. 

Specifically, the Exchange is proposing 

to define Material SIP Latency to mean 

a delay of quotation or last sale price 

information in one or more securities 

between the time data is received by the 

Processor and the time the Processor 

disseminates the data over the 

Processor’s vendor lines, which delay 

the Primary Listing Market determines, 

in consultation with, and in accordance 

with, publicly disclosed guidelines 

established by the Operating Committee, 

to be (a) material and (b) unlikely to be 

resolved in the near future. In this 

regard, SIP Emergency procedures 

presently state that ‘‘SIP material 

latency refers to sustained latency of 

100 milliseconds or greater for 10 

minutes caused by a technical issue at 

the Processor.’’ 29 The Emergency 

Procedures have various escalation 

points to advise the Primary Listing 

Market, the Operating Committee, and 

market participants. Under the proposal, 

the Primary Listing Market, in 

consultation with the Operating 

Committee, would be responsible for 

determining when this latency has 

become a Material SIP Latency. 

Because guidelines are designed as an 

early warning system to mobilize 

decision makers, many latency events 

that exceed the thresholds in the 

guidelines would not constitute 

Material SIP Latency resulting in a SIP 

Halt. Instead, the Primary Listing 

Market, in consultation with the 

Operating Committee, would be 

expected to evaluate the severity of the 

latency and its continued duration and 

consider whether the issue is likely to 

be resolved in the near future. As in the 

case of a SIP Outage, the Exchange, in 

consultation with other SROs, 

considered adopting fixed latency 

metrics in the rule, but for several 

reasons, it determined that this would 

be counterproductive. First, it could 

create situations where a SIP Halt is 

imposed even where resolution is 

imminent. Second, greater flexibility 

will enable the Exchange and other 

Primary Listing Markets to learn from 

experience about how various levels of 

latency affect trading. Fixed thresholds 

in the rule might also become outdated 

over time if latency levels drop due to 

system enhancements. Regardless of the 

thresholds, the Primary Listing Market 

always retains the authority to institute 

a Regulatory Halt if it determines, in 

good faith, a halt to be in the interests 

of a fair and orderly market. 

The Exchange proposes to add a 

definition of ‘‘Regulatory Halt’’ 30 as 

having the same meaning as in Section 

X.A.10 of the Amended Nasdaq UTP 

Plan. Specifically, the Exchange has 

proposed to define Regulatory Halt to 

mean a halt declared by the Primary 

Listing Market in trading in one or more 

securities on all Trading Centers for 

regulatory purposes, including for the 

dissemination of material news, news 

pending, suspensions, or where 

otherwise necessary to maintain a fair 

and orderly market.31 A Regulatory Halt 

includes a trading pause triggered by 

Limit Up-Limit Down, a halt based on 

Extraordinary Market Activity, a trading 

halt triggered by a Market-Wide Circuit 

Breaker, and a SIP Halt. The new term 

Regulatory Halt consolidates the various 

reasons for such a halt that are 

enumerated in the proposed Rule 

4120(b). In addition to the specific 

reasons, the rule would memorialize the 

Primary Listing Market’s ability to 

implement a Regulatory Halt where 

otherwise necessary to preserve a fair 

and orderly market.32 The definition 

also makes clear that market-wide 

circuit breakers, codified in Rule 4121, 

constitute a Regulatory Halt. These 

circuit breakers provide for coordinated 

cross-market trading halts designed to 

stop trading temporarily or, under 

extreme circumstances, close the 

markets before the normal close of the 

trading session. 

Finally, the Exchange proposes to add 

a definition of ‘‘Operational Halt,’’ 33

which is defined as having the same 

meaning as in Section X.A.7 of the 

Amended Nasdaq UTP Plan. 

Specifically, the Exchange is proposing 

to define Operational Halt to mean a 

halt in trading in one or more securities 

only on the market declaring the halt. 

An Operational Halt is effective only on 

Nasdaq; other markets are not required 

to halt trading in the impacted 

securities. In practice, the Exchange has 

always had the capacity to implement 

operational halts in specified 

circumstances.34 The proposed change 

would provide greater clarity on when 

an Operational Halt may be 

implemented and the process for halting 

and resuming trading in the event of an 


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Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Notices 27689 

35The Exchange notes that it proposes to amend 

the existing definition of the term ‘‘Post-Market 

Session’’ to clarify that it is a trading session that 

begins after ‘‘Regular Trading Hours’’—a term that, 

in turn, is defined in the Nasdaq UTP Plan—and 

that such session begins at ‘‘approximately’’ 4:00 

p.m. The addition of the term ‘‘approximately’’ 

reflects the fact that the Nasdaq Closing Cross, 

which precedes the Post-Market Session at 4:00 

p.m., is not instantaneous. See Proposed Rule 

4120(a)(7). 

36As proposed, Rule 4120(b)(1)(B)(i) provides 

that the Exchange’s determination regarding a 

trading halt would be made consistent with Section 

X.C of the Amended Nasdaq UTP Plan. 

Operational Halt. An Operational Halt is 

not a Regulatory Halt.35

Regulatory Halt Types 

The Exchange proposes to consolidate 

the various types of situations that form 

the basis for declaring a Regulatory Halt 

in Rule 4120(b). The proposed rule 

change would divide the situations that 

form the basis of the Exchange’s 

authority to declare a Regulatory Halt in 

a security for which the Exchange is the 

Primary Listing Market into three 

categories: (1) As provided by the SIP 

Plans; (2) discretionary Regulatory 

Halts; and (3) mandatory Regulatory 

Halts. 

The first category concerns situations 

enumerated in the SIP Plan, specifically 

related to a SIP Outage, Material SIP 

Latency, or Extraordinary Market 

Activity. 

The second category provides the 

Exchange with discretion to declare a 

Regulatory Halt in situations described 

by the proposed rule, such as when the 

Exchange requests certain information 

from an issuer and for a security subject 

to an IPO. The Exchange believes that 

discretion in determining whether to 

impose a Regulatory Halt is appropriate 

because of the many facts and 

circumstances that must be considered 

by the Primary Listing Market in 

determining whether to halt trading. A 

rule establishing exact standards for a 

mandatory halt would risk forcing the 

Exchange to halt trading in 

circumstances where other facts may 

weigh against a halt, thereby forcing the 

Exchange to act in a way that is not in 

the best interests of the market. 

Alternatively, fixed standards could also 

prevent the Exchange from halting in 

circumstances where a Regulatory Halt 

would be appropriate. Instead, the 

proposed change would outline the 

types of scenarios where the Primary 

Listing Market may initiate a Regulatory 

Halt after consulting with the entities 

specified in the Amended Nasdaq UTP 

Plan, where feasible. However, there 

may be situations where such 

consultation may not be possible due to 

technical issues or time sensitivity. The 

proposed change would preserve the 

Exchange’s ability to act in the best 

interests of the market in these 

circumstances, consistent with the 

Amended Nasdaq UTP Plan. 

As under the current rule, the 

proposed change continues to allow the 

Exchange to institute a Regulatory Halt 

in circumstances where the Exchange 

requests additional information from an 

issuer (current Rule 4120(a)(5) and 

proposed Rule 4120(b)(1)(B)(i)),36 to 

allow for the dissemination of material 

news (current Rule 4120(a)(1) and new 

Rule 4120(b)(1)(B)(ii)); to facilitate the 

initiation of trading of an IPO (current 

Rule 4120(a)(7) and proposed Rule 

4120(b)(1)(B)(iii)) and to protect a fair 

and orderly market in the trading of 

index warrants (current Rule 4120(a)(8) 

and proposed Rule 4120(b)(1)(B)(iv)). 

Proposed Rule 4120(b)(1)(B)(v), codified 

without material change from current 

Rule 4120(a)(9), gives the Exchange 

discretion to halt a series of Portfolio 

Depository Receipts, Index Fund Shares 

(as defined in Rule 5705), Index-Linked 

Exchangeable Notes, Equity Gold 

Shares, Trust Certificates, CommodityBased Trust Shares, Currency Trust 

Shares, Commodity Index Trust Shares, 

Commodity Futures Trust Shares, 

Partnership Units, and Managed Trust 

Securities (as defined in Rule 5711(a)– 

(h) and (j), respectively), or NextShares 

(as defined in Rule 5745) listed on 

Nasdaq if the Intraday Indicative Value 

(as defined in Rule 5705), for Portfolio 

Depository Receipts or Index Fund 

Shares, for derivative securities as 

defined in Rule 5711(a), (b), and (d)–(h), 

Rule 5711(j) for Managed Trust 

Securities, or Rule 5745 for NextShares) 

or the index value applicable to that 

series is not being disseminated as 

required, during the day in which the 

interruption to the dissemination of the 

Intraday Indicative Value or the index 

value occurs. It requires the Exchange to 

halt trading in these instruments no 

later than the beginning of trading on 

the day following the interruption to the 

dissemination of the Intraday Indicative 

Value or the index value if the 

interruption persists past the trading 

day on which it occurs. The Exchange 

would also retain discretionary 

authority to halt trading in a series of 

Portfolio Depository Receipts, Index 

Fund Shares, Exchange Traded Fund 

Shares (as defined in Rule 5704), 

Managed Fund Shares, Index-Linked 

Exchangeable Notes, Equity Gold 

Shares, Trust Certificates, CommodityBased Trust Shares, Currency Trust 

Shares, Commodity Index Trust Shares, 

Commodity Futures Trust Shares, 

Partnership Units, Trust Units (as 

defined in Rule 5711(i)), Managed Trust 

Securities, Currency Warrants (as 

defined in Rule 5711(k)), NextShares, or 

Proxy Portfolio Shares (as defined in 

Rule 5750) based on a consideration of 

the following factors: (A) Trading in 

underlying securities comprising the 

index or portfolio applicable to that 

series has been halted in the primary 

market(s), (B) the extent to which 

trading has ceased in securities 

underlying the index or portfolio, or (C) 

the presence of other unusual 

conditions or circumstances detrimental 

to the maintenance of a fair and orderly 

market. 

Proposed Rule 4120(b)(1)(B)(vi) gives 

the Exchange discretion to halt trading 

in an American Depository Receipt 

(‘‘ADR’’) or other Nasdaq-listed security 

when the foreign securities exchange or 

market listing the security underlying 

the ADR or the Nasdaq-listed security or 

the regulatory authority overseeing such 

foreign securities exchange or market 

institutes a halt for regulatory reasons. 

The Exchange is deleting text that 

presently exists in the Rule covering 

ADR and other Nasdaq-listed security 

halts, at Rule 4120(a)(4), which 

references national securities exchanges 

instituting a halt for ‘‘regulatory 

reasons’’ because under the proposed 

new rules, a Regulatory Halt will be 

issued by the Primary Listing Exchange. 

If the other national securities exchange 

is the primary listing exchange and 

declares a regulatory halt, the security 

will be subject to a halt by the 

Exchange. Thus, such a halt on the 

Exchange will be mandatory. The 

proposed amended rule will consider 

only actions taken by a foreign exchange 

that halts the Nasdaq-listed security, or 

security underlying an ADR, on its 

market for regulatory reasons (foreign 

exchanges do not fall within the 

definition of a ‘‘primary listing market’’ 

and therefore their regulatory halts do 

not fall within the Amended Nasdaq 

UTP Plan’s definition of Regulatory 

Halts). The Exchange will then assess 

the regulatory reasons underlying the 

halt on the foreign market and possibly 

initiate a Regulatory Halt. 

Proposed Rule 4120(b)(1)(B)(vii) 

would permit the Exchange to declare a 

Regulatory Halt for a security for which 

it is the Primary Listing Market, in the 

event of national, regional, or localized 

disruption that necessitates a Regulatory 

Halt to maintain a fair and orderly 

market. This proposal incorporates an 

identical provision in the Nasdaq UTP 

Plan. 

The third category of Regulatory Halts 

concerns situations in which it is 

mandatory that the Exchange must 


khammond on DSKJM1Z7X2PROD with NOTICES
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37Current Rule 4120(a)(12)(G) (‘‘If the Exchange 

is unable to reopen trading due to a systems or 

technology issue, it shall notify the Processor 

immediately’’) will be incorporated into proposed 

Rule 4120(b)(4)(A)(i)e.6. (‘‘If the Exchange is unable 

to reopen trading due to a systems or technology 

issue, it shall notify the SIP immediately’’). 38By its terms, Rule 4120(a)(11) does not apply 

to rights and warrants, which are the only Nasdaqlisted securities that are not covered by the Limit 

Up-Limit Down Plan. 

39As noted previously, the start of a Regulatory 

Halt is measured as the point in time when the 

Primary Listing Market declares the halt, regardless 

of whether there is a delay in dissemination of the 

notice or in receipt of the notice by participants. 

declare a Regulatory Halt. Proposed 

Rule 4120(b)(1)(C)(i) codifies without 

substantive modification the existing 

provisions of Rule 4120(a)(10) in 

situations where the Exchange becomes 

aware that the net asset value of a 

Derivative Securities Product (or the 

Disclosed Portfolio in the case of 

Managed Fund Shares, the Composition 

File in the case of NextShares, or in the 

case of Proxy Portfolio Securities, a 

Proxy Basket, or the Fund Portfolio) is 

not being disseminated to all 

participants at the same time. The 

Exchange is required to halt trading in 

the Derivative Securities Product when 

this occurs. Similarly, proposed Rule 

4120(b)(1)(C)(ii) retains without 

substantive modification the existing 

rule with respect to the Limit Up-Limit 

Down Plan (current Rule 4120(a)(12)).37

The Exchange proposes to make clear in 

Rule 4120(b)(1)(C)(iii) that a trading halt 

pursuant to extraordinary market 

volatility (market-wide circuit breakers), 

as is described in Rule 4121, constitutes 

a Regulatory Halt. Finally, the Exchange 

is incorporating Rule 4120(a)(13) into 

proposed Rule 4120(b)(1)(C)(iv). Rule 

4120(a)(13) requires Nasdaq to halt 

trading in an Equity Investment 

Tracking Stock (as defined in Rule 5005) 

or Subscription Receipt (listed under 

Rule 5520) whenever Nasdaq halts or 

suspends trading in a security tracked 

by the Equity Investment Tracking Stock 

or the common stock into which the 

Subscription Receipt is exchangeable. 

The Exchange is proposing to move or 

delete certain elements in the current 

list of situations that form the basis for 

declaring a Regulatory Halt in Rule 

4120(a). First, the Exchange is deleting 

the current definition of Extraordinary 

Market Activity in Rule 4120(a)(6), 

which it proposes to replace with the 

updated and more extensive definition 

previously discussed. Second, the 

Exchange is proposing to delete current 

Rule 4120(a)(11), which establishes a 

trading pause in the event of large price 

moves in securities not covered by the 

Limit Up-Limit Down Plan.38 As the 

Limit Up-Limit Down Plan is now fully 

implemented, this subsection is no 

longer necessary. In addition, the 

Exchange proposes moving existing 

Rule 4120(a)(2) and (a)(3) to proposed 

Rule 4120(b)(3) covering declaration of 

a Regulatory Halt by a Primary Listing 

Market other than Nasdaq. These 

provisions are discussed in more detail 

below. 

Initiating a Regulatory Halt 

In coordination with the other SROs, 

the Exchange developed proposed Rule 

4120(b)(2) to provide detailed and 

consistent rules on how a Primary 

Listing Market will initiate a Regulatory 

Halt. The process for initiating a 

Regulatory Halt is set forth in Section 

X.D of the Amended Nasdaq UTP Plan. 

First, the proposed rule makes clear that 

the start time of a Regulatory Halt is the 

time the Primary Listing Market 

declares the Halt, regardless of whether 

communications issues impact the 

dissemination of notice of the Halt. The 

Exchange’s experience in prior events is 

that market participants need certainty 

on the official start time of the Halt. 

Under the proposed rule, the start time 

is fixed by the Primary Listing Market; 

it is not dependent on whether notice is 

disseminated immediately. This will 

avoid possible disagreement if the Halt 

time were tied to dissemination or 

receipt of notification, which may occur 

at different times. The Exchange 

recognizes that in situations where 

communication is interrupted, trades 

may continue to occur until news of the 

Halt reaches all Trading Centers. 

However, a fixed ‘‘official’’ Halt time 

will allow SROs to revisit trades after 

the fact and determine in a consistent 

manner whether specific trades should 

stand. 

Currently, many Trading Centers and 

other market participants rely on 

automated, machine-readable trade halt 

messages disseminated by the SIP to 

automatically halt their order matching 

and order dissemination systems. While 

the Exchange disseminates these 

messages in other formats and posts the 

messages on its website, Nasdaq’s 

experience is that these alternative 

means of communication have not been 

relied on by many market participants. 

Proposed Rule 4120(b)(2)(B) would 

provide advance notice in the manner 

set forth in the Amended Nasdaq UTP 

Plan. The Amended Nasdaq UTP Plan 

requires the Primary Listing Market to 

notify all other participants and the SIP 

using such protocols and other 

emergency procedures as may be 

mutually agreed to between the 

Operating Committee and the Exchange. 

The Exchange also must take reasonable 

steps to provide notice to market 

participants if the SIP Processor is 

unable to disseminate notice of the Halt 

or the Primary Listing Market is not 

open for trading. In such case, the notice 

would include: 

• Proprietary data feeds containing 

quote and last sale information that the 

Primary Listing Market also sends to the 

applicable SIP that is unable to 

disseminate the halt notices; 

• Posting on a publicly available 

Exchange website; or 

• System status messages that are 

disseminated to market participants 

who choose to sign up for the service. 

The Exchange believes that market 

participants will benefit from additional 

sources of halt notifications that include 

machine readable and easily accessible 

communications for human traders and 

Nasdaq recommends that participants 

be prepared in advance to monitor 

multiple sources. Although it may take 

longer for participants to react to 

messages received in less automated 

formats, the use of multiple forms of 

dissemination will increase the 

likelihood that participants receive 

important information. It will also assist 

participants who do not subscribe to the 

Exchange’s proprietary feeds in getting 

regulatory notices. As noted above, in 

situations where communication is 

interrupted the Exchange and other 

SROs would retain the ability to break 

trades that occurred after the start of the 

Regulatory Halt in appropriate 

circumstances (pursuant to rules 

governing clearly erroneous trades, at 

Equity 11, Rule 11890), thereby 

lessening the potential impact on 

participants that were delayed in halting 

trading. Plan participants must monitor 

several sources of regulatory notices so 

that they are aware of the imposition of 

a Regulatory Halt in situations where 

communication is interrupted; however, 

the failure of a Plan participant to do so 

will not prevent the Exchange from 

initiating a Regulatory Halt. 

Proposed Rule 4120(b)(2)(C) also 

makes clear that, consistent with the 

Amended Nasdaq UTP Plan, except in 

exigent circumstances, the Primary 

Listing Market will not declare a 

Regulatory Halt retroactive to a time 

earlier than the notice of such halt. 

Feedback from market participants has 

been that it is very disruptive to trading 

when the Primary Listing Market sets 

the start of a trading halt for a time 

earlier than the notice of the halt.39

Therefore, in almost all situations the 

trading halt will start at the time of the 

notice or at a point in time thereafter. 

However, the Exchange retains the 

authority to implement a retroactive halt 

to deal with unexpected and significant 

situations that represent exigent 


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40See Partial Amendment No. 1 of Trading Halt 

Amendments to the UTP Plan, dated March 31, 

2021. 

41When resuming trading in a halted security, the 

current Rule states that trading shall resume at the 

time specified by Nasdaq in a notice posted on a 

publicly available Nasdaq website. Consistent with 

the Amended Nasdaq UTP Plan, the Proposed Rule 

will provide that the Exchange will notify all 

participants and the SIP that a Regulatory Halt has 

been lifted using such protocols and other 

emergency procedures as may be mutually agreed 

to between the Operating Committee and the 

Exchange. 

42The Exchange proposes to change an obsolete 

reference in the provision of the Rules pertaining 

to resumptions after IPO Halts. The Exchange 

proposes to replace the phrase ‘‘member 

organizations’’ with the word ‘‘Member’’ to reflect 

the fact that the Rules refer to Exchange participants 

as Members. 

43Companies that are dually-listed on Nasdaq 

and NYSE have one Primary Listing Market. See 

proposed amended IM–5220. Thus, if Nasdaq is not 

the Primary Listing Market for a dually-listed 

security, it will resume trading after receiving 

notice from NYSE that the Regulatory Halt has been 

terminated. 

44As proposed, Rule 4120(b)(4)(A)(i)a. will apply 

to all Regulatory Halts other than an IPO Halt or a 

SIP Halt. 

circumstances. While it is difficult in 

advance to provide an exhaustive list of 

when retroactive application of a 

trading halt would be in the public 

interest, one situation where a halt was 

applied retroactively was when the 

Primary Listing Market erroneously 

lifted a Regulatory Halt. In that case, the 

Primary Listing Market instituted a 

Regulatory Halt retroactively so that it 

coincided with the time the original halt 

was lifted in error. 

Consistent with Section X.C.2 of the 

Amended Nasdaq UTP Plan, Proposed 

Rule 4120(b)(D) states that in making a 

determination to declare a Regulatory 

Halt in trading any security for which 

the Exchange is the Primary Listing 

Market, the Exchange will consider the 

totality of information available 

concerning the severity of the issue, its 

likely duration, and potential impact on 

Members and other market participants 

and will make a good-faith 

determination that the criteria for 

declaring the Regulatory Halt have been 

satisfied and that a Regulatory Halt is 

appropriate. The Exchange will consult, 

if feasible, with the affected Trading 

Center(s), other SIP Plan Participants, or 

the Processor, as applicable, regarding 

the scope of the issue and what steps are 

being taken to address the issue. 

Finally, consistent with Section X.C.2 

of the Amended Nasdaq UTP Plan, 

Proposed Rule 4120(b)(2)(E) states that 

once a Regulatory Halt has been 

declared, the Exchange will continue to 

evaluate the circumstances to determine 

when trading may resume in accordance 

with its Rules. 

Nasdaq notes that except as otherwise 

stated, the proposed procedures for 

initiating Regulatory Halts replace those 

set forth in current Rule 4120(c). 

Regulatory Halt Initiated by Other 

Markets 

The Exchange believes that 

consolidating all subsections concerning 

a Regulatory Halt declared by other 

Primary Listing Markets in Rule 

4120(b)(3) would add clarity to the rule. 

As is the case under the current rule, the 

Exchange would honor a Regulatory 

Halt. 

• Current Rule 4120(a)(2), which 

states that the Exchange may halt 

trading on Nasdaq in any security it 

trades on an unlisted trading privileges 

basis, if the Primary Listing Market 

declares a Regulatory Halt in the 

security to permit dissemination of 

material news, would become proposed 

Rule 4120(b)(3)(A)(i). Consistent with 

Section X.G of the Nasdaq UTP Plan, the 

proposed Rule will more broadly 

require Nasdaq to halt trading of a UTP 

security if the Primary Listing Market 

declares a Regulatory Halt in that 

security. 

Current Rule 4120(b), which governs 

trading halts in certain Derivative 

Securities Products traded on the 

Exchange pursuant to unlisted trading 

privileges, would become proposed 

Rule 4120(b)(3)(A)(ii). Subsection 

(b)(3)(A)(ii) would replace the term 

‘‘Regular Market Session’’ with the term 

‘‘Regular Trading Hours’’ to stay 

consistent with other portions of the 

proposed rule. The change is nonsubstantive and would still refer to the 

period between 9:30 a.m. and 4:00 p.m. 

Eastern Time on days when the 

Exchange is open for trading. No other 

changes have been made to this 

subsection. 

Resumption of Trading After a 

Regulatory Halt 

The SROs have jointly developed 

processes to govern the resumption of 

trading in the event of a Regulatory Halt. 

While the actual process of re-launching 

trading will remain unique to each 

exchange (for example, trading in 

Nasdaq-listed securities resumes on the 

Exchange in most cases through a Halt 

Cross pursuant to Rule 4753), the 

proposed rule would harmonize certain 

common elements of the reopening 

process that would benefit from 

consistency across markets. These 

common elements include the primacy 

of the Primary Listing Market in 

resumption decisions, the requirement 

that the Primary Listing Market make its 

determination to resume trading in good 

faith,40 and certain parts of the complex 

process of reopening trading after a SIP 

Halt. With respect to a SIP Halt, 

common elements of the reopening 

process include the interaction among 

SROs (including the Primary Listing 

Market with the SIP), the requirement 

that the Primary Listing Market 

terminate a SIP Halt with a notification 

that specifies a SIP Halt Resume Time, 

the minimum quoting times before 

resumption of trading, the cutoff time 

after which trading would not resume 

during Regular Trading Hours, and the 

time when trading may resume if the 

Primary Listing Market does not open a 

security within the amount of time 

specified in its rules after the SIP Halt 

Resume Time. 

Proposed Rule 4120(b)(4) provides the 

process to be followed when resuming 

trading upon the conclusion of a 

Regulatory Halt. The new rule, which 

incorporates Section X.E, and .F of the 

Amended Nasdaq UTP Plan, is divided 

into the following three subsections 

concerning resumption of trading: (A) 

After a Regulatory Halt other than an 

IPO or SIP Halt; 41 (B) after a SIP Halt; 

and (C) after an IPO Halt.42 The 

Exchange’s proposed rule would make 

clear that Nasdaq, as the Primary Listing 

Market, is responsible for declaring a 

resumption of trading when it makes a 

good faith determination that trading 

may resume in a fair and orderly 

manner and in accordance with its 

rules. The Exchange expects that other 

SROs will propose the same concept. 

Similarly, the Exchange may resume 

trading in a non-Nasdaq-listed 

security; 43 subject to a Regulatory Halt 

after the Exchange receives notification 

from the Primary Listing Market that the 

Regulatory Halt has been terminated. 

The Exchange does not run Halt Crosses 

in securities listed on another exchange 

and, therefore, the resumption of trading 

in these securities will occur once 

notice from the Primary Listing Market 

is received. Proposed Rule 

4120(b)(4)(A)(ii) sets forth the 

mechanics of how the resumption 

would occur for these non-Nasdaq-listed 

securities and is consistent with current 

practice. 

The existing resumption process 

incorporating the Halt Cross is being 

moved to proposed Rule 

4120(b)(4)(A)(i)a.–c.44 This process will 

apply to any type of a Regulatory Halt 

except for halts related to the launch of 

IPOs and a SIP Halt (which does not 

exist under the current rule) or an LULD 

Halt. The existing process for launching 

IPOs has also been incorporated in the 

proposed rule without substantive 

modification as proposed Rule 

4120(b)(4)(C). 


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45See https://www.utpplan.com/DOC/UTP_SIP_

Emergency_Procedures.pdf. 

46See Plan to Address Extraordinary Market 

Volatility Submitted to the Securities and Exchange 

Commission Pursuant to Rule 608 of Regulation 

NMS under the Securities Exchange Act of 1934, as 

amended (‘‘Limit Up-Limit Down Plan’’), Section 

VII(B)(4), at https://assets.website-files.com/ 

5fd0e55ae5f254cd291b2d35/ 

5fd10d8e4c53d2024dd15f4f_LULD_

Plan%20Amendment_20.pdf. 

47See Partial Amendment No. 2 of Trading Halt 

Amendments to the UTP Plan, dated April 7, 2021. 

Proposed Rule 4120(b)(4)(A)(i)d. 

states that during any trading halt or 

pause for which a halt cross under Rule 

4753 will not occur (as in the case of a 

Regulatory Halt for securities where 

Nasdaq is not the Primary Listing 

Market), orders entered during the 

Regulatory Halt or pause will not be 

accepted, unless subject to instructions 

that the order will be directed to another 

exchange as described in Rule 4758. 

The Exchange proposes to add Rule 

4120(b)(4)(A)(i)e. that will address the 

re-opening process following a Limit 

Up-Limit Down pause. The Exchange is 

proposing to move the Limit Up-Limit 

Down trading pause termination process 

to Rule 4120(b)(4)(A)(i)e. unchanged 

from current Rule 4120(c)(10). 

For a SIP Halt, proposed Rule 

4120(b)(4)(B) establishes the process by 

which Nasdaq, as the Primary Listing 

Market, determines to resume trading. 

The SROs’ experience with such events 

is that communication among SROs, 

SIPs and market participants is the best 

way to ensure that the Primary Listing 

Market has access to available 

information and to coordinate the 

reopening of trading in an orderly 

manner. In addition, the SROs 

anticipate that market participants and 

other impacted entities will have access 

to information about the issue causing 

the SIP Halt, the duration of the halt and 

the resumption process through updated 

communications from the SIP, 

Operating Committee and Primary 

Listing Market. The Operating 

Committees have policies and 

procedures that, among other things, 

establish industry notice protocols for 

various SIP-related events.45

Under the proposal, for the 

resumption of trading after a SIP Halt 

initiated by the Exchange, the Exchange, 

as the Primary Listing Market, will make 

a good-faith determination of the SIP 

Halt Resume Time, after considering the 

totality of information as to whether 

resuming trading would promote a fair 

and orderly market. Nasdaq would 

solicit input from the Processor, the 

Operating Committee, or the operator of 

the system in question (as well as any 

Trading Center(s) to which such system 

is linked), regarding operational 

readiness to resume trading. The 

Primary Listing Market retains 

discretion to delay the SIP Halt Resume 

Time if it has reason to believe that 

trading will not resume in a fair or 

orderly manner. 

When resuming trading after a SIP 

Halt as the Primary Listing Market, 

Nasdaq will use the same Halt Cross as 

other Regulatory Halt types, except for 

a Regulatory Halt related to the launch 

of an IPO or an LULD Halt. Whereas the 

Halt Cross for other Regulatory Halt 

types (except for a Regulatory Halt 

related to the launch of an IPO or an 

LULD Halt, in which Nasdaq will 

extend the Display Only Period if an 

order imbalance exists at its conclusion) 

have a fixed five-minute Display Only 

Period during which the Exchange is 

open for quoting but not trading, the 

complexities in resuming trading after a 

SIP Halt require additional flexibility to 

assist market participants in events that 

may involve hundreds or even 

thousands of securities. As a result, 

proposed Rule 4120(b)(4)(B)(i)b. and c. 

sets a minimum five-minute Display 

Only Period that can be extended at the 

discretion of Nasdaq to ensure a fair and 

orderly reopening of trading. It is 

anticipated that Nasdaq will consider 

input from other SROs, the SIP and 

market participants in reaching this 

conclusion. The SROs considered 

setting a fixed-length Display Only 

Period, including a longer such period 

of ten or fifteen minutes, but it 

determined that a flexible time period 

would better serve the markets in that 

it could be five minutes, or longer if 

deemed appropriate to facilitate a fair 

and orderly reopening. Nasdaq would, 

of course, be expected to communicate 

the duration of the Display Only Period 

to market participants (i.e., in the 

resumption notice) sufficiently in 

advance of resumption to allow them to 

prepare their systems for trading. 

Proposed Rule 4120(b)(4)(B)(i)a. gives 

Nasdaq, as the Primary Listing Market, 

discretion to delay the SIP Halt Resume 

Time if it believes that trading will not 

resume in a fair and orderly manner. 

Moreover, proposed Rule 

4120(b)(4)(B)(i)b allows Nasdaq to 

stagger the SIP Halt Resume Times for 

multiple securities in order to reopen in 

a fair and orderly manner. For example, 

this discretion could be used to open 

trading in a small number of symbols to 

ensure that systems are operating 

normally before resuming trading in the 

remaining symbols. 

In addition, the proposed rule would 

establish the last SIP Halt Resume Time 

as 20 minutes before the end of Regular 

Trading Hours (e.g., 3:40 p.m. ET)— 

which is the latest time by which 

Nasdaq believes that it could conduct an 

orderly Halt Cross process before the 

end of Regular Trading Hours and 

without impacting the Closing Cross. If 

trading has not resumed by that time, 

Nasdaq would establish its closing price 

in halted securities using its 

contingency closing process. The 

Exchange’s contingent closing process is 

memorialized in Rule 4754(b)(7). 

Proposed Rule 4120(b)(4)(B)(i)c. 

provides that, for a SIP Halt initiated by 

Nasdaq, the reopening process shall be 

the same as for a non-IPO Regulatory 

Halt pursuant to proposed Rule 

4120(b)(4)(A)(i)a.–c., except that the 

Display Only Period will be a minimum 

of five minutes, but may be extended at 

the discretion of Nasdaq pursuant to 

proposed Rule 4120(b)(4)(B)(i)a.&b. 

Proposed Rule 4120(b)(4)(B)(i)d. states 

that, for a SIP Halt initiated by Nasdaq, 

if during Regular Trading Hours, Nasdaq 

does not resume trading in a security for 

which it is the Primary Listing Market 

within 10 minutes after the SIP Halt 

Resume Time, then other markets may 

resume trading in that security. Nasdaq 

notes that this 10 minute time period 

corresponds to a similar 10 minute time 

period set forth in the Limit Up-Limit 

Down Plan after which the Processor 

may update price bands for paused 

securities if the primary listing market 

for such security is unable to reopen 

trading following a trading pause due to 

a systems or technology issue.46

Proposed Rule 4120(b)(4)(B)(ii) 

provides that, for a SIP Halt initiated by 

another exchange that is the Primary 

Listing Market, during Regular Trading 

Hours, Nasdaq may resume trading after 

trading has resumed on the Primary 

Listing Market or notice has been 

received from the Primary Listing 

Market that trading may resume. 

Proposed Rule 4120(b)(4)(B)(ii) provides 

that, for a SIP Halt initiated by a market 

other than Nasdaq, during Regular 

Trading Hours, if the Primary Listing 

Market does not open a security within 

the amount of time listed by the rules 

of the Primary Listing Market, Nasdaq 

may resume trading in that security. 

Under Proposed Rule 4120(b)(4)(B)(ii), 

Outside of Regular Trading Hours, 

Nasdaq may resume trading 

immediately after the SIP Halt Resume 

Time.47

Nasdaq notes that except as otherwise 

stated, the proposed procedures for 

terminating Regulatory Halts replace 

those set forth in current Rule 4120(c). 

Operational Halt 

The Exchange proposes in Rule 

4120(c) to address Operational Halts, 


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48The Exchange notes that it does not plan to 

carry over a portion of the existing Rule text that 

permits Nasdaq, in the event that it halts trading 

pursuant to an operational trading halt imposed by 

another exchange, to commence quotations and 

trading at any time following initiation of 

operational trading halts, without regard to regular 

procedures for resuming trading. This language will 

be replaced. 

which are non-regulatory in nature and 

apply only to the exchange that calls the 

halt. The ability to call an Operational 

Halt has existed for a long time, 

although in the Exchange’s experience, 

such halts have rarely been initiated. As 

part of Nasdaq’s assessment with the 

other SROs of the halting and 

resumption of trading, the Exchange 

believes that the markets would benefit 

from greater clarity regarding when an 

Operational Halt may be appropriate. In 

part, the proposed change is designed to 

cover situations similar to those that 

might constitute a Regulatory Halt, but 

where the impact is limited to a single 

market. For example, just as a market 

disruption might trigger a Regulatory 

Halt for Extraordinary Market Activity if 

it affects multiple markets, so a 

disruption at the Exchange, such as a 

technical issue affecting trading in one 

or more securities, could impact trading 

on the Exchange so significantly that an 

Operational Halt is appropriate in one 

or more securities. In such an instance, 

it would be in the public interest to 

institute an Operational Halt to 

minimize the impact of a disruption 

that, if trading were allowed to 

continue, might negatively affect a 

greater number of market participants. 

An Operational Halt does not implicate 

other trading centers. 

As is currently the case in existing 

Rule 4120(a)(3)(B), proposed Rule 

4120(c)(1)(C) gives discretion to the 

Exchange to impose an Operational Halt 

in a security listed on Nasdaq when a 

Primary Listing Market imposes an 

Operational Halt in a security that is a 

derivative or component of the Nasdaqlisted security. As discussed in relation 

to Derivative Securities Products, 

Nasdaq does not automatically halt 

trading—through either a Regulatory 

Halt or an Operational Halt—when 

component or derivative securities are 

halted. However, proposed Rule 

4120(c)(1)(C), like the current rule, gives 

the Exchange authority to halt a security 

listed on Nasdaq if the impact of the 

component or derivative security on 

price discovery or the fair and orderly 

market in the Nasdaq-listed security is 

significant enough to warrant a trading 

halt. Factors would include whether 

trading in the security listed on Nasdaq 

is fair and orderly, the nature of the 

issue that triggered the Operational 

Halt(s) on the Primary Listing Market(s) 

in the component or derivative 

securities and whether the security that 

is subject to the Operational Halt 

continues to trade on other Trading 

Centers. 

Proposed Rule 4120(c) also would 

authorize the Exchange to implement an 

Operational Halt for any security trading 

on Nasdaq, including a security listed 

elsewhere: 

• If it is experiencing Extraordinary 

Market Activity on Nasdaq; or 

• when otherwise necessary to 

maintain a fair and orderly market or in 

the public interest. 

The Exchange is proposing to delete 

Rule 4120(a)(3)(A) that authorizes the 

Exchange to institute an ‘‘operational 

trading halt’’ in a security listed on 

another exchange when that exchange 

imposes a trading halt because of an 

order imbalance or influx. The 

Exchange believes this language could 

restrict its ability to follow an 

Operational Halt imposed by another 

market to a limited set of fact patterns. 

The Exchange believes that the broader 

language provided by the definition of 

Extraordinary Market Activity and the 

ability to initiate an Operational Halt 

when necessary to maintain a fair and 

orderly market will better serve the 

interests of investors by allowing the 

Exchange to act where appropriate. 

Proposed Rule 4120(c)(2) provides the 

process for initiating an Operational 

Halt. Under the proposed rule, the 

Exchange must notify the SIP if it has 

concerns about its ability to collect and 

transmit Quotation Information or 

Transaction Reports, or if it has declared 

an Operation Halt or suspension of 

trading in one or more Eligible Security, 

pursuant to the procedures adopted by 

the Operating Committee. 

Proposed Rule 4120(c)(3) will clarify 

how the Exchange resumes trading after 

an Operational Halt. Proposed Rule 

4120(c)(3) provides that the Exchange 

would resume trading when it 

determines that trading may resume in 

a fair and orderly manner consistent 

with the Exchange’s rules. Proposed 

Rule 4120(c)(3) includes one change 

from the current rule. Under the current 

rule, the Halt Cross process is used to 

resume trading after all halts in Nasdaqlisted securities, whether the halt is a 

Regulatory Halt or an Operational Halt. 

The Exchange is proposing to modify 

the process for an Operational Halt to 

give the Exchange discretion to open 

trading without a Halt Cross if it 

determines such action to be in the best 

interests of the market. During the July 

8, 2015 suspension of trading by NYSE 

in all securities due to an operational 

issue, many market participants 

requested that NYSE resume trading 

without an auction to avoid any impact 

on Regulation NMS compliance and 

mispricing because trading continued 

on other markets. NYSE determined that 

its rules (NYSE Rule 7.35A) allow it to 

reopen without an auction process, and 

this decision was well received. Indeed, 

Nasdaq agrees that a Halt Cross in such 

a circumstance might prove to be 

disruptive or result in trade-throughs. 

Nasdaq’s current rules would not permit 

it to reopen after an Operational Halt 

without a Halt Cross auction process. 

The Exchange proposes modifying its 

rules to provide it the same flexibility. 

For Nasdaq-listed securities where a 

Halt Cross is conducted, the Exchange 

will use the same Halt Cross process for 

resumption outlined in Rule 

4120(b)(4)(A)(i)a.–c. as it does for most 

Regulatory Halt types. The proposed 

rule notes that Nasdaq may determine to 

open trading without a Halt Cross if it 

determines such action to be in the best 

interests of the market. Where the 

Exchange decides not to hold a Halt 

Cross for a security subject to a halt or 

pause, the Exchange proposes to amend 

Rule 4753 to clarify that market hours 

trading will resume when Nasdaq 

releases the security. Moreover, where 

trading halt or pause for which a halt 

cross will not occur (such as in the case 

of an Operational Halt for securities 

where Nasdaq is not the Primary Listing 

Market), orders entered during the 

Operational Halt will not be accepted, 

unless subject to instructions that the 

order will be directed to another 

exchange as described in Rule 4758.48

When the Nasdaq is not the Primary 

Listing Market, when halting trading 

based on an Operational Halt, initiated 

by the Primary Listing Market, Nasdaq 

shall resume trading once it has 

determined the trading may be resumed 

in a fair and orderly manner. 

Conforming Changes to Other Rules 

The Exchange is proposing to modify 

a number of other rules that cross 

reference Rule 4120 in light of the 

reorganization of these rules. Updated 

cross references are proposed for the 

following rules: 

• Rule 4702(a) (Order Types) will be 

modified to update cross references to 

the Rule that governs Limit-Up-LimitDown procedures. Rule 4702(b)(16)(A) 

will be modified to update the crossreference to the provision within Rule 

4120 that is used to set the price of a 

Company Direct Listing Order. 

• Rule 4753(a)(3) (Nasdaq Halt Cross) 

will be updated to make conforming 

changes to cross-references to IPO Halt 

procedures, a Trading Pause initiated 

pursuant to the Limit Up-Limit Down 


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49At a future date, the Exchange intends to 

submit a rule filing proposal to conform Rules in 

the 5000 Series which describe trading halts for 

certain products and Rule 4120. 

50As discussed earlier, the Exchange also 

proposes to amend Rule 4753(b) to state that for 

Nasdaq-listed securities that are the subject of a 

trading halt or pause initiated pursuant to Rule 

4120, the Nasdaq Halt Cross shall occur at the time 

specified under Rule 4120, unless Nasdaq 

determines not to hold a Halt Cross, pursuant to 

proposed Rule 4120(c)(3)(A). The proposed 

amendments also clarify that market hours trading 

will commence when the Nasdaq Halt Cross 

concludes, or in the case of a security for which 

Nasdaq determines not to hold a Halt Cross, when 

Nasdaq releases the security. 

51 15 U.S.C. 78f(b). 

52 15 U.S.C. 78f(b)(5). 53 15 U.S.C. 78f(b)(5). 

procedure, and the definition of the 

terms ‘‘Auction Reference Prices’’ and 

‘‘Auction Collars.’’ 

• Rule 4753(b) (Nasdaq Halt Cross) 

will be modified to update the 

references to subsections of Rule 4120 to 

reflect the reorganization of Rule 4120. 

Going forward, the Exchange will 

generally refer to Rule 4120 in the 

proposed amended Rule, rather than to 

specific subsections, to reflect the 

intended comprehensive scope of Rule 

4753 to the halts described in Rule 

4120.49 The Exchange also updates a 

cross-reference to Rule 4120 discussed 

when describing the role of a ‘‘financial 

advisor.’’ 50

• Rule 4753(c) (Nasdaq Halt Cross) 

will be modified to update a cross 

reference to Rule 4120. 

• Rule 4754(b)(6) (Nasdaq Closing 

Cross related to the Limit Up-Limit 

Down Plan) will be modified to reflect 

the new subsections of Rule 4120 that 

govern LULD Halts. 

• IM–5315–2, IM–5405–1, and IM– 

5505–1 will be modified to reflect 

updated cross-references to provisions 

of Rule 4120 that the Exchange is 

proposing to relocate. 

In addition, the Exchange is 

proposing to amend several rules that 

rely on the definition of ‘‘Regular 

Market Session’’ in current Rule 

4120(b)(4)(D). Regular Market Session is 

defined as ‘‘the trading session from 

9:30 a.m. until 4:00 p.m. or 4:15 p.m.’’ 

The Exchange is proposing to replace 

the references to Regular Market Session 

in Rule 5710 (Securities Linked to the 

Performance of Indexes and 

Commodities (Including Currencies)) 

and 5711 with references to Regular 

Trading Hours as proposed in Rule 

4120(a)(12). The term ‘‘Regular Trading 

Hours’’ would be consistent with the 

existing application of the definition of 

‘‘Regular Market Session’’ and obviate 

the need for multiple definitions for the 

regular trading day. As previously 

discussed, no securities traded on 

Nasdaq currently close at 4:15 p.m. and, 

therefore, the alternative closing time in 

the current Regular Market Session 

definition is not needed. 

The Exchange also is proposing to 

modify IM–5220, which covers duallylisted securities, to reflect the changes 

proposed to Rule 4120. The proposed 

rule makes clear that the Primary Listing 

Market is the market on which the 

security has been listed longest. This 

clear statement has eliminated the need 

for the more specific citations to various 

subsections of Rule 4120 currently 

contained in IM–5220 because proposed 

Rule 4120 distinguishes between those 

securities for which Nasdaq is the 

Primary Listing Market and those 

securities for which Nasdaq is not. The 

Exchange is also eliminating language 

from the rule that references the 

Intermarket Trading System, which no 

longer exists. These changes are not 

substantive. 

Finally, the Exchange proposes to 

amend certain references in Rule 5711, 

which governs the trading of certain 

derivative securities. The references to 

Regular Market Session would be 

changed to Regular Trading Hours 

throughout Rule 5711. This is consistent 

with changes made in other rules 

referring to Regular Market Session. The 

reference in subsection (i)(v)(B)(2) to the 

trading pauses contained in Rule 

4120(a)(11) has been replaced with a 

citation to the Limit Up-Limit Down 

Plan, which now applies to these 

instruments (rather than Rule 

4120(a)(11), which as discussed above, 

is obsolete). The reference in Rule 

5711(j)(vi)(B)(5) to halting a series of 

Managed Trust Securities traded on the 

Exchange pursuant to unlisted trading 

privileges will be updated to reference 

the applicable section of the proposal, 

Rule 4120(b)(3)(A)(ii). 

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.51 Specifically, the proposal is 

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

Act 52 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 and 

other SROs are seeking to adopt 

harmonized rules related to halting and 

resuming trading in U.S.-listed equity 

securities. The Exchange believes that 

the proposed rules will provide greater 

transparency and clarity with respect to 

the situations in which trading will be 

halted and the process through which 

that halt will be implemented and 

terminated. Particularly, the proposed 

changes seek to achieve consistent 

results for participants across U.S. 

equities exchanges while maintaining a 

fair and orderly market, protecting 

investors and protecting the public 

interest. Based on the foregoing, the 

Exchange believes that the proposed 

rules are consistent with Section 6(b)(5) 

of the Act 53 because they will foster 

cooperation and coordination with 

persons engaged in regulating and 

facilitating transactions in securities. 

As discussed previously, the 

Exchange believes that the various 

provisions of the proposed rules that 

will apply to all SROs are focused on 

the type of cross-market event where a 

consistent approach will assist market 

participants and reduce confusion 

during a crisis. Because market 

participants often trade the same 

security across multiple venues and 

trade securities listed on different 

exchanges as part of a common strategy, 

the Exchange believes that the proposed 

rules will lessen the risk that market 

participants holding a basket of 

securities will have to deal with 

divergent outcomes depending on 

where the securities are listed or traded. 

Conversely, the proposed rules would 

still allow individual SROs to react 

differently to events that impact various 

securities or markets in different ways. 

This avoids the ‘‘brittle market’’ risk 

where an isolated event at a single 

market forces all markets trading 

equities securities to halt or halts 

trading in all securities where the issue 

impacted only a subset of securities. By 

addressing both concerns, the Exchange 

believes that the proposed rules further 

the Act’s goal of maintaining fair and 

orderly markets. 

The Exchange believes that the 

proposed rules’ focus of responsibility 

on the Primary Listing Market for 

decisions related to a Regulatory Halt 

and the resumption of trading is 

consistent with the Act, which itself 

imposes obligations on exchanges with 

respect to issuers that are listed. As is 

currently the case, the Primary Listing 

Market would be responsible for the 

many regulatory functions related to its 

listings, including the determination of 

when to declare a Regulatory Halt. 

While these core responsibilities remain 

with the Primary Listing Market, trading 


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Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Notices 27695 

54 15 U.S.C. 78f(b)(8). 

in the security can occur on multiple 

exchanges that have unlisted trading 

privileges for the security or in the overthe-counter market, regulated by FINRA. 

These other venues are responsible for 

monitoring activity on their own 

markets, but also have agreed to honor 

a Regulatory Halt. 

The proposed changes relating to 

Regulatory Halts would ensure that all 

SROs handle the situations covered 

therein in a consistent manner that 

would prevent conflicting outcomes in 

cross-market events and ensure that all 

Trading Centers recognize a Regulatory 

Halt declared by the Primary Listing 

Market. The changes are consistent with 

and implement the Amended Nasdaq 

UTP Plan. While the proposed rules 

recognize one Primary Listing Market 

for each security, the rules do not 

prevent an issuer from switching its 

listing to another national securities 

exchange that would thereafter assume 

the responsibilities of Primary Listing 

Market for that security. Similarly, the 

proposed rules set forth a fair and 

objective standard to determine which 

exchange will be the Primary Listing 

Market in the case of dually-listed 

securities: The exchange on which the 

security has been listed the longest. 

The Exchange believes that the other 

definitions in the proposed rules are 

also consistent with the Act. For 

example, existing rules of the Exchange 

allow it to take action to halt the market 

in the event of Extraordinary Market 

Activity. The proposed rules would 

expand the scope of what constitutes 

Extraordinary Market Activity, 

consistent with the amended definition 

of that term in the Amended Nasdaq 

UTP Plan, thereby furthering the Act’s 

goal of promoting fair and orderly 

markets. The Exchange is also proposing 

to adopt definitions for ‘‘SIP Outage,’’ 

‘‘Material SIP Latency’’ and ‘‘SIP Halt,’’ 

to explicitly address situations that may 

disrupt the markets, and these 

definitions are identical to the 

definitions in the Amended Nasdaq 

UTP Plan. The proposed rules provide 

guidance on when the Exchange should 

seek information from the Operating 

Committee, other SROs and market 

participants as well as means for 

dissemination of important information 

to the market, consistent with the 

Amended Nasdaq UTP Plan. The 

Exchange believes these provisions 

strike the right balance in outlining a 

process to address unforeseen events 

without preventing SROs from taking 

action needed to protect the market. 

The Exchange believes that the 

proposed rules, which make halts more 

consistent across exchange rules, is 

consistent with the Act in that it will 

foster cooperation and coordination 

with persons engaged in regulating the 

equities markets. In particular, the 

Exchange believes it is important for 

SROs to coordinate when there is a 

widespread and significant event, as 

multiple Trading Centers are impacted 

in such an event. Further, while the 

Exchange recognizes that the proposed 

rule will not guarantee a consistent 

result on every market in all situations, 

the Exchange does believe that it will 

assist in that outcome. While the 

proposed rules relating to Regulatory 

Halts focuses primarily on the kinds of 

cross-market events that would likely 

impact multiple markets, individual 

SROs will still retain flexibility to deal 

with unique products or smaller 

situations confined to a particular 

market. To that end, the Exchange has 

retained existing elements of Rule 4120 

that focus on its unique products and 

the processes it has developed over time 

to interact with its issuers. 

Also consistent with the Act, and 

with the Amended Nasdaq UTP Plan, is 

the Exchange’s proposal in Rule 4120(c) 

to address Operational Halts, which are 

non-regulatory in nature and apply only 

to the exchange that calls the halt. As 

noted earlier, the Exchange presently 

has the ability to call an Operational 

Halt, but does so rarely. The Exchange 

believes that the markets would benefit 

from greater clarity regarding when an 

Operational Halt may be appropriate. In 

part, the proposed change is designed to 

cover situations similar to those that 

might constitute a Regulatory Halt, but 

where the impact is limited to a single 

market. For example, just as a market 

disruption might trigger a Regulatory 

Halt for Extraordinary Market Activity if 

it affects multiple markets, so could a 

disruption at the Exchange, such as a 

technical issue affecting trading in one 

or more securities, impact trading on the 

Exchange so significantly that an 

Operational Halt is appropriate in one 

or more securities. In such an instance, 

it would be in the public interest to 

institute an Operational Halt to 

minimize the impact of a disruption 

that, if trading were allowed to 

continue, might negatively affect a 

greater number of market participants. 

An Operational Halt does not implicate 

other trading centers. 

As is currently the case in existing 

Rule 4120(a)(3)(B), proposed Rule 

4120(c)(1)(C) gives discretion to the 

Exchange to impose an Operational Halt 

in a security listed on Nasdaq when a 

Primary Listing Market imposes an 

Operational Halt in a security that is a 

derivative or component of the Nasdaqlisted security. As discussed in relation 

to Derivative Securities Products, 

Nasdaq does not automatically halt 

trading—through either a Regulatory 

Halt or an Operational Halt—when 

component or derivative securities are 

halted. However, proposed Rule 

4120(c)(1)(C), like the current rule, gives 

the Exchange authority to halt a security 

listed on Nasdaq if the impact of the 

component or derivative security on 

price discovery or the fair and orderly 

market in the Nasdaq-listed security is 

significant enough to warrant a trading 

halt. Factors would include whether 

trading in the security listed on Nasdaq 

is fair and orderly, the nature of the 

issue that triggered the Operational 

Halt(s) on the Primary Listing Market(s) 

in the component or derivative 

securities and whether the security that 

is subject to the Operational Halt 

continues to trade on other Trading 

Centers. 

Proposed Rule 4120(c) also would 

authorize the Exchange to implement an 

Operational Halt for any security trading 

on Nasdaq, including a security listed 

elsewhere: (i) If it is experiencing 

Extraordinary Market Activity on 

Nasdaq; or (ii) when otherwise 

necessary to maintain a fair and orderly 

market or in the public interest. 

The Exchange believes that it is 

consistent with the Act to delete Rule 

4120(a)(3)(A), which authorizes the 

Exchange to institute an ‘‘operational 

trading halt’’ in a security listed on 

another exchange when that exchange 

imposes a trading halt because of an 

order imbalance or influx. The 

Exchange believes this language could 

restrict its ability to follow an 

Operational Halt imposed by another 

market to a limited set of fact patterns. 

The Exchange believes that the broader 

language provided by the definition of 

Extraordinary Market Activity in 

proposed Rule 4120(c) will better serve 

the interests of investors by allowing the 

Exchange to act where appropriate. 

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 54 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. 

Importantly, the Exchange believes 

the proposal will not impose a burden 

on intermarket competition but will 

rather alleviate any burden on 

competition because it is the result of a 

collaborative effort by all SROs to 

harmonize and improve the process 

related to the halting and resumption of 


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27696 Federal Register / Vol. 87, No. 89 / Monday, May 9, 2022 / Notices 

55 17 CFR 200.30–3(a)(12). 

trading in U.S.-listed equity securities, 

consistent with the Amended Nasdaq 

UTP Plan. In this area, the Exchange 

believes that all SROs should have 

consistent rules to the extent possible in 

order to provide additional transparency 

and certainty to market participants and 

to avoid inconsistent outcomes that 

could cause confusion and erode market 

confidence. The proposed changes 

would ensure that all SROs handle the 

situations covered therein in a 

consistent manner and ensure that all 

Trading Centers handle a Regulatory 

Halt consistently. The Exchange 

understands that all other Primary 

Listing Markets intend to file proposals 

that are substantially similar to this 

proposal. 

The Exchange does not believe that its 

proposals concerning Operational Halts 

impose an undue burden on 

competition. Under the existing Rules, 

the Exchange already possesses 

discretionary authority to impose 

Operational Halts for various reasons, 

including because of an order imbalance 

or influx that causes another national 

securities exchange to impose a trading 

halt in a security, or because another 

national securities exchange imposes an 

operational halt in a security that is a 

derivative or component of a security 

listed on Nasdaq. As described earlier, 

the proposed Rule change clarifies and 

broadens the circumstances in which 

the Exchange may impose such Halts, 

and specifies procedures for both 

imposing and lifting them. The 

Exchange does not intend for these 

proposals to have any competitive 

impact whatsoever. Indeed, the 

Exchange expects that other exchanges 

will adopt similar rules and procedures 

to govern operational halts, to the extent 

that they have not done so already. 

The Exchange does not believe that 

the proposed rule change imposes a 

burden on intramarket competition 

because the provisions apply to all 

market participants 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 in addition to 

the SIP data and proprietary data feeds 

offered by the Exchange and other SROs 

that are available to subscribers. 

In addition, the proposals include 

several 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. The proposed rule gives 

the Exchanges the ability to declare the 

timing of a Regulatory Halt 

immediately. The SROs retain the 

discretion to cancel trades that occur 

after the time of the Regulatory Halt. 

The proposals also allow for the 

staggered resumption of trading to assist 

firms in reentering the market after a SIP 

Halt affecting multiple securities, in 

order to reopen in a fair and orderly 

manner. In addition, the proposals 

encourage early and frequent 

communication among the SROs, SIPs 

and market participants to enable the 

dissemination of timely and accurate 

information concerning the market to 

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. 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2022–017 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–2022–017. 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 (http://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–2022–017 and 

should be submitted on or before May 

31, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.55

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–09855 Filed 5–6–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

34577; File No. 812–15280] 

AFC BDC Inc., et al; 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’ or ‘‘SEC’’). 

ACTION: Notice. 

Notice of application for an order 

(‘‘Order’’) under sections 17(d) and 57(i) 

of the Investment Company Act of 1940 

(the ‘‘Act’’) and rule 17d–1 under the 

Act to permit certain joint transactions 

otherwise prohibited by sections 17(d) 

and 57(a)(4) of the Act and rule 17d–1 

under the Act. 

Summary of Application: Applicants 

request an order to permit certain 

business development companies 

(‘‘BDCs’’) and closed-end management 

investment companies to co-invest in 

portfolio companies with each other and 

with certain affiliated investment 

entities. 

Applicants: AFC BDC Inc., AFC 

Advisor LLC, AFC Management, LLC, 

AFC Investments, LLC, and AFC 

Gamma, Inc. 

Filing Dates: The application was 

filed on November 8, 2021, and 

amended on November 17, 2021 and 

April 29, 2022. 

Hearing or Notification of Hearing: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing on any application by 

emailing the SEC’s Secretary at 

Secretarys-Office@sec.gov and serving 


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