[Federal Register Volume 82, Number 161 (Tuesday, August 22, 2017)]
[Notices]
[Pages 39920-39921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-17682]



[[Page 39920]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81406; File No. SR-NASDAQ-2017-081]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of a Proposed Rule Change To Extend the Implementation 
Date for Certain Changes to the Rule 5700 Series and Rule 5810

August 16, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 7, 2017, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the date on which certain changes 
concerning the continued listing requirements for exchange-traded 
products (``ETPs'') in the Nasdaq Rule 5700 Series, as well as a 
related amendment to Nasdaq Rule 5810 (Notification of Deficiency by 
the Listing Qualifications Department), are implemented.
    The Exchange proposes to delay the implementation date of these 
changes until July 1, 2018. Given the scope of the proposed rule 
changes, the Exchange believes that this will ensure that ETP issuers 
have adequate time to develop and put into operation the new processes 
and systems necessitated by them.

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
    On September 30, 2016, the Exchange filed a proposed rule change, 
as subsequently amended by Amendments No. 1 and 2 thereto, and as 
supplemented by two clean-up filings \3\ (as amended and supplemented, 
collectively, the ``Proposed Rule Change''), to adopt certain changes 
to the Nasdaq Rule 5700 Series, as well as a related amendment to 
Nasdaq Rule 5810 (Notification of Deficiency by the Listing 
Qualifications Department), to add additional continued listing 
standards for ETPs, as well as clarify the procedures that the Exchange 
will undertake when an ETP is noncompliant with applicable rules.
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    \3\ See Securities Exchange Act Release No. 79081 (Oct. 11, 
2016), 81 FR 71548 (Oct. 17, 2016) (SR-NASDAQ-2016-135); see also 
Securities Exchange Act Release No. 80708 (May 17, 2017), 82 FR 
23690 (May 23, 2017) (SR-NASDAQ-2017-040); see also Securities 
Exchange Act Release No. 80810 (May 30, 2017), 82 FR 26205 (June 6, 
2017) (SR-NASDAQ-2017-052).
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    On May 3, 2017, the Exchange filed to extend the implementation 
date from August 1, 2017 until October 1, 2017.\4\ The Exchange now 
proposes to extend the implementation date of the amendments specified 
in the Proposed Rule Change to July 1, 2018.
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    \4\ See Securities Exchange Act Release No. 80708 (May 17, 
2017), 82 FR 23690 (May 23, 2017) (SR-NASDAQ-2017-040).
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    Since the Proposed Rule Change was approved, the Exchange has 
engaged in extensive conversations with issuers of listed ETPs, 
industry advocacy groups and index providers to discuss the new rule 
requirements and offer guidance on rule interpretation and 
application.\5\ As a result of these conversations, ETP issuers have 
expressed concern about their ability to have in place systems and 
procedures to ensure compliance by the current October 1, 2017 
implementation date. In particular, listed ETP issuers, and industry 
advocacy groups on their behalf, have explained that issuers will 
require time to design and test new compliance systems as well as 
engage in discussions with third-party providers to source and track 
new data elements required for rule compliance.\6\
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    \5\ In addition to submitting the index components to the 
Exchange on a quarterly basis, the Exchange believes that it would 
be appropriate for issuers to review the index components for 
compliance with the continued listing requirements in connection 
with index rebalances, reconstitutions, or other material changes to 
the index components.
    \6\ See, for example, Letter, dated July 11, 2017, from Dorothy 
Donohue, Acting General Counsel, Investment Company Institute to 
Brent J. Fields, Secretary, Securities and Exchange Commission, 
available at https://www.sec.gov/comments/sr-nasdaq-2016-135/nasdaq2016135-1846208-155175.pdf.
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    The Exchange believes it is appropriate to extend the 
implementation date of the Proposed Rule Change to July 1, 2018 to 
provide listed ETP issuers with the time needed to develop and test 
their compliance procedures. In support of its proposal, the Exchange 
notes that the Proposed Rule Change imposes significant new compliance 
requirements on issuers that they have not been subject to previously. 
To meet these new compliance requirements, issuers must develop 
internal systems as well as coordinate with third-party service 
providers, such as index providers, to develop procedures by which they 
can obtain essential data. Listed issuers have informed the Exchange 
that they are unable to complete this extensive project by the pending 
October 1, 2017 implementation date. The Exchange believes that it is 
critical for listed ETP issuers to have the appropriate procedures and 
systems in place to monitor and evidence ETP compliance with the new 
continued listing rules before such rules are implemented. Therefore, 
the Exchange proposes to extend the implementation date for the 
Proposed Rule Change until July 1, 2018.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is consistent 
with the protection of investors because it will enable listed issuers 
to have the systems and procedures needed to monitor and evidence 
compliance with the Proposed Rule Change prior to such rule being 
implemented. Providing

[[Page 39921]]

listed issuers with additional time to ensure that they have adequate 
compliance systems in place furthers the protection of investors and 
the public interest because it will enhance investor confidence that 
listed issuers are complying with Exchange rules.
    For these reasons, Nasdaq believes the proposed rule change is 
consistent with the requirements of Section 6(b)(5) of the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act, as amended. The Exchange 
believes that the proposed rule change will facilitate listed issuer 
ability to monitor and evidence compliance with approved continued 
listing rules by providing issuers with additional time to develop and 
test their internal systems and procedures prior to the implementation 
date.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange received a copy of a letter from the Investment 
Company Institute, on behalf of listed ETP issuers, to the SEC.\9\ As 
described in Item 3 [sic], above, the Investment Company Institute 
detailed challenges that listed ETP issuers are facing in developing 
compliance systems to address the amendments contained in the Proposed 
Rule Change and have requested that the implementation date for such 
amendments be extended to July 1, 2018.
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    \9\ See Footnote 6, infra. [sic]
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III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#fd8f889198d09e9290909893898ebd8e989ed39a928b"><span class="__cf_email__" data-cfemail="b9cbccd5dc94dad6d4d4dcd7cdcaf9cadcda97ded6cf">[email protected]</span></a>. Please include 
File Number SR-NASDAQ-2017-081 on the subject line.

Paper Comments

    <bullet> 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-2017-081. 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 Web site (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 Web site 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASDAQ-2017-081 and should 
be submitted on or before September 12, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-17682 Filed 8-21-17; 8:45 am]
 BILLING CODE 8011-01-P


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