Document ID: SEC-2018-0507-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market LLC
Posted Date: 2018-03-27T04:00Z

[Federal Register Volume 83, Number 59 (Tuesday, March 27, 2018)]
[Notices]
[Pages 13159-13161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06100]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82921; File No. SR-NASDAQ-2018-020]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 4370 Regarding the Requirements for the Listing of 
Securities That Are Issued by the Exchange or Any of Its Affiliates

March 22, 2018.
    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 March 20, 2018, 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 amend Rule 4370 regarding the requirements 
for the listing of securities that are issued by the Exchange or any of 
its affiliates.
    The text of the proposed rule change is set forth below. Proposed 
new language is italicized; deleted text is in brackets.
* * * * *

4370. Additional Requirements for Nasdaq-Listed Securities Issued by 
Nasdaq or Its Affiliates

    (a) For purposes of this Rule 4370, the terms below are defined as 
follows:
    (1) No change.
    (2) ``Affiliate Security'' means any security issued by a Nasdaq 
Affiliate or any Exchange-listed option on any such security, with the 
exception of Portfolio Depository Receipts as defined in Rule 
5705(a)(1)(A) and Index Fund Shares as defined in Rule 5705(b)(1)(A).
    (b) Upon initial and throughout continued listing and trading of 
the Affiliate Security on The Nasdaq Stock Market, Nasdaq shall:
    (1) [file a report quarterly with the Commission]provide a 
quarterly report to Nasdaq's Regulatory Oversight Committee detailing 
Nasdaq's monitoring of:
    (A)-(B) No change.
    (2) engage an independent accounting firm once a year to review and 
prepare a report on the Affiliate Security to ensure that the Nasdaq 
Affiliate is in compliance with the listing requirements contained in 
the Rule 5000, 5100, 5200, 5300, 5400, 5500, and 5600 Series and 
promptly [forward to the Commission]provide Nasdaq's Regulatory 
Oversight Committee with a copy of the report prepared by the 
independent accounting firm.
    (c) No change.
* * * * *
    (b) Not applicable.
    (c) Not applicable.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 4370 (Additional Requirements 
for Nasdaq-Listed Securities Issued by Nasdaq or its Affiliates) 
regarding the requirements for the listing of securities that are 
issued by the Exchange or any of its affiliates.
    Rule 4370 sets forth certain monitoring requirements that must be 
met throughout the continued listing of securities issued by Nasdaq or 
its affiliates. More specifically, Rule 4370 provides that, upon 
initial and throughout continued listing of the Affiliate Security \3\ 
on The Nasdaq Stock Market, Nasdaq shall:
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    \3\ Pursuant to Rule 4370(a)(2), ``Affiliate Security'' means 
any security issued by a Nasdaq Affiliate, with the exception of 
Portfolio Depository Receipts as defined in Rule 5705(a)(1)(A) and 
Index Fund Shares as defined in Rule 5705(b)(1)(A), and pursuant to 
Rule 4370(a)(1), ``Nasdaq Affiliate'' means The Nasdaq Stock Market, 
Inc. and any entity that directly or indirectly, through one or more 
intermediaries, controls, is controlled by, or is under common 
control with The Nasdaq Stock Market, Inc., where ``control'' means 
that the one entity possesses, directly or indirectly, voting 
control of the other entity either through ownership of capital 
stock or other equity securities or through majority representation 
on the board of directors or other management body of such entity.
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     File a report quarterly (``Quarterly Report'') with the 
Commission detailing Nasdaq's monitoring of (a) the Nasdaq Affiliate's 
compliance with the listing requirements; and (b) the trading of the 
Affiliate Security; and
     engage an independent accounting firm once a year to 
review and prepare a report on the Affiliate Security to ensure that 
the Nasdaq Affiliate is in compliance with the listing requirements 
(``Annual Report'') and promptly forward to the Commission a copy of 
the report prepared by the independent accounting firm.
    In discussions with the Commission Staff regarding the Exchange's 
Rule 4370, it was determined that the Exchange no longer needs to 
provide to the Commission copies of the reports specified in paragraphs 
(b)(1) and (b)(2) thereunder; instead, the Exchange must provide these 
reports to the Exchange's

[[Page 13160]]

Regulatory Oversight Committee. Accordingly, the Exchange proposes to 
amend Rule 4370 to remove the requirement that the Quarterly Report be 
filed with the Commission and that copies of the Annual Report be 
forwarded to the Commission, and to require instead that copies of each 
such report be provided to Nasdaq's Regulatory Oversight Committee. In 
addition, the Exchange proposes to modify the definition of ``Affiliate 
Security'' in Rule 4370(a)(2) to include any Exchange-listed option on 
any such security. Finally, the Exchange proposes to modify Rule 
4370(b) to require that the Exchange also follow Rule 4370 upon initial 
and throughout continued trading, not just listing, of the ``Affiliate 
Security'' on the Exchange.
    No other changes would be made to Rule 4370, which would continue 
to require that Nasdaq file a report with the Commission if it 
determines that the Nasdaq Affiliate is not in compliance with the 
listing requirements.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act \4\ in general, and Section 
6(b)(5) \5\ in particular, in that 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 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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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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, 
because the proposed changes would reduce the paperwork received by the 
Commission and ease the burden of submitting the Quarterly and Annual 
Reports, while continuing to help protect against concerns that the 
Exchange will not effectively enforce its rules with respect to the 
listing and trading of Affiliate Securities. The proposed rule change 
would not change the information available to the Commission. The 
Exchange understands that these reports are subject to Section 17A of 
the Exchange Act \6\ and that it will be required to keep and preserve, 
and to furnish to the Commission upon request, copies of these reports 
in accordance with Rule 17a-1 thereunder.\7\
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    \6\ 15 U.S.C. 78q.
    \7\ 17 CFR 240.17a-1.
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    The Exchange believes that the proposed change adding Exchange-
listed options to the definition of ``Affiliate Security'' in Rule 
4370(a)(2) and requiring that the Exchange also follow Rule 4370 upon 
initial and throughout continued trading, not just listing, of the 
``Affiliate Security'' on the Exchange, will expand the scope of Rule 
4370, which would help eliminate any perception of a potential conflict 
of interest if a Nasdaq Affiliate seeks to list and/or trade an option 
on an Affiliate Security on the Exchange and thus promote just and 
equitable principles of trade, remove impediments to a free and open 
market and protect investors and the public interest by helping protect 
against concerns that the Exchange will not effectively enforce its 
rules with respect to the listing and trading of these securities.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is not 
intended to address competitive issues but rather to reduce the 
paperwork received by the Commission, ease the burden of submitting the 
Quarterly and Annual Reports, and provide greater clarity in the 
Exchange's rules, without changing the information available to the 
Commission.

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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\ 
Because the foregoing proposed rule change does not: (i) Significantly 
affect the protection of investors or the public interest; (ii) impose 
any significant burden on competition; and (iii) become operative for 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, it has become effective pursuant to 
Section 19(b)(3)(A)(iii) of the Act \10\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 15 U.S.C. 78s(b)(2)(B).
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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 [email protected]. Please include 
File Number SR-NASDAQ-2018-020 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-2018-020. 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

[[Page 13161]]

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-2018-020 and should be submitted 
on or before April 17, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-06100 Filed 3-26-18; 8:45 am]
 BILLING CODE 8011-01-P