Document ID: SEC-2021-1165-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2021-08-30T04:00Z

[Federal Register Volume 86, Number 165 (Monday, August 30, 2021)]
[Notices]
[Pages 48455-48456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18553]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92738; File No. SR-NASDAQ-2021-064]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend General 9, Section 51, Research Analysts

August 24, 2021.
    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 12, 2021, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend General 9, Section 51, Research 
Analysts.
    The Exchange also proposes to amend General 9, Section 10, 
Recommendations to Customers (Suitability).
    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
    The Exchange proposes to amend General 9, Section 51, Research 
Analysts. Specifically, the Exchange proposes to (1) remove references 
to FINRA Rules 1120 \3\ and 1250;\4\ and (2) add references to FINRA 
Rules 1240 and 1220(a)(6), (a)(14) and (b)(6).
---------------------------------------------------------------------------

    \3\ Nasdaq Rule 1050 (subsequently renumbered as General 9, 
Section 51) originally referred to NASD Rule 1120, Continuing 
Education Requirements. See Securities Exchange Act Release Nos. 
58069 (June 30, 3008), 73 FR 39360 (July 9, 2008) (SR-NASDAQ-2008-
054) (Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change Regarding Technical and Conforming Changes to Nasdaq 
Rules); and 87778 (December 17, 2019), 84 FR 70590 (December 23, 
2019) (SR-NASDAQ-2019-098) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change To Relocate Rules From Its 
Current Rulebook Into Its New Rulebook Shell) (renumbering Nasdaq 
Rule 1050 as General 9, Section 51). The SEC approved the adoption 
of NASD Rule 1120 (Continuing Education Requirements) as new FINRA 
Rule 1250 (Continuing Education Requirements) subject to certain 
amendments, effective on October 17, 2011. See Securities Exchange 
Act Release No. 64687 (June 16, 2011); 76 FR 36586 (June 22, 2011) 
(SR-FINRA-2011-013) (Notice of Filing of Amendment No. 1 and Order 
Granting Accelerated Approval of a Proposed Rule Change, as Modified 
by Amendment No. 1, Establishing a Registration Category, 
Qualification Examination and Continuing Education Requirements for 
Certain Operations Personnel, and Adopt FINRA Rule 1250 (Continuing 
Education Requirements) in the Consolidated FINRA Rulebook). See 
also note 5 below.
    \4\ FINRA Rule 1250 was renumbered as FINRA Rule 1240. See note 
5 below.
---------------------------------------------------------------------------

    The Exchange also proposes to amend General 9, Section 10, 
Recommendations to Customers (Suitability).
General 9, Section 51
    By way of background, FINRA previously deleted in their entirety 
the NASD Rule 1000 Series relating to registration of Principals and 
Representatives and adopted rules relating to qualification and 
registration requirements in the Consolidated FINRA Rulebook.\5\ In 
that rule change, FINRA Rule 1250 was renumbered to FINRA Rule 1240.\6\ 
FINRA Rule 1240 describes continuing education requirements applicable 
to registered persons and consists of a Regulatory Element and a Firm 
Element.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 81098 (July 7, 
2017), 82 FR 32419 (July 13, 2017) (SR-FINRA-2017-007) (Order 
Approving Proposed Rule Change To Adopt Consolidated Registration 
Rules, Restructure the Representative-Level Qualification 
Examination Program, Allow Permissive Registration, Establish Exam 
Waiver Process for Persons Working for Financial Services Affiliate 
of Member, and Amend the Continuing Education Requirements).
    \6\ Id.
---------------------------------------------------------------------------

    Nasdaq subsequently filed a rule change \7\ to amend, reorganize 
and enhance certain of its corresponding membership, registration and 
qualification requirements rules in part in response to the FINRA Rule 
Changes,\8\ and also in order to facilitate the adoption of similar 
membership, registration and qualification rules by Nasdaq's affiliated 
exchanges. In that rule change, Nasdaq amended its Rule 1050 (now 
General 9, Section 51) to remove references to NASD Rules 2711, 1050, 
1022 and 1120 and it replaced those references with FINRA Rules 1120, 
1250, and 2241.\9\ The reference to FINRA Rule 1120 was in error 
because, at that time, FINRA Rule 1120 did not exist. NASD Rule 1120 
was adopted as FINRA Rule 1250.\10\ Also, the references to FINRA Rule 
1250 were in error because FINRA Rule 1250 was renumbered as FINRA Rule 
1240.\11\ Of note, NASD Rules 1050 (Registration of Research Analysts) 
and 1022 (Categories of Principal Registrations) were superseded by the 
FINRA Rule 1200 Series but this was not reflected within SR-FINRA-2018-
078 [sic].\12\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 84386 (October 9, 
2018), 83 FR 51988 (October 15, 2018) (SR-NASDAQ-2018-078) (Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend, Reorganize and Enhance Its Membership, Registration and 
Qualification Rules).
    \8\ See note 5 above.
    \9\ See note 7 above.
    \10\ See note 3 above.
    \11\ See notes 4 and 5 above.
    \12\ See note 5 above.
---------------------------------------------------------------------------

    At this time, Nasdaq proposes to remove the incorrect references to 
FINRA Rules 1120 and 1250 as such rules do not exist. The Exchange 
proposes to update the reference to FINRA Rule 1250 with a reference to 
current FINRA Rule 1240. The Exchange also proposes to add references 
to FINRA Rules 1220(a)(6), (a)(14), and (b)(6), because they correspond 
to previous NASD Rules 1050 and 1022. These changes would reflect the 
current FINRA rules relating to research analysts.
    The Exchange proposes to amend General 9, Section 10, 
Recommendations to Customers

[[Page 48456]]

(Suitability), to update a citation within subparagraph (b)(3) to NASD 
Rule IM-2210-6. In 2011, FINRA replaced NASD IM-2210-6 with FINRA Rule 
2214.\13\
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release No. 64984 (June 28, 
2011), 76 FR 46870 (August 3, 2011) (SR-FINRA-2011-035) (Notice of 
Filing of Proposed Rule Change To Adopt FINRA Rules 2210 
(Communications With the Public), 2212 (Use of Investment Companies 
Rankings in Retail Communications), 2213 (Requirements for the Use 
of Bond Mutual Fund Volatility Ratings), 2214 (Requirements for the 
Use of Investment Analysis Tools), 2215 (Communications With the 
Public Regarding Security Futures), and 2216 (Communications With 
the Public About Collateralized Mortgage Obligations (CMOs)) in the 
Consolidated FINRA Rulebook).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\14\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\15\ in particular, in that it is designed to 
promote just and equitable principles of trade and to protect investors 
and the public interest. The Exchange's proposal to remove inaccurate 
FINRA rule references from General 9, Section 51 and replace them with 
references to current FINRA rules that apply to research analysts and 
[sic] is consistent with the Act. The Exchange's proposal will align 
Nasdaq's rule to FINRA rules.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange's proposal to amend General 9, Section 10, 
Recommendations to Customers (Suitability), to update a citation within 
subparagraph (b)(3) to NASD Rule IM-2210-6 is consistent with the Act. 
Replacing NASD IM-2210-6 with FINRA Rule 2214 will bring greater 
transparency to the correct FINRA rule.

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 amendments do not 
impose an undue burden on competition as the proposal will amend the 
Exchange's General 9, Section 51 to remove inaccurate FINRA rule 
references and replace them with references to current FINRA Rules that 
apply to research analysts.
    The Exchange's proposal to amend General 9, Section 10, 
Recommendations to Customers (Suitability), to update a citation within 
subparagraph (b)(3) to NASD Rule IM-2210-6 does not impose an undue 
burden on competition. Replacing NASD IM-2210-6 with FINRA Rule 2214 
will bring greater transparency to the correct FINRA rule.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) thereunder.\17\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the 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 to 
determine whether the proposed rule change should be approved or 
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-NASDAQ-2021-064 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-2021-064. 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-2021-064 and should be submitted 
on or before September 20, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-18553 Filed 8-27-21; 8:45 am]
BILLING CODE 8011-01-P