Document ID: SEC-2020-0794-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2020-05-20T04:00Z

[Federal Register Volume 85, Number 98 (Wednesday, May 20, 2020)]
[Notices]
[Pages 30775-30776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10812]

[[Page 30775]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88868; File No. SR-NASDAQ-2020-024]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the Implementation Date for a Recent Rule Change Modifying the 
Delisting Process for Certain Securities With a Bid Price at or Below 
$0.10 or That Have Had Reverse Stock Splits With a Cumulative Ratio of 
250 or More to One Over the Prior Two-Year Period

May 14, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on May 1, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``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 modify the implementation date and process 
for rule changes adopted in SR-Nasdaq-2020-001.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaq.cchwallstreet.com, 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
    On January 2, 2020, Nasdaq filed with the Commission a proposed 
rule change to modify the delisting process for securities with a bid 
price at or below $0.10 and for securities that have had one or more 
reverse stock splits with a cumulative ratio of 250 shares or more to 
one over the prior two year period.\3\ The Commission approved this 
proposed rule change on April 21, 2020.\4\
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    \3\ Securities Exchange Act Release No. 87982 (January 15, 
2020), 85 FR 3736 (January 22, 2020) (SR-Nasdaq-2020-001).
    \4\ Securities Exchange Act Release No. 88716 (April 21, 2020), 
85 FR 23393 (April 27, 2020).
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    In its filing, Nasdaq stated that this rule change would be 
implemented for companies that first receive notification of 
noncompliance with the bid price requirement after the date of the 
Commission's approval of the changes. However, Nasdaq does not believe 
it is appropriate to implement this new requirement, which would affect 
low priced stocks, during a time when the U.S. and global equities 
markets have experienced unprecedented market-wide declines as a result 
of the ongoing spread of the COVID-19 virus and companies face highly 
unusual market conditions.\5\ Accordingly, Nasdaq is filing this rule 
change to delay the implementation date and process for the changes 
adopted in SR-Nasdaq-2020-001.
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    \5\ See Securities Exchange Act Release No. 88685 (April 17, 
2020), 85 FR 22777 (April 23, 2020) (permitting companies a longer 
period of time to regain compliance with Nasdaq's bid price and 
market value of publicly held shares continued listing requirements 
by tolling the compliance periods through and including June 30, 
2020, due to market disruptions caused by the COVID-19 virus).
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    As revised, Nasdaq will implement these rule changes for companies 
that first receive notification of noncompliance with the bid price 
requirement on or after September 1, 2020. A company that receives 
notification of non-compliance prior to that date will not be subject 
to the rule changes.
    While Nasdaq rules may allow a company two 180-day periods to 
regain compliance with the bid price requirement in certain 
circumstances, a company is not eligible for the second compliance 
period ``if it does not appear to Nasdaq that it is possible for the 
Company to cure the deficiency.'' \6\ As is currently the case, Nasdaq 
may rely upon this language to deny the second compliance period to a 
company with a very low stock price or that has engaged in significant 
prior reverse stock splits, even though the company is not yet subject 
to the rule changes.
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    \6\ Listing Rules 5810(c)(3)(A)(i) and (ii).
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    Until all companies are subject to the rule changes, Nasdaq will 
include a statement at the start of Rule 5810 and Rule 5815 explaining 
that the rule was recently amended, describing the nature of the 
amendment, and specifying the effective date for the rule changes, 
along with a link to the revised rules. Starting September 1, 2020, 
Rules 5810 and 5815 will reflect the rule changes, but until all 
companies are subject to the rule changes Nasdaq will include a 
statement at the start of Rule 5810 and Rule 5815 explaining that the 
rule was recently amended, describing the nature of the amendment, and 
specifying the effective date for the rule changes, along with a link 
to the rules as they existed before the amendment.
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 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, 
by delaying the implementation date of the rule changes in light of 
market declines and disruptions as a result of the COVID-19 virus and 
actions taken to address the pandemic. Until these rule changes are 
implemented, Nasdaq will continue to apply its prior rules and, 
notwithstanding the proposed delay in implementing the effective date 
of the rule changes, would not provide a company with a second 180-day 
compliance period for a bid price deficiency if it does not appear to 
Nasdaq that it is possible for the company to cure the deficiency.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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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 
impacts unique Nasdaq listing rules. While Nasdaq does not believe 
there will be any impact on competition from the rule changes or the 
proposed change to the

[[Page 30776]]

implementation schedule of the rule changes, any impact on competition 
that does arise from the revised implementation schedule is necessary 
to reflect concerns about market conditions in light of the COVID-19 
pandemic.

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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \11\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative upon filing. The Exchange stated that 
such waiver would ensure that there is no confusion about the 
implementation schedule for the rule change. The Exchange further 
stated that it believes waiver is consistent with the protection of 
investors and the public interest because it would merely provide a 
delay, until September 1, 2020, in the implementation of an approved 
rule change due to the highly unusual market conditions resulting from 
the ongoing spread of the COVID-19 virus. The Exchange further noted 
that investors will continue to be protected by Nasdaq's other bid 
price rules, which will continue to apply during that time, subject to 
a temporary tolling of compliance periods through and including June 
30, 2020, as described above.
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission notes that the proposal is a temporary measure to 
delay the effectiveness of an approved rule change until September 1, 
2020 in light of current market conditions. Further, Nasdaq's existing 
bid price rules will continue to apply, including its ability to deny a 
company a second compliance period if it does not appear to Nasdaq that 
it is possible for the company to cure the deficiency. The waiver of 
the operative delay will also help to ensure that all companies have 
the same rules applied to them as to bid price deficiencies as of the 
date of the filing of this rule change to delay the implementation date 
of the new rules. For these reasons, the Commission believes that 
waiver of the 30-day operative delay is consistent with the protection 
of investors and the public interest. Therefore, the Commission hereby 
waives the operative delay and designates the proposed rule change 
operative upon filing.\13\
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    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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-2020-024 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-2020-024. 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-2020-024 and should be submitted 
on or before June 10, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10812 Filed 5-19-20; 8:45 am]
 BILLING CODE 8011-01-P