Document ID: SEC-2018-1490-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2018-09-25T04:00Z

[Federal Register Volume 83, Number 186 (Tuesday, September 25, 2018)]
[Notices]
[Pages 48486-48488]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20768]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84214; File No. SR-NASDAQ-2018-072]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Conform the Exchange's By-Law Provisions Regarding the Chief Regulatory 
Officer to Those of Its Affiliate, Nasdaq PHLX LLC

September 19, 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 September 6, 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 a proposal [sic] to conform the Exchange's 
By-Law provisions regarding the Chief Regulatory Officer to those of 
its affiliate, Nasdaq PHLX LLC (``Phlx'').
    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
    The Exchange proposes to amend its By-Laws at Article IV, Section 7 
to conform its provisions regarding the Exchange's Chief Regulatory 
Officer (``CRO'') to those of its affiliate, Nasdaq PHLX LLC 
(``Phlx'').\3\ By-Law Article IV, Section 7 presently requires that an 
officer of the Exchange \4\ with the position of Executive Vice 
President or Senior Vice President be designated as the CRO of the 
Exchange. The Exchange now proposes to remove the requirement that the 
CRO be an Executive Vice President or Senior Vice President of the 
Exchange. The Exchange believes that this requirement is unnecessary 
and notes that there may be officers of the Exchange who are well 
qualified to serve in the CRO role, but who may not hold the position 
of an Executive Vice President or Senior Vice President.\5\ The 
Exchange does not seek to amend any of the current responsibilities of 
the CRO as set forth in Section 7; \6\ rather, the proposed changes are 
intended to give the Exchange more flexibility to attract and retain 
well qualified officers to the role

[[Page 48487]]

of CRO that are not designated as an Executive Vice President or Senior 
Vice President of the Exchange. As noted above, the Exchange desires to 
conform the requirements to become CRO in its By-Laws to those in the 
By-Laws of Phlx, which do not contain a similar restriction in Article 
IV, Section 4-7 of its By-Laws that its CRO be an Executive Vice 
President or Senior Vice President of Phlx.\7\
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    \3\ See Phlx By-Law Article IV, Section 4-7 (Chief Regulatory 
Officer).
    \4\ In Exhibit 5, the references to ``Company'' mean the 
Exchange.
    \5\ The Exchange notes that Phlx's CRO currently holds the 
position of Vice President.
    \6\ The CRO's responsibilities include general supervision of 
the regulatory operations of the Exchange, including responsibility 
for overseeing the Exchange's surveillance, examination, and 
enforcement functions and for administering any regulatory services 
agreements with another SRO to which the Exchange is a party. In 
addition, the CRO shall meet with the Regulatory Oversight Committee 
of the Exchange in executive session at regularly scheduled meetings 
of such committee, and at any time upon request of the CRO or any 
member of the Regulatory Oversight Committee. Unlike Phlx, the 
Exchange's By-Laws provide that the CRO may also serve as the 
General Counsel of the Exchange. See By-Law Article IV, Section 7.
    \7\ See note 5 above.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Section 
6(b)(1) of the Act,\9\ in particular, in that it enables the Exchange 
to be so organized so as to have the capacity to be able to carry out 
the purposes of the Act and to comply, and to enforce compliance by its 
members and persons associated with its members, with the provisions of 
the Act, the rules and regulations thereunder, and the rules of the 
Exchange. The Exchange also believes that this proposal furthers the 
objectives of Section 6(b)(5) of the Act,\10\ 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. The proposed changes will remove the 
requirement currently in Article IV, Section 7 of the Exchange's By-
Laws that the CRO be an Executive Vice President or Senior Vice 
President of the Exchange. As discussed above, the current 
responsibilities of the CRO as provided in Article IV, Section 7 remain 
unchanged under this proposal, and the CRO will continue to have 
general oversight of the regulatory operations of the Exchange and be 
obligated to meet regularly with the Regulatory Oversight Committee. 
The proposed rule change is intended to provide the Exchange with 
greater flexibility to attract and retain capable individuals who are 
well qualified to serve in the CRO role. In addition, the proposed 
amendments will have the additional benefit of bringing the Exchange's 
requirements on the CRO role into greater conformity with those of its 
affiliate, Phlx, thereby creating equivalent standards among the 
affiliated exchanges owned by Nasdaq, Inc. (``HoldCo'').\11\ As such, 
the Exchange believes that its proposal will bring greater consistency 
to its rules, which is beneficial to both investors and the public 
interest.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(1).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Nasdaq BX, Inc. (``BX''), Nasdaq ISE, LLC (``ISE''), Nasdaq 
GEMX, LLC (``GEMX''), and Nasdaq MRX, LLC (``MRX'') will file 
similar proposals to conform their By-Laws with Phlx's By-Laws. ISE, 
GEMX, MRX, NSM, BX, and Phlx will hereinafter be referred to 
collectively as ``Affiliated Exchanges.''
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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 does 
not address competitive issues but relates to the administration and 
functioning of the Exchange by allowing the Exchange greater 
flexibility in attracting and retaining well qualified officers to the 
role of CRO that are not designated as an Executive Vice President or 
Senior Vice President.

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)(iii) of the Act \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 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 under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, Rule 19b-4(f)(6)(iii) \15\ 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 proposed 
rule change may become operative immediately upon filing. The Exchange 
notes that waiver of the operative delay will allow it to amend its By-
Laws by September 26, 2018. The Exchange states that the boards of the 
Affiliated Exchanges will collectively meet on that date to address, 
among other matters, certain annual corporate ``housekeeping items,'' 
which the Exchange states has historically included Exchange officer 
appointments. As such, the Commission believes that waiver of the 
operative delay is consistent with the protection of investors and the 
public interest. Therefore, the Commission hereby waives the 30-day 
operative delay and designates the proposed rule change as operative 
upon filing.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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 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 [email protected]. Please include 
File Number SR-NASDAQ-2018-072 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-2018-072. 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 48488]]

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-2018-072 and should be submitted 
on or before October 16, 2018.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Brent J. Fields,
Secretary.
[FR Doc. 2018-20768 Filed 9-24-18; 8:45 am]
 BILLING CODE 8011-01-P