Document ID: SEC-2022-0400-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2022-03-23T04:00Z

[Federal Register Volume 87, Number 56 (Wednesday, March 23, 2022)]
[Notices]
[Pages 16502-16504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06088]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94447; File No. SR-NASDAQ-2022-023]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Harmonize Various Processes Under Options 3, Section 20 Across the 
Affiliated Nasdaq Options Exchanges

March 17, 2022.
    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 8, 2022, 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, II, and III, 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 harmonize its processes and procedures 
under Options 3, Section 20 with those of its affiliated options 
exchange.
    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 harmonize its existing processes for the 
review of decisions on appeal under Options 3, Section 20 with those of 
its affiliate Nasdaq Phlx LLC (``Phlx''). The Exchange also proposes 
several non-substantive, conforming changes in Options 3, Section 1.
Appeal
    Today, Options 3, Section 20(k) governs the appeal process for 
determinations by Exchange staff made under this Rule, including 
obvious error determinations. Specifically, a party to a transaction 
affected by a decision made under this section may appeal that decision 
to the Exchange Review Council. An appeal must be made in writing, and 
must be received by the Exchange within thirty (30) minutes after the 
person making the appeal is given the notification of the determination 
being appealed.
    The Exchange proposes generally to maintain its current appeal 
process with certain additions to harmonize its process with that of 
its affiliate, Phlx. First, while Phlx similarly requires the parties 
to submit a request for review within thirty (30) minutes of being 
notified of the determination being appealed, Phlx also provides 
parties with additional time to submit their request if the 
notification occurs later in the trading day. In particular, if the 
notification is made after 3:30 p.m. Eastern Time, either party has 
until 9:30 a.m. Eastern Time on the next trading day to submit a 
request for review.\3\ Similar to Phlx, the Exchange believes that this 
flexibility will be helpful for Participants in submitting their appeal 
requests in a timely manner, particularly where notification of the 
Official's decision was received later in the trading day, and 
therefore proposes to adopt this provision in Options 3, Section 20(k).
---------------------------------------------------------------------------

    \3\ See Phlx Options 3, Section 20(l).
---------------------------------------------------------------------------

    Second, the Exchange proposes to add a provision for when the 
Exchange Review Council panel must render a decision on requests for 
appeal to harmonize to Phlx's process. Specifically, the Exchange 
proposes in Options 3, Section 20(k) that the Exchange Review Council 
panel shall review the facts and render a decision on the day of the 
transaction, or the next trade day in the case where a request is 
properly made after 3:30 p.m. on the day of the transaction or where 
the request is properly made the next trade day.\4\
---------------------------------------------------------------------------

    \4\ See Phlx Options 3, Section 20(l) for analogous language.
---------------------------------------------------------------------------

Options 3, Section 1
    The Exchange proposes non-substantive, conforming amendments to 
Options 3, Section 1 (Days and Hours of Business). The Exchange first 
proposes to amend the title from ``Days and Hours of Business'' to 
``Hours of Business.'' The Exchange recently filed to establish General 
3, Section 1030, which governs the days the Exchange will be open for 
business.\5\ At this time, the Exchange also proposes to amend Options 
3, Section 1(c) which provides, ``NOM shall not be open for business on 
any

[[Page 16503]]

holiday observed by The Nasdaq Stock Market, LLC.'' The Exchange 
proposes to instead provide, ``NOM shall not be open for business as 
provided within General 3, Section 1030.'' This proposed text will make 
clear that while General 3, Section 1030 governs the days the Exchange 
will be open for business, the remainder of the rule addresses the 
hours of operation of the System and specific products. Finally, the 
Exchange proposes to update citations to the Options 4 rules related to 
Exchange-Traded Fund Shares and Index-Linked Securities.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 93675 (November 29, 
2021), 86 FR 68714 (December 3, 2021) (SR-NASDAQ-2021-69) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To 
Include Juneteenth National Independence Day as a Holiday). Rule 
1030 of General 3 memorialized all current Exchange holidays and 
added a provision to permit the Exchange the authority to halt or 
suspend trading or close Exchange facilities for certain 
unanticipated closures.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\7\ 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 
and because it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that its proposal to amend the current appeal 
process to harmonize with Phlx's appeal process is consistent with the 
Act because it will continue to afford Participants with due process in 
connection with decisions made by Officials under Options 3, Section 20 
that the Participant may feel warrants review. As discussed above, the 
proposal would allow either party until 9:30 a.m. the next trading to 
submit a request for review if notification is made after 3:30 p.m., 
which the Exchange believes will be helpful for Participants in 
submitting their appeal requests in a timely manner. Furthermore, the 
proposal provides the Exchange Review Council panel additional time and 
flexibility to render decisions on requests for appeal in cases where a 
request is properly made after 3:30 p.m. on the day of the transaction 
or where the request is properly made the next trade day, and is 
designed to reduce administrative burden on the Exchange.
    Ultimately, the proposed changes to the appeal process are intended 
to align certain time frames with those of its affiliate in order to 
provide more consistent rules and procedures across the affiliated 
options exchanges owned by Nasdaq, Inc. Consistent rules and 
procedures, in turn, would simplify and streamline the regulatory 
requirements and increase the understanding of the Exchange's 
operations for Participants of the Exchange that are also members on 
the Exchange's affiliated options exchanges. Greater harmonization 
across the affiliated options exchanges will result in greater 
uniformity, rules that are easier to follow and understand, and more 
efficient regulatory compliance, thereby contributing to the protection 
of investors and the public interest. As such, the proposed rule change 
would foster cooperation and coordination with persons engaged in 
facilitating transactions in securities and would remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system.
    Lastly, the Exchange's proposal to amend Options 3, Section 1 (Days 
and Hours of Business) as described above will bring greater clarity, 
and ensure that this Rule conforms to the changes made in the recent 
filing to establish General 3, Section 1030, which governs the days the 
Exchange will be open for business.\8\ The Exchange believes that 
market participants would benefit from the increased clarity, thereby 
reducing potential confusion, and ensuring that market participants and 
investors can more easily navigate and understand the Exchange's rules.
---------------------------------------------------------------------------

    \8\ See supra note 5.
---------------------------------------------------------------------------

    For these reasons, the Exchange believes that the proposal is 
consistent with 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 it relates to the proposed 
changes to the appeal process under Options 3, Section 20(k), the 
changes are designed to provide greater harmonization among similar 
rules and processes across the Exchange's affiliated options exchanges, 
resulting in more efficient regulatory compliance for common members. 
For these reasons, the Exchange believes that the proposed rule change 
reflects this competitive environment and does not impose any undue 
burden on intermarket competition.

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 \9\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 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.
---------------------------------------------------------------------------

    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 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2022-023 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-2022-023. 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 (https://www.sec.gov/

[[Page 16504]]

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-2022-
023 and should be submitted on or before April 13, 2022.
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06088 Filed 3-22-22; 8:45 am]
BILLING CODE 8011-01-P