Document ID: SEC-2015-0132-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2015-01-23T05:00Z

[Federal Register Volume 80, Number 15 (Friday, January 23, 2015)]
[Notices]
[Pages 3689-3691]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-01066]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74078; File No. SR-NASDAQ-2015-004]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Membership Application

January 16, 2015.
    Pursuant to Section 19(b)(1) of the Securities Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 5, 2015, 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 NASDAQ. 
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

    NASDAQ proposes to amend Rule 1013 titled ``New Member 
Application'' to include an expedited application process for firms 
that are already approved members of NASDAQ OMX PHLX LLC (``PHLX'').
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.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. 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,

[[Page 3690]]

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 purpose of the proposed rule change is to amend NASDAQ Rule 
1013(a)(5), entitled Applicants That Are Members of an Association or 
Another Exchange, to permit an expedited review for new member 
applications seeking NASDAQ membership provided those applicants are 
approved members of PHLX.
    Specifically, Exchange Rule 1013(a)(5)(C) currently permits the 
Exchange to accept applicants that gained membership at Financial 
Industry Regulatory Authority (``FINRA'') or NASDAQ OMX BX, Inc. 
(``BX'') when considering a NASDAQ new member application. Applicants 
who are approved members of FINRA or BX are eligible for an abbreviated 
waive-in application eliminating the submission and review of 
duplicative supplemental material that has already been submitted and 
reviewed in connection with a FINRA or BX new member application.
    At this time, the Exchange proposes to extend the abbreviated 
application process already in place for approved FINRA and/or BX 
members to PHLX members. The Exchange notes that the PHLX 
qualifications are the same as those applicable to NASDAQ membership 
requirements. PHLX approved members seeking NASDAQ membership will be 
required to submit a fully executed Waive-In Membership Application and 
Membership Agreement but will not be required to submit any duplicative 
documentation that was previously provided as part of the PHLX 
application. These PHLX members would still be required to provide 
additional information if there has been a material change in status 
from its [sic] original application with PHLX. Applicants will be 
required to attest that the information provided as part of previously 
conducted new membership review remains complete and accurate.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \3\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \4\ 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 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.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Today, the NASDAQ Membership Department performs similar functions 
when reviewing new member applications for NASDAQ, BX and PHLX.\5\ The 
Membership Department reviews: Applicant business plans, clearing 
arrangements, FOCUS reports, organizational charts, and written 
supervisory procedures for applicants desiring membership in any of the 
aforementioned markets. These membership requirements include, but are 
not limited to, review of registration as a Broker Dealer with the 
Commission, a net capital review, qualification of associated persons 
and examining written supervisory procedures. The same material is 
considered for each new member review conducted by FINRA on behalf of 
NASDAQ.
---------------------------------------------------------------------------

    \5\ Today, FINRA conducts the new member application reviews for 
NASDAQ and BX pursuant to a 17d-2 agreement and Regulatory Services 
Agreement. These application reviews are administered by FINRA and 
subject to NASDAQ's final review and decision.
---------------------------------------------------------------------------

    NASDAQ believes that this proposed amendment is consistent with its 
current practices today when reviewing applications for members of BX 
and FINRA. NASDAQ proposes this rule change to harmonize its affiliated 
exchanges' rules to provide applicants similar application procedures 
on its markets. The PHLX new member review is consistent with the 
NASDAQ new member review. NASDAQ believes that applicants that are 
members of PHLX are eligible for the waive-in process when seeking 
membership on NASDAQ similar to BX and FINRA members.
    NASDAQ believes that the proposed rule change would eliminate the 
duplicate review for prospective NASDAQ applicants that were approved 
for membership by PHLX. The waive-in process will promote efficiency 
with respect to the Exchange's membership review process and reduce the 
burden on applicants that have already been approved for membership on 
PHLX by reducing the duplicative information and documentation required 
to be provided to the Exchange. As a result, Exchange staff will be 
able to focus its regulatory efforts on reviewing any material changes 
or new information that may affect the applicant's eligibility for 
Exchange membership.
    This proposed rule change does not affect the protection of 
investors as NASDAQ will maintain the vigorous membership review that 
is conducted today when reviewing PHLX members applications.

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 waive-in process 
for approved PHLX members will not impose any burden on competition, 
but rather it will remove unnecessary burdens that currently exist for 
PHLX member applicants seeking NASDAQ membership. The proposal will 
eliminate the redundant review process for PHLX members that currently 
does not exist for FINRA and BX members applying to become NASDAQ 
members.

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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\6\ 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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

[[Page 3691]]

     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2015-004 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549.

All submissions should refer to File Number SR-NASDAQ-2015-004. 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 Web site (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 Web site 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 such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASDAQ-2015-004 and should 
be submitted on or before February 13, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-01066 Filed 1-22-15; 8:45 am]
BILLING CODE 8011-01-P