Document ID: SEC-2023-0487-0001
Agency: sec
Document Type: Notice
Title: Order: Application by Long-Term Stock Exchange, Inc. for an Exemption
Posted Date: 2023-05-04T04:00Z

[Federal Register Volume 88, Number 86 (Thursday, May 4, 2023)]
[Notices]
[Pages 28650-28651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-09445]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97399]

Order Granting Application by Long-Term Stock Exchange, Inc. for 
an Exemption, Pursuant to Section 36(a) of the Exchange Act, From the 
Rule Filing Requirements of Section 19(b) of the Exchange Act With 
Respect to Certain Rules Incorporated by Reference

April 28, 2023.
    The Long-Term Stock Exchange, Inc. (``LTSE'' or ``Exchange'') filed 
with the Securities and Exchange Commission (the ``Commission'' or 
``SEC'') an application \1\ for an exemption under Section 36(a) of the 
Securities Exchange Act of 1934 (``Exchange Act'') \2\ and Rule 0-12 
thereunder \3\ from the rule filing requirements of Section 19(b) of 
the Exchange Act \4\ with respect to the rules of the Exchange relating 
to continuing education. Section 36 of the Exchange Act authorizes the 
Commission to conditionally or unconditionally exempt any person, 
security, or transaction, or any class or classes of persons, 
securities, or transactions, from any provision or provisions of the 
Exchange Act or of any rule or regulation thereunder, to the extent 
that such exemption is necessary or appropriate in the public interest, 
and is consistent with the protection of investors.
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    \1\ See Letter from James G. Buckley, Chief Regulatory Officer, 
LTSE, to Vanessa Countryman, Office of the Secretary, SEC, dated 
April 19, 2023 (``Exemptive Request'').
    \2\ 15 U.S.C. 78mm.
    \3\ 17 CFR 240.0-12 (Commission procedures for filing 
applications for orders for exemptive relief under Section 36 of the 
Exchange Act).
    \4\ 15 U.S.C. 78s(b).
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    LTSE has requested that the Commission grant the Exchange an 
exemption from the rule filing requirements of Section 19(b) of the 
Exchange Act for changes to LTSE Rule 2.154 (Continuing Education) 
effected solely by virtue of changes to Financial Industry Regulatory 
Authority, Inc. (``FINRA'') Rule 1240 (Continuing Education) that are 
incorporated by reference into LTSE Rule 2.154. Specifically, the 
Exchange requests that it be permitted to incorporate by reference a 
change made to FINRA Rule 1240 without the need for the Exchange to 
separately file a similar proposed rule change pursuant to Section 
19(b) of the Exchange Act. The Exchange believes that this exemption is 
appropriate because it will promote consistency between LTSE and FINRA 
rules pertaining to continuing education, which are not trading 
rules.\5\
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    \5\ Exemptive Request, supra note 1, at pp. 1-2. A self-
regulatory organization (``SRO'') wishing to incorporate rules of 
another SRO by reference may submit a written request for an order 
exempting it from the requirement in Section 19(b) of the Exchange 
Act to file proposed rule changes relating to the rules incorporated 
by reference, if, among other things, the rules to be incorporated 
are categories of rules (rather than individual rules within a 
category) that are not trading rules (e.g., the SRO has requested 
incorporation of rules such as margin, suitability, or arbitration). 
See also Exchange Act Release No. 49260 (Feb. 17, 2004), 69 FR 8500 
(Feb. 24, 2004).
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    As a condition of the requested exemption, LTSE has agreed to 
provide written notice to its members whenever a change is proposed to 
FINRA continuing education rules that are incorporated by reference 
into LTSE's continuing education rules.\6\ Such notice would alert the 
Exchange's members to the FINRA proposed rule change and give them an 
opportunity to comment on the proposal.\7\ The Exchange would similarly 
inform members in writing when the Commission approves any such 
proposed rule change.\8\
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    \6\ LTSE will provide such notice via a posting on the same 
website location where it posts its own rule filings pursuant to and 
within the timeframe required by Rule 19b-4(1) under the Exchange 
Act. The website posting will include a link to the location on 
FINRA's website where the applicable proposed rule change is posted. 
Exemptive Request, supra note 1, at p. 2, n.7.
    \7\ Exemptive Request, supra note 1, at p. 2.
    \8\ Id.
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    The Commission has issued exemptions similar to LTSE's request.\9\ 
In granting one such exemption in 2022, the Commission repeated an 
earlier Commission statement that it would consider similar future 
exemption requests from other SROs, provided that:
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    \9\ See, e.g., Exchange Act Release No. 94707 (Apr. 12, 2022), 
87 FR 22962 (Apr. 18, 2022) (order granting The Nasdaq Stock Market 
LLC and five affiliated national securities exchanges an exemption 
under Section 36(a) of the Exchange Act from the rule filing 
requirements of Section 19(b) of the Exchange Act with respect to 
certain of its rules incorporating by reference FINRA rules); 
Exchange Act Release No. 83040 (Apr. 12, 2018), 83 FR 17198 (Apr. 
18, 2018) (order granting MIAX PEARL, LLC, an exemption under 
Section 36(a) of the Exchange Act from the rule filing requirements 
of Section 19(b) of the Exchange Act with respect to certain of its 
rules incorporating by reference rules of the Miami International 
Securities Exchange, LLC); Exchange Act Release No. 61534 (Feb. 18, 
2010), 75 FR 8760 (Feb. 25, 2010) (order granting BATS Exchange, 
Inc., an exemption under Section 36(a) of the Exchange Act from the 
rule filing requirements of Section 19(b) of the Exchange Act with 
respect to certain of its rules incorporating by reference rules of 
the Chicago Board Options Exchange, Inc., FINRA, and the New York 
Stock Exchange, LLC).
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     An SRO wishing to incorporate rules of another SRO by 
reference has submitted a written request for an order exempting it 
from the requirement in

[[Page 28651]]

Section 19(b) of the Exchange Act to file proposed rule changes 
relating to the rules incorporated by reference, has identified the 
applicable originating SRO(s), together with the rules it wants to 
incorporate by reference, and otherwise has complied with the 
procedural requirements set forth in the Commission's release governing 
procedures for requesting exemptive orders pursuant to Rule 0-12 under 
the Exchange Act;
     The incorporating SRO has requested incorporation of 
categories of rules (rather than individual rules within a category) 
that are not trading rules (e.g., the SRO has requested incorporation 
of rules such as margin, suitability, or arbitration); and
     The incorporating SRO has reasonable procedures in place 
to provide written notice to its members each time a change is proposed 
to the incorporated rules of another SRO.\10\
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    \10\ See Exchange Act Release No. 94707 (Apr. 12, 2022), 87 FR 
22962 (Apr. 18, 2022).
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    The Exchange has satisfied each of these conditions. Moreover, 
granting LTSE an exemption from the rule filing requirements under 
Section 19(b) of the Exchange Act will promote efficient use of 
Commission and Exchange resources by avoiding duplicative rule filings 
based on simultaneous changes to identical rule text sought by more 
than one SRO.\11\ The Commission therefore finds it appropriate in the 
public interest, and consistent with the protection of investors, to 
exempt the Exchange from the rule filing requirements under Section 
19(b) of the Exchange Act with respect to the above-described rule the 
Exchange has incorporated by reference.
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    \11\ See, e.g., 83 FR 17198, 17199 & n.15.
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    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act,\12\ that LTSE is exempt from the rule filing requirements of 
Section 19(b) of the Exchange Act with respect to a change to LTSE Rule 
2.154 resulting solely from changes made to FINRA Rule 1240 without the 
need for LTSE to separately file, pursuant to Section 19(b) of the 
Exchange Act, a proposed rule change similar to the one filed by FINRA, 
provided that LTSE promptly provides written notice to its members 
whenever a change is proposed to FINRA Rule 1240, and provided that it 
informs its members in writing when the Commission approves any such 
proposed change.
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    \12\ 15 U.S.C. 78mm.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(76).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-09445 Filed 5-3-23; 8:45 am]
BILLING CODE 8011-01-P