Document ID: SEC-2021-1336-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq BX, Inc.
Posted Date: 2021-10-04T04:00Z

[Federal Register Volume 86, Number 189 (Monday, October 4, 2021)]
[Notices]
[Pages 54770-54772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-21481]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93143; File No. SR-BX-2021-042]

Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Establish a New 
Rule Requiring Members To Input Accurate Information Into BX Systems

September 28, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 54771]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 22, 2021, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``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 establish a new rule applicable to the 
Nasdaq BX Equities Market (the ``Equities Market'') that explicitly 
requires members to input accurate information into BX systems.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/bx/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
    In 2009, The Nasdaq Stock Market LLC (``Nasdaq'') adopted 
provisions that required its members to input accurate information into 
the Nasdaq Market Center and Nasdaq Options Market.\3\ The Exchange 
proposes to adopt a rule identical to Nasdaq Equity 2, Section 3(a)(6) 
\4\ that makes clear its members' responsibility to input accurate 
quotation and order information into the Equities Market.\5\ The 
Equities Market requires entry of certain information to post a quote 
or to enter an order. Such information, among other things, identifies 
the member, the size and price of the order or quote, and the member's 
capacity in placing an order. Accurate trade and quote information is 
fundamental to the operation of an efficient and fair market.
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    \3\ Securities Exchange Act Release No. 59547 (March 10, 2009), 
74 FR 11386 (March 17, 2009) (SR-NASDAQ-2009-014).
    \4\ Nasdaq Equity 2, Section 3 was previously numbered Nasdaq 
Rule 4611; however, the rule was renumbered and relocated in 2020. 
See Securities Exchange Act Release No. 34-90577 (December 7, 2020), 
85 FR 80202 (December 11, 2020) (SR-NASDAQ-2020-079).
    \5\ As defined in BX Equity 1, Section 1(a)(6).
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    Moreover, the information input by members when posting a quote or 
placing an order is used for purposes of policing the Equities Market. 
For instance, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') conducts trade abuse surveillances of the Equities Market 
on the Exchange's behalf. The trade abuse surveillances use capacity 
information input by members. A member's capacity in a trade concerns 
whether the member is acting as an agent, principal, or ``riskless'' 
principal in the transaction. Accordingly, accurate input of capacity 
information is of fundamental regulatory importance. BX does not have a 
rule that makes an explicit statement regarding a member's obligation 
to input accurate information into the Equities Market. (That said, BX 
believes that disciplinary cases against members entering inaccurate or 
incomplete information may be brought appropriately under BX General 9, 
Section 1(a), which requires members to observe high standards of 
commercial honor and just and equitable principles of trade. BX General 
9, Section 1(a) also protects the investing public and the securities 
industry from dishonest practices that are unfair to investors or 
hinder the functioning of a free and open market, even though those 
practices may not be illegal or violate a specific rule or regulation.) 
Because of the regulatory importance of accurate information input into 
the Equities Market, the Exchange believes rules that directly address 
members' obligation to provide accurate information are appropriate. 
The proposed rule makes clear the members' obligation to input accurate 
information into the Equities Market, and that failure to do so would 
be considered a violation of BX rules.
    The Exchange notes that FINRA has rules that require the accurate 
entry of certain trade information into its systems. For example, FINRA 
Rule 7330(d) requires FINRA members to report to the OTC Reporting 
Facility certain specific trade-related information. A failure to 
provide such information represents a violation of FINRA rules, and may 
result in disciplinary action. FINRA has substantially similar 
requirements for other trade reporting systems it operates.
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 the proposal 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 regulating, clearing, settling, 
processing information with respect to, and 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. The proposed amendments will 
serve to promote the accuracy of information input into the Equities 
Market. Accurate information is necessary for the efficient and fair 
operation of the Equities Market, and will assist the Exchange in 
surveilling the markets for fraudulent activity.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange also believes that the creation of this rule will 
bring greater transparency and will harmonize its rules with those of 
its affiliated exchange, Nasdaq, by giving its members the ability to 
compare the rules in their respective rulebooks.

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 Exchange believes that the 
proposed amendments do not impose an undue burden on competition 
because the proposed rule will make clear the members' obligation to 
input accurate quotation and order information into the Equities 
Market. Moreover, the proposed rule will align the rules of the 
Exchange closer to the rules of The Nasdaq Stock Market, which 
previously adopted an identical provision.

[[Page 54772]]

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 \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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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    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-BX-2021-042 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-BX-2021-042. 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-BX-2021-042 and should be submitted on 
or before October 25, 2021.
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    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-21481 Filed 10-1-21; 8:45 am]
BILLING CODE 8011-01-P