Document ID: SEC-2022-1077-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq PHLX, LLC
Posted Date: 2022-08-11T04:00Z

[Federal Register Volume 87, Number 154 (Thursday, August 11, 2022)]
[Notices]
[Pages 49635-49637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17222]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95435; File No. SR-Phlx-2022-32]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend the 
Expiration Date of the Temporary Amendments Concerning Video Conference 
Hearings

August 5, 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 July 26, 2022, Nasdaq PHLX LLC (``Phlx'' 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 Exchange has designated the 
proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. 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.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the expiration date of the 
temporary amendments in SR-Phlx-2020-53 from July 31, 2022, to October 
31, 2022.\4\ The proposed rule change would not make any changes to the 
text of the Exchange rules.
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    \4\ If the Exchange seeks to provide additional temporary relief 
from the rule requirements identified in this proposed rule change 
beyond October 31, 2022, the Exchange will submit a separate rule 
filing to further extend the temporary extension of time. The 
amended Exchange rules will revert to their original form at the 
conclusion of the temporary relief period and any extension thereof.
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    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/phlx/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 continue to harmonize Exchange Rule 
General 3, Section 16 with recent changes by the Financial Industry 
Regulatory Authority, Inc. (``FINRA'') to its Rule 1015 in response to 
the COVID-19 global health crisis and the corresponding need to 
restrict in-person

[[Page 49636]]

activities.\5\ The Exchange originally filed proposed rule change SR-
Phlx-2020-53, which allows the Exchange Review Council (``ERC'') to 
conduct hearings in connection with appeals of Membership Application 
Program decisions, on a temporary basis, by video conference, if 
warranted by the current COVID-19-related public health risks posed by 
an in-person hearing. In March 2022, the Exchange filed a proposed rule 
change, SR-Phlx-2022-15, to extend the expiration date of the temporary 
amendments in SR-Phlx-2020-53 from March 31, 2022, to July 31, 2022.\6\ 
Even though it has been more than two years since the World Health 
Organization declared COVID-19 a pandemic, uncertainty still remains 
around this disease. The continued presence of COVID-19 variants 
including the quickly emerging Omicron BA.4 and BA.5 subvariants, 
dissimilar vaccination rates throughout the United States, and the 
current medium to high COVID-19 community levels in many states 
indicate that COVID-19 remains an active and real public health 
concern.\7\ Due to the uncertainty and the lack of a clear timeframe 
for a sustained and widespread abatement of COVID-19-related health 
concerns and corresponding restrictions,\8\ the Exchange believes that 
there is a continued need for temporary relief beyond July 31, 2022. 
Accordingly, the Exchange proposes to extend the expiration date of the 
temporary rule amendments in SR-Phlx-2020-53 from July 31, 2022, to 
October 31, 2022.
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    \5\ See Securities Exchange Act Release No. 95281 (July 14, 
2022), 87 FR 43335 (July 20, 2022) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2022-018) (``FINRA Filing''). The 
Exchange notes that the FINRA Filing also proposed to temporarily 
amend FINRA Rules 9261, 9524, and 9830, which govern hearings in 
connection with appeals of disciplinary actions, eligibility 
proceedings, and temporary and permanent cease and desist orders. 
The Exchange's Rules 9261, 9524, and 9830 incorporate by reference 
The Nasdaq Stock Market LLC rules, which are the subject of a 
separate filing. See SR-NASDAQ-2022-044. Therefore, the Exchange is 
not proposing to adopt that aspect of the FINRA Filing.
    \6\ See Securities Exchange Act Release No. 94611 (April 5, 
2022), 87 FR 21230 (April 11, 2022) (Notice of Filing and Immediate 
Effectiveness of File No. SR-Phlx-2022-15); see also Securities 
Exchange Act Release No. 93853 (December 22, 2021), 86 FR 74164 
(December 29, 2021) (Notice of Filing and Immediate Effectiveness of 
File No. SR-Phlx-2021-75); Securities Exchange Act Release No. 92906 
(September 9, 2021), 86 FR 51404 (September 15, 2021) (Notice of 
Filing and Immediate Effectiveness of File No. SR-Phlx-2021-49); 
Securities Exchange Act Release No. 91766 (May 4, 2021), 86 FR 25014 
(May 10, 2021) (Notice of Filing and Immediate Effectiveness of File 
No. SR-Phlx-2021-27); Securities Exchange Act Release No. 90758 
(December 21, 2020), 85 FR 85782 (December 29, 2020) (Notice of 
Filing and Immediate Effectiveness of File No. SR-Phlx-2020-053).
    \7\ For example, there has been a notable upward trend in the 
number of daily COVID-19 cases in the United States since April 1, 
2022. See https://covid.cdc.gov/covid-data-tracker/#trends_dailycases. In addition, on June 9, 2022, the Biden 
Administration announced its operational plan for COVID-19 
vaccinations for children under the age of five. See https://www.whitehouse.gov/briefing-room/statements-releases/2022/06/09/fact-sheetbiden-administration-announces-operational-plan-for-covid-19-vaccinations-for-children-under-5/.
    \8\ For instance, the Centers for Disease Control (``CDC'') 
recommends that people wear a mask in public indoor settings in 
areas with a high COVID-19 community level regardless of vaccination 
status or individual risk. See https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/about-face-coverings.html. The CDC also 
recommends that people wear a mask in indoor areas of public 
transportation and transportation hubs to protect themselves and 
those around them and help keep travel and public transportation 
safer for everyone. See https://www.cdc.gov/coronavirus/2019-ncov/travelers/masks-public-transportation.html. Furthermore, numerous 
states currently have mask mandates in certain settings, such as 
healthcare and correctional facilities.
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    As set forth in SR-Phlx-2020-53, the Exchange also relies on COVID-
19 data and criteria to determine whether the current public health 
risks presented by an in-person hearing may warrant a hearing by video 
conference. Based on that data and criteria, the Exchange does not 
believe the COVID-19-related health concerns necessitating this relief 
will meaningfully subside by July 31, 2022, and believes that there 
will be a continued need for this temporary relief beyond that date. 
Accordingly, the Exchange proposes to extend the expiration date of the 
temporary rule amendments originally set forth in SR-Phlx-2020-53 from 
July 31, 2022, to October 31, 2022. The extension of the temporary 
amendments allowing for specified ERC hearings to proceed by video 
conference will allow the Exchange's critical adjudicatory functions to 
continue to operate effectively in these extraordinary circumstances--
enabling the Exchange to fulfill its statutory obligations to protect 
investors and maintain fair and orderly markets--while also protecting 
the health and safety of hearing participants.
    The Exchange has filed the proposed rule change for immediate 
effectiveness and has requested that the SEC waive the requirement that 
the proposed rule change not become operative for 30 days after the 
date of the filing, so the Exchange can implement the proposed rule 
change immediately.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\9\ in general, and 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, by providing greater harmonization between the Exchange rules 
and FINRA rules of similar purpose,\11\ resulting in less burdensome 
and more efficient regulatory compliance.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ See supra note 5.
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    The proposed rule change, which extends the expiration date of the 
temporary amendments to the Exchange rules set forth in SR-Phlx-2020-
53, will continue to aid the Exchange's efforts to timely conduct 
hearings in connection with its core adjudicatory functions. Given the 
current and frequently changing COVID-19 conditions and the uncertainty 
around when those conditions will see meaningful, widespread and 
sustained improvement, without this relief allowing ERC hearings to 
proceed by video conference, the Exchange might be required to postpone 
some or almost all hearings indefinitely. The Exchange must be able to 
perform its critical adjudicatory functions to fulfill its statutory 
obligations to protect investors and maintain fair and orderly markets. 
As such, this relief is essential to the Exchange's ability to fulfill 
its statutory obligations and allows hearing participants to avoid the 
serious COVID-19-related health and safety risks associated with in-
person hearings.
    Among other things, this relief will allow the ERC to timely 
provide members, disqualified individuals and other applicants an 
approval or denial of their applications. As set forth in detail in SR-
Phlx-2020-53, this temporary relief allowing ERC hearings to proceed by 
video conference accounts for fair process considerations and will 
continue to provide fair process while avoiding the COVID-19-related 
public health risks for hearing participants. Accordingly, the proposed 
rule change extending this temporary relief is in the public interest 
and consistent with the Act's purpose.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the temporary proposed rule 
change will impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act. As set forth in 
SR-Phlx-2020-53, the proposed rule change is intended solely

[[Page 49637]]

to extend temporary relief necessitated by the continued impacts of the 
COVID-19 outbreak and the related health and safety risks of conducting 
in-person activities. The Exchange believes that the proposed rule 
change will prevent unnecessary impediments to its operations, 
including its critical adjudicatory processes, and its ability to 
fulfill its statutory obligations to protect investors and maintain 
fair and orderly markets that would otherwise result if the temporary 
amendments were to expire on July 31, 2022.

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) 
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.
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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, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission 
may 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 proposal 
may become operative immediately upon filing. The Exchange has 
indicated that there is a continued need to extend the temporary relief 
because the Exchange does not believe the COVID-19 related health 
concerns necessitating this relief will meaningfully subside by July 
31, 2022.\16\ Importantly, extending the temporary relief provided in 
SR-Phlx-2020-53 immediately upon filing and without a 30-day operative 
delay will allow the Exchange to continue critical adjudicatory and 
review processes in a reasonable and fair manner and meet its critical 
investor protection goals, while also following best practices with 
respect to the health and safety of hearing participants.\17\ The 
Commission also notes that this proposal extends without change the 
temporary relief previously provided by SR-Phlx-2020-53.\18\ As 
proposed, the temporary changes would be in place through October 31, 
2022 and the amended rules will revert back to their original state at 
the conclusion of the temporary relief period and, if applicable, any 
extension thereof.\19\ For these reasons, the Commission believes that 
waiver of the 30-day operative delay for this proposal is consistent 
with the protection of investors and the public interest. Accordingly, 
the Commission hereby waives the 30-day operative delay and designates 
the proposal operative upon filing.\20\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra Item II.
    \17\ See FINRA Filing, at 43337-38 (noting the same in granting 
FINRA's request to waive the 30-day operative delay so that SR-
FINRA-2022-018 would become operative immediately upon filing).
    \18\ See supra note 6.
    \19\ See supra note 4. As noted above, the Exchange states that 
if it requires temporary relief from the rule requirements 
identified in this proposal beyond October 31, 2022, it may submit a 
separate rule filing to extend the effectiveness of the temporary 
relief under these rules.
    \20\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change'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 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2022-32 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-Phlx-2022-32. 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-Phlx-2022-32 and should be submitted on 
or before September 1, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17222 Filed 8-10-22; 8:45 am]
BILLING CODE 8011-01-P