[Federal Register Volume 83, Number 160 (Friday, August 17, 2018)]
[Notices]
[Pages 41115-41116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17737]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83834; File No. SR-NASDAQ-2018-067]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Delete and Replace the Current Rules on Arbitration

August 13, 2018.
    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 August 9, 2018, 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 delete the current rules on arbitration 
(``Current Arbitration Rules''), currently under the 10000 Series 
(Rules 10001 through 10102), and adopt the Nasdaq ISE, LLC (``ISE'') 
rules on arbitration in Chapter 18 of the ISE's rulebook (``Proposed 
Arbitration Rules'') into General 6 in the Exchange's rulebook's 
(``Rulebook'') shell structure.\3\
---------------------------------------------------------------------------

    \3\ Recently, the Exchange added a shell structure to its 
Rulebook with the purpose of improving efficiency and readability 
and to align its rules closer to those of its five sister exchanges, 
Nasdaq BX, Inc.; Nasdaq PHLX LLC; Nasdaq ISE, LLC; Nasdaq GEMX, LLC; 
and Nasdaq MRX, LLC (``Affiliated Exchanges''). The shell structure 
currently contains eight (8) Chapters which, once complete, will 
apply a common set of rules to the Affiliated Exchanges. See 
Securities Exchange Act Release No. 82175 (November 29, 2017), 82 FR 
57494 (December 5, 2017) (SR-NASDAQ-2017-125).
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's 
website at http://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 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 delete the rules on arbitration, currently 
under the 10000 Series (Rules 10001 through 10102), and adopt the ISE 
rules on arbitration in Chapter 18 of the ISE's rulebook into General 6 
in the Exchange's Rulebook.
    The Exchange adopted the Current Arbitration Rules to ensure a fair 
and efficient manner in which to handle any dispute, claim or 
controversy arising out of, or in connection with, the business of any 
Member of the Exchange. To help administer the process of dispute 
resolution, the Exchange and FINRA are parties to a Regulatory 
Contract, pursuant to which FINRA has agreed to perform certain 
functions and provide access to certain services, including: member 
regulation and registration; non-real time market surveillance; 
examinations and investigations; and dispute resolution. FINRA 
currently operates the largest securities dispute resolution forum in 
the United States,\4\ and has given the Exchange access to these 
services. Under the Current Arbitration Rules, Members and associated 
persons of a Member are subject to the FINRA Code of Arbitration 
Procedure.
---------------------------------------------------------------------------

    \4\ http://www.finra.org/arbitration-and-mediation.
---------------------------------------------------------------------------

    Because the Affiliated Exchanges are also parties to similar 
Regulatory Contracts with FINRA that make their members and associated 
persons of such members subject to the FINRA Code of Arbitration 
Procedure, the Exchange believes it is pertinent that a common set of 
rules on arbitration be included in the General section of the 
Rulebook's shell. These rules will, pursuant to subsequent filings, 
then replace the existing arbitration rules for each of the Affiliated 
Exchanges.
    As part of the process of harmonizing these rules, staff evaluated 
the corresponding rules on arbitration at each of the Affiliated 
Exchanges. Staff have determined that the Proposed Arbitration Rules 
are the easiest to read and the most accessible, and do not

[[Page 41116]]

detract from, or omit, any of the substance of the Current Arbitration 
Rules.
    Therefore, the Exchange will adopt the Proposed Arbitration Rules 
and place them under the ``General 6 Arbitration'' of the shell's 
``General Equity and Options Rules'' section. As mentioned, these rules 
are already in place on ISE, and also apply to Nasdaq GEMX, LLC and 
Nasdaq MRX, LLC, which incorporate Chapter 18 of the ISE Rules by 
reference. Subsequently, the other Affiliated Exchanges plan to adopt 
these rules also.
    The relocation and harmonization of the arbitration rules is part 
of the Exchange's continued effort to promote efficiency and conformity 
of its processes with those of its Affiliated Exchanges.\5\ The 
Exchange believes that the adoption and placement of the Proposed 
Arbitration Rules to their new location in the shell will facilitate 
the use of the Rulebook by Members \6\ of the Exchange who are members 
of other Affiliated Exchanges. Moreover, the proposed changes are of a 
conforming nature and will not amend the substance of the adopted rules 
other than to update the language to that of the Proposed Arbitration 
Rules, and to make conforming cross-reference changes.
---------------------------------------------------------------------------

    \5\ See footnote 3.
    \6\ Exchange Rule 0120(i).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ 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 promoting efficiency and conformity of the Exchange's processes with 
those of the Affiliated Exchanges and to make the Exchange's Rulebook 
easier to read and more accessible to its Members. The Exchange 
believes that the adoption and harmonization of the arbitration rules 
and cross-reference updates are of a non-substantive nature.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 changes do not 
impose a burden on competition because, as previously stated, they are 
(i) of a non-substantive nature, (ii) intended to harmonize the 
Exchange's rules with those of its Affiliated Exchanges, and (iii) 
intended to organize the Rulebook in a way that it will ease the 
Members' navigation and reading of the rules across the Affiliated 
Exchanges.

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 requested a waiver of 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: (i) 
necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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-NASDAQ-2018-067 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-2018-067. 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 wedbsite (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-NASDAQ-2018-067 and should 
be submitted on or before September 7, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

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

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-17737 Filed 8-16-18; 8:45 am]
 BILLING CODE 8011-01-P