[Federal Register Volume 84, Number 109 (Thursday, June 6, 2019)]
[Notices]
[Pages 26498-26500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11801]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85987; File No. SR-NASDAQ-2019-046]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Relocate the Order Audit Trail System Rules
May 31, 2019.
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 May 23, 2019, The Nasdaq Stock Market LLC (``Nasdaq'' 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 (a) rename the title of Equity 5 ``Order
Audit Trail Services'' under the Exchange's rulebook (``Rulebook'')
shell structure \3\ to Equity 5 ``Order Audit Trail System''; (b)
relocate its current Rule 7000A Series concerning the Order Audit Trail
System (``OATS'') to Equity 5 ``Order Audit Trail System'' (as renamed
by this proposal); and (c) make conforming cross-reference changes in
Rules 5320A and IM-9216.
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\3\ In 2017, 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. (``BX''); Nasdaq PHLX LLC (``Phlx''); Nasdaq ISE,
LLC; Nasdaq GEMX, LLC; and Nasdaq MRX, LLC (``Affiliated
Exchanges''). See Securities Exchange Act Release No. 82175
(November 29, 2017), 82 FR 57494 (December 5, 2017) (SR-NASDAQ-2017-
125). This proposed change is the first of a total of three, which
will move the OATS rules of Nasdaq, BX, and Phlx to their respective
shell structures.
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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 (a) rename the title of Equity 5 ``Order
Audit Trail Services'' under the Rulebook shell structure to Equity 5
``Order Audit Trail System''; (b) relocate its current Rule 7000A
Series concerning OATS to Equity 5 ``Order Audit Trail System'' (as
renamed by this proposal); and (c) make conforming cross-reference
changes in Rules 5320A and IM-9216, as detailed below.
1. Rename the Title of Equity 5
The title of Equity 5 is currently ``Order Audit Trail Services.''
The word ``Services'' was erroneously inserted when adopting the shell.
The accurate word is ``System,'' which reflects the name of the FINRA
Order Audit Trail System to which the rules thereunder apply.
Consequently, the Exchange is making a corrective change to the name of
the rule.
2. Relocation of the OATS Rules
The Exchange, as part of its continued effort to promote efficiency
and the conformity of its rule structure with those of the Affiliated
Exchanges,\4\ and the goal of harmonizing and making its rule structure
uniform, proposes to relocate the OATS rules, currently under the Rule
7000A Series, into Equity 5 ``Order Audit Trail System'' of the shell
structure. Specifically, the Exchange will add the word ``Section''
[[Page 26499]]
and renumber the Rule 7000A Series as detailed in the table below:
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\4\ See footnote 3.
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7000A Series Equity 5
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7000A.................................... Deleted.
7400A.................................... Equity 5.
7410A.................................... Section 1.
7420A.................................... Section 2.
7430A.................................... Section 3.
7440A.................................... Section 4.
7450A.................................... Section 5.
7460A.................................... Section 6.
7470A.................................... Deleted.
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The Exchange believes that the relocation of the OATS rules will
facilitate the use of the Rulebook by Members \5\ of the Exchange,
including BX and Phlx members, and other market participants. Moreover,
the proposed changes are of a non-substantive nature and they will not
amend the relocated rules, other than to update their numbers as
previously detailed.
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\5\ Exchange Rule 0120(i).
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3. Cross-Reference Updates
In connection with the changes described above, the Exchange
proposes to update all internal and external cross-references in the
Rulebook that direct the reader to the current placement of the OATS
rules and/or any of their subsections. Specifically, the Exchange will
update a cross-reference in Nasdaq Rule 5320A to OATS Rule 7440A, which
will be renumbered Equity 5, Section 4. Similarly, the Exchange
proposes to update the cross-reference in IM-9216 (Violations
Appropriate for Disposition Under Plan Pursuant to SEC Rule 19d-
1(c)(2)) that currently points to ``Rules 6954 and 6955.'' Rules 6954
and 6955 were respectively renumbered as OATS Rules 7440A and 7450A in
2012.\6\ This cross-reference will be updated as Equity 5, Sections 4
and 5.
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\6\ See Securities Exchange Act Release No. 68153 (November 5,
2012), 77 FR 67409 (November 9, 2012) (SR-NASDAQ-2012-124).
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The Exchange also proposes to correct a cross-reference in current
OATS Rule 7460A (to be renumbered Equity 5, Section 6) that points to
Nasdaq Rule 2110. Rule 2110 (Standards of Commercial Honor and
Principles of Trade) was renumbered as Nasdaq Rule 2010A and,
therefore, its cross-reference in the Equity 5, Section 6 will be
updated accordingly.\7\
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\7\ Id.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\9\ 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 structural conformity of the Exchange's
rules with those of the Affiliated Exchanges and to make the Exchange's
Rulebook, in the present case, the OATS rules, easier to read and more
accessible to its Members, including BX and Phlx members, and market
participants. The Exchange believes that the correction to Equity 5's
title, relocation of the OATS rules, and cross-reference updates are of
a non-substantive nature.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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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 (i)
are of a non-substantive nature, (ii) are intended to harmonize the
structure of the Exchange's rules with those of its Affiliated
Exchanges, and (iii) are intended to organize the Rulebook in a way
that it will ease the Members', including BX and Phlx members, and
market participants' navigation and reading of the rules.
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 \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \12\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the proposed rule change may become operative upon filing. Waiver
of the operative delay would allow the Exchange to promptly relocate
the OATS rules and continue to reorganize its Rulebook to promote
efficiency and structural consistency between the Exchange's rules and
those of BX and Phlx. Therefore, the Commission believes that waiver of
the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission hereby
waives the operative delay and designates the proposed rule change
operative upon filing.\14\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule'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 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 [email protected]. Please include
File Number SR-NASDAQ-2019-046 on the subject line.
[[Page 26500]]
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-2019-046. 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-NASDAQ-2019-046 and should be submitted
on or before June 27, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11801 Filed 6-5-19; 8:45 am]
BILLING CODE 8011-01-P