Federal Register, Volume 85 Issue 166 (Wednesday, August 26, 2020)

[Federal Register Volume 85, Number 166 (Wednesday, August 26, 2020)]
[Notices]
[Pages 52645-52650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18680]

[[Page 52645]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89623; File No. SR-NASDAQ-2020-045]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Update Obsolete References to NASD Rules in the Nasdaq Rulebook

August 20, 2020.
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 7, 2020, 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 update obsolete references to NASD rules
in the Nasdaq rulebook (``Rulebook'') and make other related changes.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/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 2008, the Financial Industry Regulatory Authority (FINRA) began
a process to harmonize and streamline its rules by retiring,
consolidating, and relocating NASD rules into the FINRA rulebook.\3\
Consistent with those changes, the Exchange is proposing to replace
outdated NASD references in its Rulebook, delete unnecessary or
duplicative rule text, and consolidate certain Nasdaq rules.
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\3\ See Information Notice, March 28, 2008 (Rulebook
Consolidation Process) at https://www.finra.org/sites/default/files/NoticeDocument/p038121.pdf.
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Generally, where appropriate, the Exchange will replace the term
``Association'' and the ``NASD'' acronym with the acronym ``FINRA.''
Specifically, Nasdaq will provide cites to the updated FINRA rules and
current internal references as provided in the relocated FINRA rules.
Additionally, the Exchange proposes to update internal cross-references
as necessary.
A. Global Changes
As previously indicated, Nasdaq proposes to replace the terms
``Association'' and/or ``NASD'' with the term ``FINRA,'' without making
other accompanying changes to the rules (this will also include a few,
necessary grammatical changes, such as removing where appropriate the
word ``the''). Accordingly, the Exchange will update Rules 2830; 3360;
11210; IM-11710; 11860; 11870; General 1; General 2, Section 5; General
2, Section 7; General 9, Section 21; General 9, Section 33; and Equity
7, Section 111. The Exchange notes that it will not update references
to NASD notices in its Rulebook. Specifically, the notices referenced
in General 9, Section 20(e) (``NASD Notice to Members 97-19'') and Rule
4630(d) (``NASD Notice to Members 91-45'') will remain unchanged.
B. Specific Rule Changes
The Exchange proposes the following changes to capture the
amendments and relocation of rules in the FINRA rulebook. Additionally,
the cross-references updates are intended to keep the Nasdaq rules
aligned with their corresponding FINRA rules:
Nasdaq Rule 2830. Investment Company Securities
The Exchange proposes to update the NASD Rule 2830 reference in
this rule and replace it with a reference to FINRA Rule 2341
(``Investment Company Securities''). FINRA Rule 2341 was adopted
without any substantive changes to the NASD rule text.\4\
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\4\ See Securities Exchange Act Release No. 78130 (June 22,
2016), 81 FR 42016 (June 28, 2016) (SR-FINRA-2016-019).
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Moreover, to be consistent with cross-reference updates in current
FINRA Rule 2341, the Exchange will update the cross-reference to NASD
Rule 2820 with FINRA Rule 2320. Additionally, the Exchange will update
Rule 2830(b)(3) by replacing the NASD Rule 2420 reference with FINRA
Rule 2040 and update the Nasdaq rule text to track the text of FINRA
Rule 2040(a). Finally, the Exchange will replace the NASD Rule 2230
reference with FINRA Rule 2232.
Nasdaq Rule 3360. Short-Interest Reporting
In 2008, FINRA Rule 4560 was adopted to include the short interest
reporting requirements of the substantially similar NASD Rule 3360 and
Incorporated NYSE Rules 421(1) and 421.10 with non-substantive changes
to the NASD rule text.\5\ In 2010, FINRA made further amendments to the
rule that were intended to eliminate the definition of ``OTC Equity
Security'' in FINRA Rule 4560 (Short-Interest Reporting) and to clarify
that the rule applied to all equity securities except restricted equity
securities.\6\
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\5\ See Securities Exchange Act Release No. 58461 (September 4,
2008), 73 FR 52710 (September 10, 2008) (SR-FINRA-2008-033).
\6\ See Securities Exchange Act Release No. 61979 (April 23,
2010), 75 FR 23316 (May 3, 2010) (SR-FINRA-2010-003).
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The Exchange proposes to update Nasdaq Rule 3360(a) by replacing
the NASD Rule 3360 reference with FINRA Rule 4560 (``Short-Interest
Reporting''). The Exchange will not update Rule 3360 to include the
reference to ``Restricted Equity Securities'' found in FINRA Rule 4560
since, following the termination of the PORTAL Market,\7\ such
securities are no longer listed or traded in the Exchange; relatedly,
the Exchange will omit the reference to FINRA Rule 6420 since a cross-
reference to the definition of Restricted Equity Securities is not
required. Further, the Exchange will add the word ``all'' before the
word ``securities'' but, unlike the FINRA rule, will not insert the
word ``equities'' because the Exchange also lists options securities.
Finally, the Exchange will remove a sentence concerning the reporting
obligations to reflect changes also made in the FINRA rule.\8\
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\7\ See Securities Exchange Act Release No. 58638 (September 24,
2008), 73 FR 57188 (October 1, 2008) (SR-NASDAQ-2008-076).
\8\ See Securities Exchange Act Release No. 66872 (April 27,
2012), 77 FR 26340 (May 3, 2012) (SR-FINRA-2012-001).
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The Exchange also proposes to amend current Rule 3360(b) and (c)
and adopt the text of current FINRA Rule 4560(b) and (c).

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Nasdaq Rule 4200. Definitions
The Exchange proposes to update the NASD Rule 2710(b)(11) reference
in this rule and replace it with a reference to FINRA Rule 5190
(``Notification Requirements for Offering Participants''). In 2008,
NASD Rules 2710(b)(10) and (11) were relocated into FINRA Rule 5190 to
consolidate and streamline all Regulation M-related notice
requirements.\9\
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\9\ See Securities Exchange Act Release No. 58514 (September 11,
2008), 73 FR 54190 (September 18, 2008) (SR-FINRA-2008-039).
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The Exchange also proposes to replace in Rule 4200(a)(2) and (b)
the cross-reference to Nasdaq Rule 4623 (``Alternative Trading
Systems'') with Nasdaq Rule 4624. Consistent with FINRA Rule 5190(e), a
Nasdaq member's notification obligation, as described in Nasdaq Rule
4200 is detailed under Nasdaq Rule 4624 (``Penalty Bids and Syndicate
Covering Transactions'').
Nasdaq Rule 6110. Definitions
The Exchange proposes to update the NASD Rule 6120 reference in
Nasdaq Rule 6110(g) and replace it with a reference to FINRA Rule 7220A
(``Trade Reporting Participation Requirements''). In 2008, the NASD
Rule 6100 Series was relocated and amended to form the FINRA Rule 7200A
Series, applicable to the FINRA/Nasdaq Trade Reporting Facility, and
the Rule 7300 Series, applicable to FINRA's Over the Counter Reporting
Facility.\10\ The Exchange proposes also to conform its Rule 6110(g) by
removing the reference to UTP Exchanges which are not listed under
FINRA Rule 7220A.
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\10\ See Securities Exchange Act Release No. 58643 (September
25, 2008), 73 FR 57174 (October 1, 2008) (SR-FINRA-2008-021).
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Nasdaq General 2, Section 15. Business Continuity Plans
The Exchange proposes to update the NASD Rule 3510 reference in
this rule and replace it with a reference to FINRA Rule 4370
(``Business Continuity Plans and Emergency Contact Information'').
FINRA Rule 4370 was adopted to include NASD Rules 3510 (``Business
Continuity Plans'') and NASD Rule 3520 (``Emergency Contact
Information'') without substantive changes to the rule text.\11\
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\11\ See Securities Exchange Act Release No. 60534 (August 19,
2009), 74 FR 44410 (August 28, 2009) (SR-FINRA-2009-036).
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Additionally, the Exchange proposes to include a new paragraph (b)
that will indicate that references in FINRA Rule 4370 to Rule 4517
shall be construed as references to Nasdaq General 2, Section 16.
Nasdaq General 9, Section 1(c). Front Running Policy
The Exchange proposes to update the NASD IM-2110-3 reference in the
Nasdaq rule and replace it with a reference to current FINRA Rule 5270.
The NASD interpretive material was relocated to FINRA Rule 5270 to
broaden its scope and provide clarity into an activity that is
inconsistent with just and equitable principles of trade.\12\
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\12\ Securities Exchange Act Release No. 67774 (September 4,
2012), 77 FR 55519 (September 10, 2012) (SR-FINRA-2012-025).
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Nasdaq General 9, Section 1(f). Confirmation of Callable Common Stock
The Exchange proposes to delete the duplicative text at the
beginning of the section that currently reads ``Exchange members and
persons''. Next, the Exchange proposes to update the NASD IM-2110-6
reference in the Nasdaq rule and replace it with a reference to current
FINRA Rule 2232. In 2009, the requirements of the NASD interpretive
material were transferred to their current location in the FINRA
rulebook.\13\ FINRA Rule 2232 expanded the coverage of the relocated
interpretive material's requirements, clarifying that the requirement
to disclose that the security is callable (and that further information
is available from the member) applies to any equity security.
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\13\ Securities Exchange Act Release No. 63150 (October 21,
2010), 75 FR 66173 (October 27, 2010) (SR-FINRA-2009-058).
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Nasdaq General 9, Section 3. Communications With the Public and Section
4. Institutional Sales Material and Correspondence
In 2012, FINRA adopted Rule 2210 (``Communications with the
Public'') to encompass, among other provisions, NASD Rules 2210 and
2211, and NASD Interpretive Materials 2210-1 and 2210-4.\14\ The
Exchange proposes to consolidate the text of General 9, Sections 3 and
4 into current Section 3 and reserve current Section 4, as explained
below.
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\14\ See Securities Exchange Act Release No. 66681 (March 29,
2012), 77 FR 20452 (April 4, 2012) (SR-FINRA-2011-035).
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Current Nasdaq General 9, Section 3(a) incorporates by reference
FINRA Rule 2210 (``Communications with the Public''). Moreover, Section
3(a) provides that references to FINRA Rule 2211 shall be understood as
references to Nasdaq Rule 2211. The Exchange proposes to delete from
Section 3(a) the reference concerning Rule 2211.
The retired NASD Rule 2210 incorporated the definitions of
``Correspondence'' and ``Institutional Sales Material'' from NASD Rule
2211. When FINRA adopted Rule 2210, both definitions were merged into
the current rule and the references to Rule 2211 were removed. It
follows, that the Exchange removes the reference Rule 2211 as such is
no longer necessary.
The Exchange also proposes to delete Section 3(b) and re-letter
current Section 3(c) as (b). Current Section 3(b) incorporates by
reference NASD IM-2210-1 which, as explained, was merged into FINRA
Rule 2210. Updating current Section 3(b) to incorporate FINRA Rule 2210
will make the section redundant. Therefore, Section 3(b) will be
deleted as it is no longer necessary.
The Exchange proposes to delete General 9, Section 4(a) because
Section 3(a) already incorporates by reference FINRA Rule 2210.
Furthermore, the Exchange believes that the exception in current
Section 4(a) concerning NASD Rule 2211(d)(3) does not need to be added
to Nasdaq General 9, Section 3(a), because that provision is no longer
referenced in FINRA Rule 2210.
The Exchange also proposes to adopt current Section 4(b)(1) as
Section 3(c), with a minor change. New Section 3(c) will provide that
references to FINRA ``membership'' will be construed as references to
membership with the Exchange.
Finally, the Exchange proposes to adopt part of the text in current
Section 4(b)(2) as Section 3(d). New Section 3(d) will omit references
to FINRA Rule 2210 (as such incorporation is already provided in
Section 3(a)) and will state that references to FINRA Rules 4512 \15\
and 3110 \16\ shall be read, respectively, as references to Nasdaq
General 9, Section 45 and Section 20.
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\15\ See Securities Exchange Act Release No. 63784 (January 27,
2011), 76 FR 5850 (February 2, 2011) (SR-FINRA-2010-052).
\16\ See Securities Exchange Act Release No. 71179 (December 23,
2013), 79 FR 79542 (December 30, 2013) (SR-FINRA-2013-025).
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Nasdaq General 9, Section 9. Fairness Opinions
The Exchange proposes to update the NASD Rule 2290 reference in
this rule and replace it with a reference to FINRA Rule 5150
(``Fairness Opinions''). The aforementioned NASD rule was relocated to
FINRA Rule 5150 with no changes to the rule text.\17\
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\17\ See Securities Exchange Act Release No. 58643 (September
25, 2008), 73 FR 57174 (October 1, 2008) (SR-FINRA-2008-028).
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Nasdaq General 9, Section 11. Best Execution and Interpositioning
The Exchange proposes to update the NASD Rule 2440 and IM-2440
references in this rule and replace them

[[Page 52647]]

with a reference to FINRA Rule 2121 and its supplementary material
(``Fair Prices and Commissions''). FINRA Rule 2121 was adopted without
any substantive changes to the NASD rule text.\18\
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\18\ See Securities Exchange Act Release No. 72208 (May 21,
2014), 79 FR 30675 (May 28, 2014) (SR-FINRA-2014-023).
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Nasdaq General 9, Section 12. Customer Account Statements
The Exchange proposes to update the NASD Rule 2340 reference in
this rule and replace it with a reference to FINRA Rule 2231
(``Customer Account Statements''). FINRA Rule 2231 was adopted without
any substantive changes to the NASD rule text.\19\
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\19\ See Securities Exchange Act Release No. 85589 (April 10,
2019), 84 FR 15646 (April 16, 2019) (SR-FINRA-2019-009).
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Moreover, the Exchange will update the references to NASD Rules
2810 and 3110 as shown in Section 12(b). Specifically, the Exchange
will replace the reference to NASD Rule 2810 with FINRA Rule 2310
(``Direct Participation Programs'') \20\ and NASD Rule 3110 with FINRA
Rule 4512 (``Customer Account Information''). The Exchange also
proposes to add back to Section 12(b) Nasdaq Rule 2310A \21\ that is
equivalent to current FINRA Rule 2310. This cross-reference was
inadvertently removed from the rulebook by a recent relocation
filing.\22\ Finally, the Exchange proposes to replace the reference of
General 9, Section 30 with Section 45, because it corresponds to FINRA
Rule 4512.
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\20\ See Securities Exchange Act Release No. 59987 (May 27,
2009), 74 FR 26902 (June 4, 2009) (SR-FINRA-2009-016).
\21\ See Securities Exchange Act Release Nos. 61321 (January 8,
2010), 75 FR 3776 (January 22, 2010) (SR-NASDAQ-2010-002) and 61681
(March 10, 2010), 75 FR 12591 (March 16, 2010) (SR-NASDAQ-2010-033).
\22\ See Securities Exchange Act Release No. 87778 (December 17,
2019), 84 FR 70590 (December 23, 2019) (SR-NASDAQ-2019-098).
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Additionally, the Exchange proposes to amend Section 12(c) by
replacing the reference to General 5, Section 2 with a reference to the
Nasdaq Rule 9600 Series. The Exchange needs to make this correction
because there is no Section 2 under the General 5 title.
Nasdaq General 9, Section 13. Margin Disclosure Statement
The Exchange proposes to update the NASD Rule 2341 reference in
this rule and replace it with a reference to FINRA Rule 2264 (``Margin
Disclosure Statement''). FINRA Rule 2264 was adopted with only minor
changes to the text of NASD Rule 2341, and those changes were intended
to clarify the submission of disclosure statements.\23\
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\23\ See Securities Exchange Act Release No. 60697 (September
21, 2009), 74 FR 49051 (September 25, 2009) (SR-FINRA-2009-052).
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The Exchange also proposes to amend Section 13(b) by updating the
reference to NASD Rule 3110 with FINRA Rule 4512 \24\ and the reference
to General 9, Section 30 with Section 45, because it corresponds to
FINRA Rule 4512.
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\24\ See supra note 15.
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Nasdaq General 9, Section 16. Charges for Services Performed
The Exchange proposes to update the NASD Rule 2430 reference in
this rule and replace it with a reference to FINRA Rule 2122 (``Charges
for Services Performed''). FINRA Rule 2122 was adopted without any
substantive changes to the NASD rule text.\25\
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\25\ See Securities Exchange Act Release No. 73714 (December 2,
2014), 79 FR 72743 (December 8, 2014) (SR-FINRA-2014-049).
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Nasdaq General 9, Section 17. Net Transactions With Customers
The Exchange proposes to update the NASD Rule 2441 reference in
this rule and replace it with a reference to FINRA Rule 2124 (``Net
Transactions with Customers''). FINRA Rule 2124 was adopted without any
substantive changes to the NASD rule text.\26\ The Exchange also
proposes to adopt a cross-reference to FINRA Rule 4511, which has a
corresponding Exchange rule under General 9, Section 30. Moreover, the
Exchange proposes to add a cross-reference to FINRA Rule 4512 and a
reference to the corresponding Exchange rule under General 9, Section
45.
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\26\ See supra note 11.
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Nasdaq General 9, Section 19. Discretionary Accounts
The Exchange proposes to update the NASD Rule 2510 reference in
this rule and replace it with a reference to FINRA Rule 3260
(``Discretionary Accounts''). FINRA Rule 3260 was adopted without any
substantive changes to the NASD rule text.\27\
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\27\ See supra note 19.
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Moreover, the Exchange will update the cross-references to NASD
rules with their respective equivalent FINRA rules. Specifically, the
Exchange will replace the NASD Rule 3010 reference with FINRA Rule
3110. Additionally, the Exchange will replace the NASD Rule 3110
reference with FINRA Rule 4512.\28\ Finally, the Exchange proposes to
replace the reference to General 9, Section 30 with Section 45, because
it corresponds to FINRA Rule 4512.
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\28\ See supra note 15.
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Nasdaq General 9, Section 21. Supervisory Control System and Section
22. Annual Certification of Compliance and Supervisory Processes
The Exchange proposes to consolidate Sections 21 and 22 into one
rule, Section 21 (``Supervisory Control System, Annual Certification of
Compliance and Supervisory Processes''), as explained below. First, the
Exchange proposes to update the NASD Rule 3012 reference in this rule
and replace it with a reference to FINRA Rule 3120 (``Supervisory
Control System''). FINRA Rule 3120 retained the former NASD rule's
testing and verification requirements for the member's supervisory
procedures and provided requirements for members reporting $200 million
or more in gross revenue.\29\ The Exchange will also update the
reference to Nasdaq Rule 3012, which was relocated to the Nasdaq shell
as Nasdaq General 9, Section 21.\30\
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\29\ See supra note 16.
\30\ See supra note 22.
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Second, the Exchange will update the NASD Rule 3013 reference in
Section 21(c) (``Annual Certification of Compliance and Supervisory
Processes'') and replace it with a reference to FINRA Rule 3130
(``Annual Certification of Compliance and Supervisory Processes'').
FINRA Rule 3130 was adopted to streamline and combine the requirements
of NASD Rule 3013 and IM-3013.\31\
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\31\ See Securities Exchange Act Release No. 58661 (September
26, 2008), 73 FR 57395 (October 2, 2008) (SR-FINRA-2008-030).
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Third, the Exchange will re-letter the next paragraph, currently
lettered as ``(b)'' (``For purposes of this Rule . . .''), as ``(d)''.
In re-lettered Section (d)(2), as previously explained, the Exchange
will update the reference to NASD Rule 3013 with FINRA Rule 3130, which
shall be read as a reference to Exchange's corresponding rule under
General 9, Section 21. Similarly, the Exchange proposes to update the
cross-reference to NASD Rule 2110 with FINRA Rule 2010. In 2008, NASD
Rule 2110 was renumbered as FINRA Rule 2010 with no changes to the rule
text.\32\ Additionally, the Exchange will change the General 9, Section
3 reference with Section 1(a), because it corresponds to FINRA Rule
2010.
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\32\ See supra note 17.
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Finally, the Exchange will delete and reserve Current General 9,
Section 22, since its sub-sections are duplicative of sub-sections in
Section 21.

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Nasdaq General 9, Section 23. Outside Business Activities of an
Associated Person
The Exchange proposes to update the NASD Rule 3030 reference in
this rule and replace it with a reference to FINRA Rule 3270 (``Outside
Business Activities of Registered Persons''). FINRA Rule 3270 was
adopted to harmonize and simplify the events that constitute an outside
business activity, expanding upon the obligations imposed in NASD Rule
3030, by prohibiting any registered person from doing business with
another person as a result of any business activity outside the scope
of the relationship with his or her member firm, unless prior written
notice was provided to the member.\33\
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\33\ See Securities Exchange Act Release No. 62762 (August 23,
2010), 75 FR 53362 (August 31, 2010) (SR-FINRA-2009-042).
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Moreover, the Exchange will update the cross-reference to NASD Rule
3040 with FINRA Rule 3280.\34\ The Exchange proposes also to update the
reference to General 9, Section 23 with Section 24 (``Private
Securities Transactions of an Associated Person''), because it
corresponds to FINRA Rule 3280.
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\34\ See Securities Exchange Act Release No. 75757 (August 25,
2015), 80 FR 52530 (August 31, 2015) (SR-FINRA-2015-030).
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Nasdaq General 9, Section 24. Private Securities Transactions of an
Associated Person
The Exchange proposes to update the NASD Rule 3040 reference in
this rule and replace it with a reference to FINRA Rule 3280 (``Private
Securities Transactions of an Associated Person''). FINRA Rule 3280 was
adopted without any substantive changes to the NASD rule text.\35\
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\35\ Id. See also Securities Exchange Act Release No. 80105
(February 24, 2017), 82 FR 12387 (March 2, 2017) (SR-FINRA-2017-
004).
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The Exchange will also update the cross-reference to NASD Rule 3050
with FINRA Rule 3210.\36\ The Exchange proposes also to update the
reference to General 9, Section 24 with Section 25 (``Transactions for
or by Associated Persons''), because it incorporates FINRA Rule 3210.
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\36\ See Securities Exchange Act Release No. 77550 (April 7,
2016), 81 FR 21924 (April 13, 2016) (SR-FINRA-2015-029).
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Furthermore, the Exchange proposes to correct a typo in the quoted
text of Nasdaq General 9, Section 24(b)(2). Specifically, the Exchange
will substitute the word ``immediately'' with ``immediate.''
Finally, the Exchange will replace a reference to NASD Rule 2790
with FINRA Rule 5130.\37\ The definition of ``immediate family
member,'' cross-referenced in General 9, Section 24(b)(2), is currently
located under FINRA Rule 5130(i)(5).
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\37\ See Securities Exchange Act Release No. 58421 (August 25,
2008), 73 FR 51032 (August 29, 2008) (SR-FINRA-2008-025).
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Nasdaq General 9, Section 25. Transactions for or by Associated Persons
The Exchange proposes to update the NASD Rule 3050 reference in
this rule and replace it with a reference to FINRA Rule 3210
(``Accounts At Other Broker-Dealers and Financial Institutions'').
FINRA Rule 3210 was adopted to consolidate NASD Rule 3050, Incorporated
NYSE Rules 407 and 407A, and Incorporated NYSE Rule Interpretations
407/01 and 407/02. The rule was designed to streamline the provisions
of the NASD and incorporated NYSE rules and to help facilitate
effective oversight of the specified trading activities of associated
persons of member firms.\38\
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\38\ See supra note 36.
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Nasdaq General 9, Section 31. Use of Information Obtained in Fiduciary
Capacity
The Exchange proposes to update the NASD Rule 3120 reference in
this rule and replace it with a reference to FINRA Rule 2060 (``Use of
Information Obtained in Fiduciary Capacity''). FINRA Rule 2060 was
adopted without any changes to the NASD rule text.\39\
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\39\ See Securities Exchange Act Release No. 61071 (November 30,
2009), 74 FR 64109 (December 7, 2009) (SR-FINRA-2009-067).
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Nasdaq General 9, Section 33. Reporting Requirements for Clearing Firms
The Exchange proposes to update the NASD Rule 3150 reference in
this rule and replace it with a reference to FINRA Rule 4540
(``Reporting Requirements for Clearing Firms''). FINRA Rule 4540 was
adopted without any substantive changes to the NASD rule text.\40\
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\40\ See supra note 19.
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Furthermore, the Exchange proposes to amend Section 33(c)(1) by
replacing the reference to General 5, Section 2 with a reference to the
Nasdaq Rule 9600 Series. The Exchange needs to make this correction
because there is no Section 2 under the General 5 title.
Finally, the Exchange proposes to update the reference to Nasdaq
Rule 3150, which was relocated to the Nasdaq shell as Nasdaq General 9,
Section 33.\41\
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\41\ See supra note 22.
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Nasdaq General 9, Section 34. Extensions of Time Under Regulation T and
SEC Rule 15c3-3
The Exchange proposes to update the NASD Rule 3160 reference in
this rule and replace it with a reference to FINRA Rule 4230
(``Required Submissions for Requests for Extensions of Time Under
Regulation T and SEA Rule 15c3-3''). FINRA Rule 4230 was adopted
largely based on the text of NASD Rule 3160, with a clarification to
the original rule text regarding the reporting obligations of clearing
members.\42\
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\42\ See Securities Exchange Act Release No. 62482 (July 12,
2010), 75 FR 41562 (July 16, 2010) (SR-FINRA-2010-024).
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The Exchange will also update the reference to Nasdaq Rule 3160,
which was relocated to the Nasdaq shell as Nasdaq General 9, Section
34.\43\
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\43\ See supra note 22.
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Nasdaq General 9, Section 38. Margin Requirements
The Exchange proposes to update the NASD Rule 2520 reference in
this rule and replace it with a reference to FINRA Rule 4210 (``Margin
Requirements''). In 2010, NASD Rules 2520, 2521, 2522, and IM-2522 were
combined and consolidated into a single rule intended to improve the
organization of margin rules and improve their readability.\44\
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\44\ See supra note 42.
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The Exchange proposes also to amend Section 38(d) by replacing the
reference to General 5, Section 2 with a reference to the Nasdaq Rule
9600 Series. The Exchange needs to make this correction because there
is no Section 2 under the General 5 title.
Nasdaq General 9, Section 45. Customer Account Information
The Exchange proposes to update the NASD Rule 2510 reference in
this rule and replace it with FINRA Rule 3260 (``Discretionary
Accounts''). FINRA Rule 3260 was adopted without any changes to the
original NASD rule text.\45\
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\45\ See supra note 19.
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The Exchange also proposes to delete from the rule the text that
reads ``(or any successor FINRA rule)'' since the NASD rule is now
relocated to FINRA Rule 3260. Finally, the Exchange will replace the
General 9, Section 18 reference with Section 19 (``Discretionary
Accounts''), because it corresponds to FINRA Rule 3260.
Moreover, the Exchange will update General 9, Section 45(b)(2) to
provide that General 9, Section 29 is equivalent to FINRA Rule 2070.
Finally, the Exchange proposes a minor correction in the rule by
deleting the text that reads ``and 28'' that was inadvertently

[[Page 52649]]

introduced during a recent rule relocation.\46\
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\46\ See supra note 22.
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Nasdaq General 9, Section 47. Approval and Documentation of Changes in
Account Name or Designation
The Exchange proposes to update the NASD Rule 2510 reference in
this rule and replace it with FINRA Rule 3260 (``Discretionary
Accounts''). FINRA Rule 3260 was adopted without any changes to the
original NASD rule text.\47\ The Exchange also proposes to delete from
the rule the text that reads ``(or any successor FINRA rule)'' since
the NASD rule is now relocated to FINRA Rule 3260. Finally, the
Exchange will replace the Exchange General 9, Section 18 reference with
Section 19, because it corresponds to FINRA Rule 3260.
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\47\ See supra note 19
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Nasdaq General 9, Section 49. Payments Involving Publications That
Influence the Market Price of a Security
The Exchange proposes to update the NASD Rule 2711 reference in
this rule and replace it with a reference to FINRA Rule 2241
(``Research Analysts and Research Reports''). Specifically, the
research report's definition referenced in General 9, Section 49(b)(3)
was relocated to current FINRA Rule 2241(a)(11). That definition was
amended to exclude communications concerning open-end registered
investment companies not listed or traded on an exchange.\48\
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\48\ See Securities Exchange Act Release No. 75471 (July 16,
2015), 80 FR 43482 (July 22, 2015) (SR-FINRA-2014-047).
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The Exchange also proposes to delete the paragraph at the end of
the rule concerning the consolidation of FINRA rules, since FINRA has
completed the relocation of its rules.
Nasdaq Equity 7, Section 111. Nasdaq SIP: Nasdaq Level 1 Service
The Exchange proposes to update the cross-reference to the NASD
6600 Rule Series with a reference to FINRA 6400 Rules Series (``Quoting
and Trading in OTC Equity Securities'').\49\
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\49\ See supra note 10.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\50\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\51\ in particular, in that it is designed to
promote just and equitable principles of trade and to protect investors
and the public interest by bringing greater transparency to its rules
by updating the references to the FINRA rules previously described. The
Exchange's proposal is consistent with the Act and will protect
investors and the public interest by harmonizing its rules and
clarifying outdated references so that Exchange members and the general
public can readily locate FINRA rules that are incorporated by
reference into the Rulebook.
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\50\ 15 U.S.C. 78f(b).
\51\ 15 U.S.C. 78f(b)(5).
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The reference and cross-reference updates, re-lettering, deleting
unnecessary or duplicative text, consolidating certain Nasdaq rules,
and other minor technical changes will bring greater transparency to
Nasdaq's Rule structure. The Exchange believes its proposal will
benefit investors and the general public by increasing the transparency
of its Rulebook.

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 amendments to update the references and cross-references in
its Rulebook are intended to bring greater clarity to the Exchange's
rules. The reference and cross-reference updates, re-lettering,
deleting unnecessary or duplicative text, consolidating certain Nasdaq
rules, and other minor technical changes will bring greater
transparency to Nasdaq's Rulebook.

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 \52\ and Rule 19b-
4(f)(6) thereunder.\53\
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\52\ 15 U.S.C. 78s(b)(3)(A).
\53\ 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 \54\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \55\ 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.
Waiver of the operative delay would allow the Exchange to immediately
update its outdated rules and otherwise make its rules more consistent
with corresponding FINRA rules that it incorporates by reference. 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 30-day operative delay
and designates the proposed rule change operative upon filing.\56\
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\54\ 17 CFR 240.19b-4(f)(6).
\55\ 17 CFR 240.19b-4(f)(6)(iii).
\56\ 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 rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2020-045 on the subject line.

[[Page 52650]]

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-2020-045. 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-2020-045 and should be submitted
on or before September 16, 2020.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\57\
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\57\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18680 Filed 8-25-20; 8:45 am]
BILLING CODE 8011-01-P