[Federal Register Volume 85, Number 250 (Wednesday, December 30, 2020)]
[Notices]
[Pages 86614-86617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28803]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90774; File No. SR-NASDAQ-2020-092]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Extend the Expiration Date of the Temporary Amendments Set Forth in 
SR-NASDAQ-2020-076 Concerning Video Conference Hearings

December 22, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on December 17, 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 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-NASDAQ-2020-076 from December 31, 2020 to 
April 30, 2021. The proposed rule change would not make any changes to 
the text of the Exchange rules.
    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

[[Page 86615]]

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 response to the COVID-19 global health crisis and the 
corresponding need to restrict in-person activities, the Exchange filed 
proposed rule change SR-NASDAQ-2020-076, which allows the Exchange's 
Office of Hearing Officers (``OHO'') and the Exchange Review Council 
(``ERC'') to conduct hearings, on a temporary basis, by video 
conference, if warranted by the current COVID-19-related public health 
risks posed by an in-person hearing. The COVID-19 conditions 
necessitating these temporary amendments persist, with cases rapidly 
escalating nationwide. Based on its assessment of current COVID-19 
conditions, and the lack of certainty as to when COVID-19-related 
health concerns will subside, the Exchange has determined that there is 
a continued need for this temporary relief for several months beyond 
December 31, 2020. Accordingly, the Exchange proposes to extend the 
expiration date of the temporary rule amendments in SR-NASDAQ-2020-076 
from December 31, 2020, to April 30, 2021.
    On November 5, 2020, the Exchange filed with the Commission a 
proposed rule change for immediate effectiveness, SR-NASDAQ-2020-076, 
to temporarily amend Exchange Rules 1015, 9261, 9524 and 9830 to grant 
OHO and the ERC authority \4\ to conduct hearings in connection with 
appeals of Membership Application Program decisions, disciplinary 
actions, eligibility proceedings and temporary and permanent cease and 
desist orders by video conference, if warranted by the current COVID-
19-related public health risks posed by an in-person hearing (the 
``November 5 Filing'').\5\ The Commission published its notice of 
filing and immediate effectiveness for the November 5 Filing on 
November 10, 2020.\6\ The temporary amendments, as originally proposed 
in the November 5 Filing, will expire on December 31, 2020, absent 
another proposed rule change filing by the Exchange.
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    \4\ For OHO hearings under Exchange Rules 9261 and 9830, the 
proposed rule change temporarily grants authority to the Chief or 
Deputy Chief Hearing Officer to order that a hearing be conducted by 
video conference. For ERC hearings under Exchange Rules 1015 and 
9524, this temporary authority is granted to the ERC or relevant 
Subcommittee.
    \5\ The temporary amendments set forth in the November 5 Filing 
were subject to a 30-day operative delay and, accordingly, became 
operative on December 6, 2020. See infra note 6 and accompanying 
text.
    \6\ See Exchange Act Release No. 90390 (November 10, 2020), 85 
FR 73302 (November 17, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-NASDAQ-2020-076).
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    The Exchange proposed the temporary amendments allowing for 
specified OHO and ERC hearings to be conducted by video conference in 
response to the COVID-19-related public health risks posed in 
connection with conducting traditional, in-person hearings. As set 
forth in the November 5 Filing, the Exchange relies on COVID-19 data 
and the guidance issued by public health authorities to determine 
whether the current public health risks presented by an in-person 
hearing may warrant a hearing by video conference.\7\ As noted above, 
the COVID-19-related public health risks necessitating this temporary 
relief have not yet abated, with COVID-19 cases surging nationwide.
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    \7\ As noted in the November 5 Filing, the temporary proposed 
rule change grants discretion to OHO and the ERC to order a video 
conference hearing. In deciding whether to schedule a hearing by 
video conference, OHO and the ERC may consider a variety of other 
factors in addition to COVID-19 trends.
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    Based on its assessment of current COVID-19 conditions, including 
the recent escalation in COVID-19 cases nationwide, the Exchange does 
not believe the COVID-19-related health concerns necessitating this 
relief will subside by December 31, 2020, and has determined that there 
will be a continued need for this temporary relief for several months 
beyond December 31, 2020. Accordingly, the Exchange proposes to extend 
the expiration date of the temporary rule amendments in the November 5 
Filing from December 31, 2020, to April 30, 2021. The extension of 
these temporary amendments allowing for specified OHO and 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,\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 continuing to provide greater harmonization between the Exchange 
rules and FINRA rules of similar purpose,\10\ resulting in less 
burdensome and more efficient regulatory compliance.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ See Exchange Act Release No. 90619 (December 9, 2020), 85 
FR 81250 (December 15, 2020) (SR-FINRA-2020-042). In SR-FINRA-2020-
042, FINRA proposed rule changes to extend the expiration date of 
the temporary rule amendments set forth in SR-FINRA-2020-015 and SR-
FINRA-2020-027 from December 31, 2020, to April 30, 2021. SR-FINRA-
2020-015 provided temporary relief from some timing, method of 
service and other procedural requirements in FINRA's rules. SR-
FINRA-2020-027 allowed FINRA's OHO and the NAC to conduct hearings, 
on a temporary basis, by video conference, if warranted by the 
current COVID-19-related public health risks posed by an in-person 
hearing.
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    The proposed rule change, which extends the expiration date of the 
temporary amendments to the Exchange rules set forth in the November 5 
Filing, will continue to aid the Exchange's efforts to timely conduct 
hearings in connection with its core adjudicatory functions. Given 
current COVID-19 conditions and the uncertainty around when those 
conditions will improve, without this relief allowing OHO and ERC 
hearings to continue to proceed by video conference, such hearings may 
need to be postponed indefinitely. The Exchange must be able to perform 
its critical adjudicatory functions in order 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 OHO to conduct temporary 
cease and desist proceedings by video conference so that the Exchange 
can take immediate action to stop ongoing customer harm and will allow 
the ERC to timely provide members, disqualified individuals and other 
applicants an

[[Page 86616]]

approval or denial of their applications. As set forth in detail in the 
November 5 Filing, this temporary relief allowing OHO and 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 result in any burden on competition that is not necessary 
or appropriate in furtherance of the purposes of the Act. As set forth 
in the November 5 Filing, the proposed rule change is intended solely 
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 December 31, 2020.

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) \11\ of the Act and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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 under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
pursuant to Rule 19b-4(f)(6)(iii), the Commission may 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 so that the proposed rule change 
may become operative immediately upon filing. As noted above, the 
Exchange states that the COVID-related health and safety risks of 
conducting in-person activities, which necessitated these temporary 
amendments, persist and that cases are rapidly escalating nationwide. 
Based on the Exchange's assessment of the current COVID-19 conditions, 
including the lack of certainty as to when COVID-19-related health 
concerns will subside, the Exchange has determined that that there is a 
continued need for this temporary relief for several months beyond 
December 31, 2020. Accordingly, the Exchange states that waiver of the 
operative delay would allow the proposed changes, which are designed to 
minimize disruptions to the Exchange's operations in order to maintain 
fair processes and fulfill its obligations to protect investors and 
maintain fair and orderly markets, to be operative on the date of 
filing so the Exchange can implement the extension of these temporary 
amendments immediately.
    The Exchange also indicates that this filing is eligible to become 
operative immediately because the proposal would continue to provide 
greater harmonization between the Exchange rules and FINRA rules that 
serve a similar purpose, resulting in less burdensome and more 
efficient regulatory compliance. This proposal would serve to extend 
the expiration date of the temporary amendments to the Exchange rules 
set forth in the November 5 Filing, which is consistent with FINRA's 
extension to its comparable rules, where FINRA requested and the 
Commission granted a waiver of the 30-day operative delay.\13\ The 
Exchange also states that this temporary relief is necessary in order 
to continue performing critical adjudicatory functions necessary to 
meet its statutory obligations in light of COVID-19 related health and 
safety risks associated with in-person hearings.
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    \13\ See supra note 10 (referencing FINRA's proposal to extend 
the expiration date of temporary rule amendments allowing hearings 
to be conducted on a temporary basis by video conference if 
warranted by COVID-19 related health risks). See also November 5 
Filing, 85 FR at 73303 (stating that with certain exceptions, the 
text of Exchange Rules 1015, 9261, 9524 and 9830 are substantially 
the same as FINRA's rules).
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    The Commission observes that this proposal, like the Exchange's 
November 5 Filing and FINRA's comparable filing,\14\ provides only 
temporary relief during the period in which the Exchange's operations 
are impacted by COVID-19. As proposed, the changes would be in place 
through April 30, 2021. For these reasons, 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 proposal 
operative upon filing.\15\
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    \14\ See supra note 10 and accompanying text.
    \15\ 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-NASDAQ-2020-092 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-2020-092. 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/

[[Page 86617]]

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, on 
business days between the hours of 10:00 a.m. and 3:00 p.m., located at 
100 F Street NE, Washington, DC 20549. Copies of such 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-2020-092 and should 
be submitted on or before January 20, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020-28803 Filed 12-29-20; 8:45 am]
BILLING CODE 8011-01-P