[Federal Register Volume 86, Number 88 (Monday, May 10, 2021)]
[Notices]
[Pages 25033-25035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09771]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91764; File No. SR-GEMX-2021-04]


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

May 4, 2021.
    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 April 28, 2021, Nasdaq GEMX, LLC (``GEMX'' 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 substantially 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-GEMX-2020-21 from April 30, 2021, to August 
31, 2021.\4\ The proposed rule change would not make any changes to the 
text of the Exchange rules.
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    \4\ See Securities Exchange Act Release No. 90755 (Dec. 21, 
2020), 85 FR 85819 (Dec. 29, 2020) (SR-GEMX-2020-21). If the 
Exchange seeks to provide additional temporary relief from the rule 
requirements identified in this proposed rule change beyond August 
31, 2021, 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/gemx/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 2 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 activities.\5\ The Exchange originally filed 
proposed rule change SR-GEMX-2020-21, 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. While there are signs of 
improvement, the COVID-19 conditions necessitating the temporary 
amendments persist and, based on its assessment of current COVID-19 
conditions and the lack of certainty as to when COVID-19-related health 
concerns and corresponding restrictions will meaningfully subside, the 
Exchange has determined that there is a continued need for this 
temporary relief for several months beyond April 30, 2021. Accordingly, 
the Exchange proposes to extend the expiration date of the temporary 
rule amendments in

[[Page 25034]]

SR-GEMX-2020-21 from April 30, 2021, to August 31, 2021.
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    \5\ See Securities Exchange Act Release No. 91495 (April 7, 
2021), 86 FR 19306 (April 13, 2021) (SR-FINRA-2021-006) (``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-2021-033 (April 28, 
2021). Therefore, the Exchange is not proposing to adopt that aspect 
of the FINRA Filing.
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    As set forth in SR-GEMX-2020-21, 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 April 30, 2021, and has determined that 
there will be a continued need for this temporary relief for several 
months beyond that date. Accordingly, the Exchange proposes to extend 
the expiration date of the temporary rule amendments originally set 
forth in SR-GEMX-2020-21 from April 30, 2021, to August 31, 2021. 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,\6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\7\ 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, resulting in less burdensome and more 
efficient regulatory compliance.\8\
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 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-GEMX-2020-
21, 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 meaningfully improve, without this relief allowing 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 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-
GEMX-2020-21, 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-GEMX-2020-21, 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 April 30, 2021.

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\
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    \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 satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ 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 the proposed rule change to extend the expiration date 
will continue to 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 April 30, 2021.\13\ Importantly, extending 
the relief provided in GEMX-2020-21 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 its employees.\14\ 
The Commission also notes that this proposal extends without change the 
temporary relief previously provided by GEMX-2020-21,\15\ and only 
during the period in which the Exchange's operations are impacted by

[[Page 25035]]

COVID-19. As proposed, the changes would be in place through August 31, 
2021 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.\16\ 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.\17\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ See supra Item II.
    \14\ See FINRA Filing, 86 FR at 19308 (noting the same in 
granting FINRA's request to waive the 30-day operative delay so that 
SR-FINRA-2021-006 would become operative immediately upon filing).
    \15\ See supra note 4.
    \16\ See id. As noted above, the Exchange states that if it 
requires temporary relief from the rule requirements identified in 
this proposal beyond August 31, 2021, it may submit a separate rule 
filing to extend the effectiveness of the temporary relief under 
these rules.
    \17\ 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-GEMX-2021-04 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-GEMX-2021-04. 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; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-GEMX-2021-04 and should be 
submitted on or before June 1, 2021.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09771 Filed 5-7-21; 8:45 am]
BILLING CODE 8011-01-P