Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Business Continuity and Disaster Recovery Plans Testing Requirements, 70045-70047 [2015-28697]
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Federal Register / Vol. 80, No. 218 / Thursday, November 12, 2015 / Notices
proposed rule change so that it has
sufficient time to consider the proposed
rule change. Accordingly, the
Commission, pursuant to Section
19(b)(2) of the Act,6 designates
December 21, 2015, as the date by
which the Commission should either
approve or disapprove or institute
proceedings to determine whether to
disapprove the proposed rule change
(File Number SR–NYSEArca–2015–73),
as modified by Amendments No. 1 and
3.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–28682 Filed 11–10–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76368; File No. SR–
NASDAQ–2015–134]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Adopt
Business Continuity and Disaster
Recovery Plans Testing Requirements
November 5, 2015.
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 November
2, 2015, The NASDAQ Stock Market
LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I 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.
mstockstill on DSK4VPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt
business continuity and disaster
recovery plans (‘‘BC/DR Plans’’) testing
requirements applicable to Exchange
Members 3 and Options Participants 4 in
6 Id.
7 17
CFR 200.30–3(a)(31).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The term ‘‘Member’’ is defined as ‘‘any
registered broker or dealer that has been admitted
to membership in Nasdaq.’’ See Exchange Rule
0120(i).
4 The term ‘‘Options Participant’’ is defined as a
category of Nasdaq Member that is authorized to
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18:15 Nov 10, 2015
Jkt 238001
connection with Regulation Systems
Compliance and Integrity (‘‘Regulation
SCI’’).5
The text of the proposed rule change
is available on the Exchange’s Web site
at https://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
Nasdaq is proposing to adopt new
Rule 1170 to implement the BC/DR
Plans requirements of Rule 1004 of
Regulation SCI. As adopted by the
Commission, Regulation SCI applies to
certain self-regulatory organizations
(including the Exchange), alternative
trading systems (‘‘ATSs’’), plan
processors, and exempt clearing
agencies (collectively, ‘‘SCI entities’’),
and will require these SCI entities to
comply with requirements with respect
to the automated systems central to the
performance of their regulated activities.
Among the requirements of Regulation
SCI is Rule 1001(a)(2)(v), which requires
the Exchange and other SCI entities to
maintain ‘‘[b]usiness continuity and
disaster recovery plans that include
maintaining backup and recovery
capabilities sufficiently resilient and
geographically diverse and that are
reasonably designed to achieve next
business day resumption of trading and
two-hour resumption of critical SCI
systems following a wide-scale
‘‘transact business on NOM via the Trading System.
Options Participants may trade options for their
own proprietary accounts or, if authorized to do so
under applicable law, and consistent with these
NOM Rules and with applicable law and SEC rules
and regulations, may conduct business on behalf of
Customers.’’ See NOM Option Rules, Chapter II,
Section 1(a).
5 See Securities Exchange Act Release No. 73639
(November 19, 2014), 79 FR 72252 (December 5,
2014) (‘‘SCI Adopting Release’’).
PO 00000
Frm 00111
Fmt 4703
Sfmt 4703
70045
disruption.’’ 6 The Exchange has put
extensive time and resources toward
planning for system failures and already
maintains robust BC/DR Plans
consistent with the Rule. As set forth
below, in connection with Regulation
SCI, the Exchange is proposing to
require certain Members to participate
in testing of the operation of the
Exchange’s BC/DR Plans.
With respect to an SCI entity’s BC/DR
Plans, including its backup systems,
paragraph (a) of Rule 1004 of Regulation
SCI requires each SCI entity to:
‘‘[e]stablish standards for the
designation of those members or
participants that the SCI entity
reasonably determines are, taken as a
whole, the minimum necessary for the
maintenance of fair and orderly markets
in the event of the activation of such
plans.’’ 7 Paragraph (b) of Rule 1004 of
Regulation SCI further requires each SCI
entity to ‘‘[d]esignate members or
participants pursuant to the standards
established in paragraph (a) of [Rule
1004] and require participation by such
designated members or participants in
scheduled functional and performance
testing of the operation of such plans, in
the manner and frequency specified by
the SCI entity, provided that such
frequency shall not be less than once
every 12 months.’’ 8 In order to comply
with Rule 1004 of Regulation SCI, the
Exchange proposes to adopt new Rule
1170, which incorporates the
requirements of Rule 1004 of Regulation
SCI as part of the Exchange’s rules, and
sets forth the notice, selection criteria
and obligations of Members and
Participants with respect to BC/DR
Plans testing. Nasdaq proposes to adopt
Rule 1170(a), which will set forth the
Exchange’s obligations with respect to
the selection of Members and
Participants for testing. Specifically, the
rule will require Nasdaq to ‘‘[e]stablish
standards for the designation of those
Members and Options Participants that
Nasdaq reasonably determines are,
taken as a whole, the minimum
necessary for the maintenance of fair
and orderly markets in the event of the
activation of such plans.’’ The proposed
new rule further provides that ‘‘[s]uch
standards may include volume-based
and/or market share-based criteria, and
may be adjusted from time to time by
Nasdaq.’’ Lastly, the proposed new rule
will require Nasdaq to provide public
notice of the standards that it adopts.
Nasdaq is proposing to adopt Rule
1170(b), which will set forth the
obligations of Nasdaq and its Members
6 17
CFR 242.1001(a)(2)(v).
CFR 242.1004(a).
8 17 CFR 242.1004(b).
7 17
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70046
Federal Register / Vol. 80, No. 218 / Thursday, November 12, 2015 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
and Participants with respect to testing.
Specifically, the rule will require
Nasdaq to ‘‘designate Members and
Options Participants pursuant to the
standards established in paragraph (a) of
this rule and require participation by
such designated Members and Options
Participants in scheduled functional
and performance testing of the operation
of such plans, in the manner and
frequency specified by Nasdaq,
provided that such frequency shall not
be less than once every 12 months.’’
Moreover, the rule will require Nasdaq
to provide at least six months prior
notice to Members and Participants that
are designated for mandatory testing.
Lastly, the rule will provide notice that
participation in testing is a condition of
membership for Members and
Participants that are designated for
testing.
The Exchange encourages all
Members and Participants to connect to
the Exchange’s backup systems and to
participate in testing of such systems; 9
however, certain Members and
Participants will be obligated to
participate in BC/DR Plans testing. In
adopting new Rule 1170, the Exchange
will require mandatory participation in
BC/DR Plans testing by those Members
and Participants that the Exchange
reasonably determines are, taken as a
whole, the minimum necessary for the
maintenance of fair and orderly markets
in the event of the activation of such
plans on the Exchange and NOM,
respectively. The Exchange believes that
using overall participation on its
markets (by volume and/or market
share) as a measure to select Members
and Participants for mandatory
participation in BC/DR Plans testing is
a reasonable means by which it can
determine which Members and
Participants are necessary for the
maintenance of fair and orderly markets
in the event of the activation of such
plans.10 For each BC/DR Plans test
cycle, Nasdaq will select the top ten
Members on the Exchange and the top
five Participants on NOM based on
Nasdaq’s measure of overall
9 In this regard, Nasdaq will allow any Member
or Participant to participate in the testing of the
Exchange’s BC/DR Plans, which is consistent with
the Plan. See SCI Adopting Release, supra note 5
at 72350. Nasdaq will provide instructions on how
a Member and Participant must inform Nasdaq of
its interest in participating in an upcoming BC/DR
Plans test via the announcement of the test date. A
Member or Participant must provide Nasdaq notice
of its interest to participate at least a week prior to
the test date and must have the appropriate
connection for testing in place.
10 Nasdaq will provide notice of the specific
selection criteria and measurement period in a
notice to Members and Participants. The initial
selection criteria and measurement period will be
announced no later than November 3, 2015.
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participation on each of those markets.
The Exchange will provide notice of a
Members’ and Participants’ selection at
least six months prior to the next BC/
DR Plans test date. All notices
concerning BC/DR Plans testing will be
posted on Nasdaq’s Web site.
The Exchange is proposing to initially
select Members and Participants with
the highest levels of trading volume on
Nasdaq and NOM over four calendar
months (‘‘Measurement Period’’) as
mandatory testing Members and
Participants, respectively.11
Specifically, the Measurement Period
will be the four calendar months of
trading immediately prior to Nasdaq’s
announcement of the next BC/DR Plans
test date. The Measurement Period will
always begin at a point after Nasdaq
announces the criteria to be used in the
next BC/DR Plans test. By way of
example, if on October 6, 2017 Nasdaq
announced the BC/DR Plans test
selection criteria and on March 2, 2018
Nasdaq announced a BC/DR Plans test
date of September 8, 2018, the
Measurement Period used to select
Members and Participants subject to
mandatory testing would be November
2017 through February 2018. Members
and Participants not obligated to
participate that wish to participate in
this test must inform Nasdaq no later
than September 1, 2018.12
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6 of the Act,13 in general, and
further the objectives of Section 6(b)(5)
of the Act,14 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, 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; and are not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
The proposal will ensure that the
Members and Participants necessary to
ensure the maintenance of fair and
orderly markets are properly designated
consistent with Rule 1004 of Regulation
SCI. Specifically, the proposal will
11 Nasdaq may change the total number of
Members selected from time to time.
12 See note 9.
13 15 U.S.C. 78f.
14 15 U.S.C. 78f(b)(5).
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Frm 00112
Fmt 4703
Sfmt 4703
adopt clear and objective criteria with
respect to the designation of Members
and Participants that are required to
participate in the testing of the
Exchange’s BC/DR Plans, as well as
appropriate notification regarding such
designation. As set forth in the SCI
Adopting Release, ‘‘SROs have the
authority, and legal responsibility,
under Section 6 of the Exchange Act, to
adopt and enforce rules (including rules
to comply with Regulation SCI’s
requirements relating to BC/DR testing)
applicable to their members or
participants that are designed to, among
other things, foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, 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.’’ 15 The Exchange
believes that this proposal is consistent
with such authority and legal
responsibility.
B. Self-Regulatory Organization's
Statement on Burden on Competition
The Exchange does not believe that
the 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 amended.
To the contrary, the proposal is not a
competitive proposal but rather is
necessary for the Exchange’s
compliance with Regulation SCI.
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 16 and Rule 19b–
4(f)(6)(iii) thereunder.17 Because the
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
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
15 See SCI Adopting Release, supra note 5 at
72350.
16 15 U.S.C. 78s(b)(3)(A)(iii).
17 17 CFR 240.19b–4(f)(6).
E:\FR\FM\12NON1.SGM
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Federal Register / Vol. 80, No. 218 / Thursday, November 12, 2015 / Notices
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.18 A proposed rule change
filed under Rule 19b–4(f)(6)(iii) 19
normally does not become operative
prior to 30 days after the date of the
filing. However, pursuant to Rule 19b–
4(f)(6)(iii),20 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 Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest as it
will allow the Exchange to incorporate
changes required under Regulation SCI,
such as establishing standards for
designating BC/DR participants, prior to
the November 3, 2015 compliance date.
Accordingly, the Commission
designates the proposed rule change to
be operative upon filing.21
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:
mstockstill on DSK4VPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
18 In addition, Rule 19b–4(f)(6) requires a selfregulatory 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.
19 17 CFR 240.19b–4(f)(6).
20 17 CFR 240.19b–4(f)(6)(iii).
21 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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18:15 Nov 10, 2015
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• Send an email to rulecomments@sec.gov. Please include File
Number SR±NASDAQ±2015±134 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2015–134. 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 Web site (https://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 Web site 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±
NASDAQ±2015±134 and should be
submitted on or before December 3,
2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–28697 Filed 11–10–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76366; File No. SR–
NYSEMKT–2015–85]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing of Proposed
Rule Change to the Co-Location
Services Offered by the Exchange (the
Offering of a Wireless Connection To
Allow Users To Receive Market Data
Feeds From Third Party Markets) and
To Reflect Changes to the NYSE MKT
Equities Price List and the NYSE Amex
Options Fee Schedule Related to
These Services
November 5, 2015.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on October
23, 2015, NYSE MKT LLC (the
‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to change the
co-location services offered by the
Exchange to include a means for colocated Users to receive market data
feeds from third party markets through
a wireless connection. In addition, the
proposed rule change reflects changes to
the NYSE MKT Equities Price List
(‘‘Price List’’) and the NYSE Amex
Options Fee Schedule (‘‘Fee Schedule’’)
related to these services. The text of the
proposed rule change is available on the
Exchange’s Web site at www.nyse.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
self-regulatory organization 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 those statements may be examined at
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
22 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 80, Number 218 (Thursday, November 12, 2015)]
[Notices]
[Pages 70045-70047]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28697]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76368; File No. SR-NASDAQ-2015-134]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Adopt Business Continuity and Disaster Recovery Plans Testing
Requirements
November 5, 2015.
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 November 2, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt business continuity and disaster
recovery plans (``BC/DR Plans'') testing requirements applicable to
Exchange Members \3\ and Options Participants \4\ in connection with
Regulation Systems Compliance and Integrity (``Regulation SCI'').\5\
---------------------------------------------------------------------------
\3\ The term ``Member'' is defined as ``any registered broker or
dealer that has been admitted to membership in Nasdaq.'' See
Exchange Rule 0120(i).
\4\ The term ``Options Participant'' is defined as a category of
Nasdaq Member that is authorized to ``transact business on NOM via
the Trading System. Options Participants may trade options for their
own proprietary accounts or, if authorized to do so under applicable
law, and consistent with these NOM Rules and with applicable law and
SEC rules and regulations, may conduct business on behalf of
Customers.'' See NOM Option Rules, Chapter II, Section 1(a).
\5\ See Securities Exchange Act Release No. 73639 (November 19,
2014), 79 FR 72252 (December 5, 2014) (``SCI Adopting Release'').
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Exchange's
Web site at https://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
Nasdaq is proposing to adopt new Rule 1170 to implement the BC/DR
Plans requirements of Rule 1004 of Regulation SCI. As adopted by the
Commission, Regulation SCI applies to certain self-regulatory
organizations (including the Exchange), alternative trading systems
(``ATSs''), plan processors, and exempt clearing agencies
(collectively, ``SCI entities''), and will require these SCI entities
to comply with requirements with respect to the automated systems
central to the performance of their regulated activities. Among the
requirements of Regulation SCI is Rule 1001(a)(2)(v), which requires
the Exchange and other SCI entities to maintain ``[b]usiness continuity
and disaster recovery plans that include maintaining backup and
recovery capabilities sufficiently resilient and geographically diverse
and that are reasonably designed to achieve next business day
resumption of trading and two-hour resumption of critical SCI systems
following a wide-scale disruption.'' \6\ The Exchange has put extensive
time and resources toward planning for system failures and already
maintains robust BC/DR Plans consistent with the Rule. As set forth
below, in connection with Regulation SCI, the Exchange is proposing to
require certain Members to participate in testing of the operation of
the Exchange's BC/DR Plans.
---------------------------------------------------------------------------
\6\ 17 CFR 242.1001(a)(2)(v).
---------------------------------------------------------------------------
With respect to an SCI entity's BC/DR Plans, including its backup
systems, paragraph (a) of Rule 1004 of Regulation SCI requires each SCI
entity to: ``[e]stablish standards for the designation of those members
or participants that the SCI entity reasonably determines are, taken as
a whole, the minimum necessary for the maintenance of fair and orderly
markets in the event of the activation of such plans.'' \7\ Paragraph
(b) of Rule 1004 of Regulation SCI further requires each SCI entity to
``[d]esignate members or participants pursuant to the standards
established in paragraph (a) of [Rule 1004] and require participation
by such designated members or participants in scheduled functional and
performance testing of the operation of such plans, in the manner and
frequency specified by the SCI entity, provided that such frequency
shall not be less than once every 12 months.'' \8\ In order to comply
with Rule 1004 of Regulation SCI, the Exchange proposes to adopt new
Rule 1170, which incorporates the requirements of Rule 1004 of
Regulation SCI as part of the Exchange's rules, and sets forth the
notice, selection criteria and obligations of Members and Participants
with respect to BC/DR Plans testing. Nasdaq proposes to adopt Rule
1170(a), which will set forth the Exchange's obligations with respect
to the selection of Members and Participants for testing. Specifically,
the rule will require Nasdaq to ``[e]stablish standards for the
designation of those Members and Options Participants that Nasdaq
reasonably determines are, taken as a whole, the minimum necessary for
the maintenance of fair and orderly markets in the event of the
activation of such plans.'' The proposed new rule further provides that
``[s]uch standards may include volume-based and/or market share-based
criteria, and may be adjusted from time to time by Nasdaq.'' Lastly,
the proposed new rule will require Nasdaq to provide public notice of
the standards that it adopts.
---------------------------------------------------------------------------
\7\ 17 CFR 242.1004(a).
\8\ 17 CFR 242.1004(b).
---------------------------------------------------------------------------
Nasdaq is proposing to adopt Rule 1170(b), which will set forth the
obligations of Nasdaq and its Members
[[Page 70046]]
and Participants with respect to testing. Specifically, the rule will
require Nasdaq to ``designate Members and Options Participants pursuant
to the standards established in paragraph (a) of this rule and require
participation by such designated Members and Options Participants in
scheduled functional and performance testing of the operation of such
plans, in the manner and frequency specified by Nasdaq, provided that
such frequency shall not be less than once every 12 months.'' Moreover,
the rule will require Nasdaq to provide at least six months prior
notice to Members and Participants that are designated for mandatory
testing. Lastly, the rule will provide notice that participation in
testing is a condition of membership for Members and Participants that
are designated for testing.
The Exchange encourages all Members and Participants to connect to
the Exchange's backup systems and to participate in testing of such
systems; \9\ however, certain Members and Participants will be
obligated to participate in BC/DR Plans testing. In adopting new Rule
1170, the Exchange will require mandatory participation in BC/DR Plans
testing by those Members and Participants that the Exchange reasonably
determines are, taken as a whole, the minimum necessary for the
maintenance of fair and orderly markets in the event of the activation
of such plans on the Exchange and NOM, respectively. The Exchange
believes that using overall participation on its markets (by volume
and/or market share) as a measure to select Members and Participants
for mandatory participation in BC/DR Plans testing is a reasonable
means by which it can determine which Members and Participants are
necessary for the maintenance of fair and orderly markets in the event
of the activation of such plans.\10\ For each BC/DR Plans test cycle,
Nasdaq will select the top ten Members on the Exchange and the top five
Participants on NOM based on Nasdaq's measure of overall participation
on each of those markets. The Exchange will provide notice of a
Members' and Participants' selection at least six months prior to the
next BC/DR Plans test date. All notices concerning BC/DR Plans testing
will be posted on Nasdaq's Web site.
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\9\ In this regard, Nasdaq will allow any Member or Participant
to participate in the testing of the Exchange's BC/DR Plans, which
is consistent with the Plan. See SCI Adopting Release, supra note 5
at 72350. Nasdaq will provide instructions on how a Member and
Participant must inform Nasdaq of its interest in participating in
an upcoming BC/DR Plans test via the announcement of the test date.
A Member or Participant must provide Nasdaq notice of its interest
to participate at least a week prior to the test date and must have
the appropriate connection for testing in place.
\10\ Nasdaq will provide notice of the specific selection
criteria and measurement period in a notice to Members and
Participants. The initial selection criteria and measurement period
will be announced no later than November 3, 2015.
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The Exchange is proposing to initially select Members and
Participants with the highest levels of trading volume on Nasdaq and
NOM over four calendar months (``Measurement Period'') as mandatory
testing Members and Participants, respectively.\11\ Specifically, the
Measurement Period will be the four calendar months of trading
immediately prior to Nasdaq's announcement of the next BC/DR Plans test
date. The Measurement Period will always begin at a point after Nasdaq
announces the criteria to be used in the next BC/DR Plans test. By way
of example, if on October 6, 2017 Nasdaq announced the BC/DR Plans test
selection criteria and on March 2, 2018 Nasdaq announced a BC/DR Plans
test date of September 8, 2018, the Measurement Period used to select
Members and Participants subject to mandatory testing would be November
2017 through February 2018. Members and Participants not obligated to
participate that wish to participate in this test must inform Nasdaq no
later than September 1, 2018.\12\
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\11\ Nasdaq may change the total number of Members selected from
time to time.
\12\ See note 9.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act,\13\ in general, and further the objectives
of Section 6(b)(5) of the Act,\14\ in particular, in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, 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; and are not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The proposal will ensure that the Members and
Participants necessary to ensure the maintenance of fair and orderly
markets are properly designated consistent with Rule 1004 of Regulation
SCI. Specifically, the proposal will adopt clear and objective criteria
with respect to the designation of Members and Participants that are
required to participate in the testing of the Exchange's BC/DR Plans,
as well as appropriate notification regarding such designation. As set
forth in the SCI Adopting Release, ``SROs have the authority, and legal
responsibility, under Section 6 of the Exchange Act, to adopt and
enforce rules (including rules to comply with Regulation SCI's
requirements relating to BC/DR testing) applicable to their members or
participants that are designed to, among other things, foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, 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.'' \15\ The Exchange believes that this proposal is consistent
with such authority and legal responsibility.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(5).
\15\ See SCI Adopting Release, supra note 5 at 72350.
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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
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. To
the contrary, the proposal is not a competitive proposal but rather is
necessary for the Exchange's compliance with Regulation SCI.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6)(iii) thereunder.\17\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
[[Page 70047]]
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\18\ A proposed rule change filed under Rule
19b-4(f)(6)(iii) \19\ normally does not become operative prior to 30
days after the date of the filing. However, pursuant to Rule 19b-
4(f)(6)(iii),\20\ the Commission may designate a shorter time if such
action is consistent with the protection of investors and the public
interest.
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\16\ 15 U.S.C. 78s(b)(3)(A)(iii).
\17\ 17 CFR 240.19b-4(f)(6).
\18\ 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.
\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Commission believes that waiving the 30-day operative delay
is consistent with the protection of investors and the public interest
as it will allow the Exchange to incorporate changes required under
Regulation SCI, such as establishing standards for designating BC/DR
participants, prior to the November 3, 2015 compliance date.
Accordingly, the Commission designates the proposed rule change to be
operative upon filing.\21\
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\21\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2015-134 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2015-134. 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 Web site (https://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 Web site 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-NASDAQ-2015-134 and should
be submitted on or before December 3, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28697 Filed 11-10-15; 8:45 am]
BILLING CODE 8011-01-P
