Order Granting Applications by Nasdaq BX, Inc. and Nasdaq PHLX LLC for Exemption Pursuant to Section 36(a) of the Exchange Act From the Rule Filing Requirements of Section 19(b) of the Exchange Act With Respect to Certain Order Audit Trail System Rules Incorporated by Reference, 7410-7411 [2019-03736]

Download as PDF 7410 Federal Register / Vol. 84, No. 42 / Monday, March 4, 2019 / Notices Dated: February 25, 2019. Nadine N. Mancini, General Counsel, Senior Agency Official for Privacy. [FR Doc. 2019–03831 Filed 3–1–19; 8:45 am] BILLING CODE 7600–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85203] Order Granting Applications by Nasdaq BX, Inc. and Nasdaq PHLX LLC for Exemption Pursuant to Section 36(a) of the Exchange Act From the Rule Filing Requirements of Section 19(b) of the Exchange Act With Respect to Certain Order Audit Trail System Rules Incorporated by Reference February 26, 2019. Nasdaq BX, Inc. (‘‘BX’’) and Nasdaq PHLX LLC (‘‘Phlx’’) (each the ‘‘Exchange’’ and collectively, the ‘‘Exchanges’’) have filed with the Securities and Exchange Commission (‘‘Commission’’) an application for an exemption from the rule filing requirements of Section 19(b) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) 1 with respect to certain rules of Financial Industry Regulatory Authority (‘‘FINRA’’) that the Exchanges seek to incorporate by reference. Section 36(a)(1) of the Exchange Act,2 subject to certain limitations, authorizes the Commission to conditionally or unconditionally exempt any person, security, or transaction, or any class thereof, from any provision of the Exchange Act or rule thereunder, if necessary or appropriate in the public interest and consistent with the protection of investors. The Exchanges each filed a proposed rule change 3 under Section 19(b) of the Exchange Act to amend their respective Order Audit Trail System (‘‘OATS’’) rules, some of which incorporate by reference the rules contained in the FINRA Rule 7400 Series entitled ‘‘Order Audit Trail System,’’ as such rules may be in effect from time to time, and reference FINRA Rule 4590 entitled ‘‘Synchronization of Member Business Clocks.’’ In the proposed rule changes, the Exchanges proposed to incorporate by reference FINRA Rules 4590, 7440, 1 15 U.S.C. 78s(b). U.S.C. 78mm(a)(1). 3 See Securities Exchange Act Release Nos. 84227 (September 20, 2018), 83 FR 48483 (September 25, 2018) (SR–BX–2018–045) and 84545 (November 6, 2018), 83 FR 56387 (November 13, 2018) (SR–Phlx– 2018–68). 2 15 VerDate Sep<11>2014 17:33 Mar 01, 2019 Jkt 247001 and 7450, and thus make these rules applicable to Exchange members in the case of BX, and member organizations in the case of Phlx.4 The Exchanges request, pursuant to Rule 0–12 under the Exchange Act,5 that the Commission grant the Exchanges an exemption from the rule filing requirements of Section 19(b) of the Exchange Act for changes to each Exchange’s rules that are effected solely by virtue of a change to FINRA Rules 4590, 7440, and 7450 that are incorporated by reference. Specifically, the Exchanges request that they be permitted to incorporate by reference changes made to FINRA Rules 4590, 7440, and 7450 that are cross-referenced in the Exchanges’ rules without the need for each Exchange to separately file, pursuant to Section 19(b) of the Exchange Act, the same proposed rule change as filed by FINRA.6 The Exchanges represent that FINRA Rules 4590, 7440, and 7450 are regulatory in nature and that they do not intend to incorporate by reference any trading rules.7 Further, the Exchanges represent that they will, as a condition of this exemption, provide written notice to their members whenever FINRA proposes a change to FINRA Rules 4590, 7440, and 7450.8 Such notice will alert the members of each Exchange to the proposed rule change and give them an opportunity to comment on the proposal. The Exchanges state that they will also inform members in writing when the Commission approves any such proposed rule change.9 The Exchanges believe this exemption is appropriate because it will result in the Exchanges’ rules pertaining to OATS compliance remaining consistent at all times, thus ensuring consistent regulation of joint members of the Exchanges, as well as the Nasdaq Market.10 4 The Exchanges stated in their proposed rule changes specified in note 3 above that the changes would not be operative until such time as the Commission granted their request for an exemption from the rule filing requirements of Section 19(b) of the Exchange Act. 5 17 CFR 240.0–12. 6 See Letter from T. Sean Bennett, Principal Associate General Counsel, Nasdaq Inc., to Brent J. Fields, Secretary, Commission, dated November 29, 2018. 7 See id. at 2. 8 The Exchanges also state that they will provide such notice on their websites in the same section they use to post their own proposed rule changes pursuant to Rule 19b–4(l) of the Exchange Act. In addition, the Exchanges state that their websites will include a link to the FINRA website where the proposed rule change would be located. Id. 9 Id. 10 Id. PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 The Commission has issued exemptions similar to the Exchanges’ request.11 In granting one such exemption in 2010, the Commission repeated a prior, 2004 Commission statement that it would consider similar future exemption requests from other self-regulatory organizations (‘‘SROs’’), provided that: • An SRO wishing to incorporate rules of another SRO by reference has submitted a written request for an order exempting it from the requirement in Section 19(b) of the Exchange Act to file proposed rule changes relating to the rules incorporated by reference, has identified the applicable originating SRO(s), together with the rules it wants to incorporate by reference, and otherwise has complied with the procedural requirements set forth in the Commission’s release governing procedures for requesting exemptive orders pursuant to Rule 0–12 under the Exchange Act; 12 • The incorporating SRO has requested incorporation of categories of rules (rather than individual rules within a category) that are not trading rules (e.g., the SRO has requested incorporation of rules such as margin, suitability, or arbitration); and • The incorporating SRO has reasonable procedures in place to provide written notice to its members each time a change is proposed to the incorporated rules of another SRO.13 The Commission believes that the Exchanges have satisfied each of these 11 See, e.g., Securities Exchange Act Release Nos. 80338 (March 29, 2017), 82 FR 16464 (April 4, 2017) (order granting exemptive request from MIAX PEARL, LLC relating to rules of Miami International Securities Exchange, LLC incorporated by reference); 72650 (July 22, 2014), 79 FR 44075 (July 29, 2014) (order granting exemptive requests from NASDAQ OMX BX, Inc. and the NASDAQ Stock Market LLC relating to rules of NASDAQ OMX PHLX LLC incorporated by reference); 67256 (June 26, 2012), 77 FR 39277, 39286 (July 2, 2012) (order approving SR–BX–2012–030 and granting exemptive request relating to rules incorporated by reference by the BX Options rules); 61534 (February 18, 2010), 75 FR 8760 (February 25, 2010) (order granting BATS Exchange, Inc.’s exemptive request relating to rules incorporated by reference by the BATS Exchange Options Market rules) (‘‘BATS Options Market Order’’); and 57478 (March 12, 2008), 73 FR 14521, 14539–40 (March 18, 2008) (order approving SR–NASDAQ–2007–004 and SR– NASDAQ–2007–080, and granting exemptive request relating to rules incorporated by reference by The NASDAQ Options Market). 12 See 17 CFR 240.0–12 and Securities Exchange Act Release No. 39624 (February 5, 1998), 63 FR 8101 (February 18, 1998) (‘‘Commission Procedures for Filing Applications for Orders for Exemptive Relief Pursuant to Section 36 of the Exchange Act; Final Rule’’). 13 See BATS Options Market Order, supra note 11 (citing Securities Exchange Act Release No. 49260 (February 17, 2004), 69 FR 8500 (February 24, 2004) (order granting exemptive request relating to rules incorporated by reference by several SROs) (‘‘2004 Order’’)). E:\FR\FM\04MRN1.SGM 04MRN1 Federal Register / Vol. 84, No. 42 / Monday, March 4, 2019 / Notices conditions. Further, the Commission also believes that granting the Exchanges an exemption from the rule filing requirements under Section 19(b) of the Exchange Act will promote efficient use of the Commission’s and the Exchanges’ resources by avoiding duplicative rule filings based on simultaneous changes to identical rule text sought by more than one SRO.14 The Commission therefore finds it appropriate in the public interest and consistent with the protection of investors to exempt the Exchanges from the rule filing requirements under Section 19(b) of the Exchange Act with respect to the above-described rules they incorporate by reference. This exemption is conditioned upon the Exchanges promptly providing written notice to their members whenever FINRA changes a rule that the Exchanges have incorporated by reference. Accordingly, it is ordered, pursuant to Section 36 of the Exchange Act,15 that the Exchanges are exempt from the rule filing requirements of Section 19(b) of the Exchange Act solely with respect to changes to the rules identified in their request that incorporate by reference certain FINRA rules that are the result of changes to such FINRA rules, provided that the Exchanges promptly provide written notice to their members whenever FINRA proposes to change a rule that the Exchanges have incorporated by reference. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–03736 Filed 3–1–19; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Data Collection Available for Public Comments Small Business Administration. 60-Day notice and request for comments. AGENCY: ACTION: The Small Business Administration (SBA) intends to request approval from the Office of Management and Budget (OMB) for the collection of information described below. The Paperwork Reduction Act (PRA) requires federal agencies to publish a SUMMARY: 14 See BATS Options Market Order, supra note 11, 75 FR at 8761; see also 2004 Order, supra note 13, 69 FR at 8502. 15 15 U.S.C. 78mm. 16 17 CFR 200.30–3(a)(76). VerDate Sep<11>2014 17:33 Mar 01, 2019 Jkt 247001 notice in the Federal Register concerning each proposed collection of information before submission to OMB, and to allow 60 days for public comment in response to the notice. This notice complies with that requirement. DATES: Submit comments on or before May 3, 2019. ADDRESSES: Send all comments to Daniel Upham, Chief, Microenterprise Development Division, Office of Capital Access, Small Business Administration, 409 Third Street SW, Washington, DC 20416. FOR FURTHER INFORMATION CONTACT: Daniel Upham, Chief, Microenterprise Development Division, Office of Capital Access, Daniel.upham@sba.gov, 202– 205–7001, or Curtis B. Rich, Management Analyst, 202–205–7030, curtis.rich@sba.gov. SUPPLEMENTARY INFORMATION: Section 853(c) of the National Defense Authorization Act for Fiscal Year 2019 (NDAA 2019), Public Law 115–232 (8/ 13/2018) requires the SBA to study the level of participation by intermediaries that are eligible to participate in the Agency’s Microloan Program. To that end SBA plans to conduct a survey of this group of intermediaries to determine the reasons why some of them do not participate in the program. The survey will explore ways to encourage increased participation in the microloan program, and also decrease the costs associated with participation. Generally, the survey will look at the operations of the intermediaries, including structure, size, area of operations, and the nature of the services that they provide. Intermediaries that are eligible for the program but do not currently participate will be asked to identify some of the factors that contribute to their nonparticipation in the program. The survey will also explore what factors could make the program more appealing to intermediaries and lead them to participate. The complete list of questions is available upon request from SBA. Finally, as required by the NDAA 2019, the results of the study will be reported to the Committee on Small Business and Entrepreneurship of the Senate, and the Committee on Small Business of the House of Representatives. Solicitation of Public Comments SBA is requesting comments on (a) Whether the collection of information is necessary for the agency to properly perform its functions; (b) whether the burden estimates are accurate; (c) whether there are ways to minimize the PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 7411 burden, including through the use of automated techniques or other forms of information technology; and (d) whether there are ways to enhance the quality, utility, and clarity of the requested information. Summary of Information Collection Title: SBA Study of Microenterprise Participation. Form Number: N/A. Description of Respondents: Organizations eligible to participate in the SBA Microloan Program. Estimated Number of Respondents: 500. Total Estimated Responses: 500. Total Estimated Annual Hour Burden: 160 hours. Curtis Rich, Management Analyst. [FR Doc. 2019–03720 Filed 3–1–19; 8:45 am] BILLING CODE 8025–01–P DEPARTMENT OF STATE [Public Notice: 10686] Bureau of Political-Military Affairs; Rescission of Statutory Debarment of Rocky Mountain Instrument Company Under the International Traffic in Arms Regulations Notice is hereby given that the Department of State has rescinded the statutory debarment of Rocky Mountain Instrument Company included in Federal Register notice of September 8, 2010. DATES: Rescission as of March 4, 2019. FOR FURTHER INFORMATION CONTACT: Jae Shin, Director, Office of Defense Trade Controls Compliance, Bureau of Political-Military Affairs, Department of State (202) 632–2107. SUPPLEMENTARY INFORMATION: Section 38(g)(4) of the Arms Export Control Act (AECA), 22 U.S.C. 2778(g)(4), prohibits the issuance of licenses or other approvals for the export of defense articles or defense services where the applicant, or any party to the export, has been convicted of violating the AECA and certain other U.S. criminal statues enumerated in § 38(g)(1) of the AECA. In addition, § 127.7(b) of the International Traffic in Arms Regulations (ITAR) provides for the statutory debarment of any person who has been convicted of violating or conspiring to violate the AECA. As stated in this provision, it is the policy of the Department of State not to consider applications for licenses or requests for approvals involving any person who has been statutorily debarred. Persons subject to statutory SUMMARY: E:\FR\FM\04MRN1.SGM 04MRN1

Agencies

[Federal Register Volume 84, Number 42 (Monday, March 4, 2019)]
[Notices]
[Pages 7410-7411]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03736]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85203]


Order Granting Applications by Nasdaq BX, Inc. and Nasdaq PHLX 
LLC for Exemption Pursuant to Section 36(a) of the Exchange Act From 
the Rule Filing Requirements of Section 19(b) of the Exchange Act With 
Respect to Certain Order Audit Trail System Rules Incorporated by 
Reference

February 26, 2019.
    Nasdaq BX, Inc. (``BX'') and Nasdaq PHLX LLC (``Phlx'') (each the 
``Exchange'' and collectively, the ``Exchanges'') have filed with the 
Securities and Exchange Commission (``Commission'') an application for 
an exemption from the rule filing requirements of Section 19(b) of the 
Securities Exchange Act of 1934 (``Exchange Act'') \1\ with respect to 
certain rules of Financial Industry Regulatory Authority (``FINRA'') 
that the Exchanges seek to incorporate by reference. Section 36(a)(1) 
of the Exchange Act,\2\ subject to certain limitations, authorizes the 
Commission to conditionally or unconditionally exempt any person, 
security, or transaction, or any class thereof, from any provision of 
the Exchange Act or rule thereunder, if necessary or appropriate in the 
public interest and consistent with the protection of investors.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b).
    \2\ 15 U.S.C. 78mm(a)(1).
---------------------------------------------------------------------------

    The Exchanges each filed a proposed rule change \3\ under Section 
19(b) of the Exchange Act to amend their respective Order Audit Trail 
System (``OATS'') rules, some of which incorporate by reference the 
rules contained in the FINRA Rule 7400 Series entitled ``Order Audit 
Trail System,'' as such rules may be in effect from time to time, and 
reference FINRA Rule 4590 entitled ``Synchronization of Member Business 
Clocks.'' In the proposed rule changes, the Exchanges proposed to 
incorporate by reference FINRA Rules 4590, 7440, and 7450, and thus 
make these rules applicable to Exchange members in the case of BX, and 
member organizations in the case of Phlx.\4\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release Nos. 84227 (September 
20, 2018), 83 FR 48483 (September 25, 2018) (SR-BX-2018-045) and 
84545 (November 6, 2018), 83 FR 56387 (November 13, 2018) (SR-Phlx-
2018-68).
    \4\ The Exchanges stated in their proposed rule changes 
specified in note 3 above that the changes would not be operative 
until such time as the Commission granted their request for an 
exemption from the rule filing requirements of Section 19(b) of the 
Exchange Act.
---------------------------------------------------------------------------

    The Exchanges request, pursuant to Rule 0-12 under the Exchange 
Act,\5\ that the Commission grant the Exchanges an exemption from the 
rule filing requirements of Section 19(b) of the Exchange Act for 
changes to each Exchange's rules that are effected solely by virtue of 
a change to FINRA Rules 4590, 7440, and 7450 that are incorporated by 
reference. Specifically, the Exchanges request that they be permitted 
to incorporate by reference changes made to FINRA Rules 4590, 7440, and 
7450 that are cross-referenced in the Exchanges' rules without the need 
for each Exchange to separately file, pursuant to Section 19(b) of the 
Exchange Act, the same proposed rule change as filed by FINRA.\6\
---------------------------------------------------------------------------

    \5\ 17 CFR 240.0-12.
    \6\ See Letter from T. Sean Bennett, Principal Associate General 
Counsel, Nasdaq Inc., to Brent J. Fields, Secretary, Commission, 
dated November 29, 2018.
---------------------------------------------------------------------------

    The Exchanges represent that FINRA Rules 4590, 7440, and 7450 are 
regulatory in nature and that they do not intend to incorporate by 
reference any trading rules.\7\ Further, the Exchanges represent that 
they will, as a condition of this exemption, provide written notice to 
their members whenever FINRA proposes a change to FINRA Rules 4590, 
7440, and 7450.\8\ Such notice will alert the members of each Exchange 
to the proposed rule change and give them an opportunity to comment on 
the proposal. The Exchanges state that they will also inform members in 
writing when the Commission approves any such proposed rule change.\9\
---------------------------------------------------------------------------

    \7\ See id. at 2.
    \8\ The Exchanges also state that they will provide such notice 
on their websites in the same section they use to post their own 
proposed rule changes pursuant to Rule 19b-4(l) of the Exchange Act. 
In addition, the Exchanges state that their websites will include a 
link to the FINRA website where the proposed rule change would be 
located. Id.
    \9\ Id.
---------------------------------------------------------------------------

    The Exchanges believe this exemption is appropriate because it will 
result in the Exchanges' rules pertaining to OATS compliance remaining 
consistent at all times, thus ensuring consistent regulation of joint 
members of the Exchanges, as well as the Nasdaq Market.\10\
---------------------------------------------------------------------------

    \10\ Id.
---------------------------------------------------------------------------

    The Commission has issued exemptions similar to the Exchanges' 
request.\11\ In granting one such exemption in 2010, the Commission 
repeated a prior, 2004 Commission statement that it would consider 
similar future exemption requests from other self-regulatory 
organizations (``SROs''), provided that:
---------------------------------------------------------------------------

    \11\ See, e.g., Securities Exchange Act Release Nos. 80338 
(March 29, 2017), 82 FR 16464 (April 4, 2017) (order granting 
exemptive request from MIAX PEARL, LLC relating to rules of Miami 
International Securities Exchange, LLC incorporated by reference); 
72650 (July 22, 2014), 79 FR 44075 (July 29, 2014) (order granting 
exemptive requests from NASDAQ OMX BX, Inc. and the NASDAQ Stock 
Market LLC relating to rules of NASDAQ OMX PHLX LLC incorporated by 
reference); 67256 (June 26, 2012), 77 FR 39277, 39286 (July 2, 2012) 
(order approving SR-BX-2012-030 and granting exemptive request 
relating to rules incorporated by reference by the BX Options 
rules); 61534 (February 18, 2010), 75 FR 8760 (February 25, 2010) 
(order granting BATS Exchange, Inc.'s exemptive request relating to 
rules incorporated by reference by the BATS Exchange Options Market 
rules) (``BATS Options Market Order''); and 57478 (March 12, 2008), 
73 FR 14521, 14539-40 (March 18, 2008) (order approving SR-NASDAQ-
2007-004 and SR-NASDAQ-2007-080, and granting exemptive request 
relating to rules incorporated by reference by The NASDAQ Options 
Market).
---------------------------------------------------------------------------

     An SRO wishing to incorporate rules of another SRO by 
reference has submitted a written request for an order exempting it 
from the requirement in Section 19(b) of the Exchange Act to file 
proposed rule changes relating to the rules incorporated by reference, 
has identified the applicable originating SRO(s), together with the 
rules it wants to incorporate by reference, and otherwise has complied 
with the procedural requirements set forth in the Commission's release 
governing procedures for requesting exemptive orders pursuant to Rule 
0-12 under the Exchange Act; \12\
---------------------------------------------------------------------------

    \12\ See 17 CFR 240.0-12 and Securities Exchange Act Release No. 
39624 (February 5, 1998), 63 FR 8101 (February 18, 1998) 
(``Commission Procedures for Filing Applications for Orders for 
Exemptive Relief Pursuant to Section 36 of the Exchange Act; Final 
Rule'').
---------------------------------------------------------------------------

     The incorporating SRO has requested incorporation of 
categories of rules (rather than individual rules within a category) 
that are not trading rules (e.g., the SRO has requested incorporation 
of rules such as margin, suitability, or arbitration); and
     The incorporating SRO has reasonable procedures in place 
to provide written notice to its members each time a change is proposed 
to the incorporated rules of another SRO.\13\
---------------------------------------------------------------------------

    \13\ See BATS Options Market Order, supra note 11 (citing 
Securities Exchange Act Release No. 49260 (February 17, 2004), 69 FR 
8500 (February 24, 2004) (order granting exemptive request relating 
to rules incorporated by reference by several SROs) (``2004 
Order'')).
---------------------------------------------------------------------------

    The Commission believes that the Exchanges have satisfied each of 
these

[[Page 7411]]

conditions. Further, the Commission also believes that granting the 
Exchanges an exemption from the rule filing requirements under Section 
19(b) of the Exchange Act will promote efficient use of the 
Commission's and the Exchanges' resources by avoiding duplicative rule 
filings based on simultaneous changes to identical rule text sought by 
more than one SRO.\14\ The Commission therefore finds it appropriate in 
the public interest and consistent with the protection of investors to 
exempt the Exchanges from the rule filing requirements under Section 
19(b) of the Exchange Act with respect to the above-described rules 
they incorporate by reference. This exemption is conditioned upon the 
Exchanges promptly providing written notice to their members whenever 
FINRA changes a rule that the Exchanges have incorporated by reference.
---------------------------------------------------------------------------

    \14\ See BATS Options Market Order, supra note 11, 75 FR at 
8761; see also 2004 Order, supra note 13, 69 FR at 8502.
---------------------------------------------------------------------------

    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act,\15\ that the Exchanges are exempt from the rule filing 
requirements of Section 19(b) of the Exchange Act solely with respect 
to changes to the rules identified in their request that incorporate by 
reference certain FINRA rules that are the result of changes to such 
FINRA rules, provided that the Exchanges promptly provide written 
notice to their members whenever FINRA proposes to change a rule that 
the Exchanges have incorporated by reference.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78mm.
    \16\ 17 CFR 200.30-3(a)(76).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-03736 Filed 3-1-19; 8:45 am]
BILLING CODE 8011-01-P
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