Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Assume Operational Responsibility for Certain Enforcement Functions Currently Performed by FINRA Under the Exchanges Authority and Supervision, 19042-19044 [2020-06959]
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19042
Federal Register / Vol. 85, No. 65 / Friday, April 3, 2020 / Notices
other things, requires every selfregulatory organization to comply with
its own rules. OCC filed its Capital
Management Policy as a ‘‘proposed rule
change’’ within the meaning of Section
19(b) of the Act,30 and Rule 19b–4 under
the Act.31 The Capital Management
Policy specifies that the maximum
Operational Loss Fee shall be the
Adjusted RWD Amount.32 Because the
Adjusted RWD Amount will change
annually based, in part, on OCC’s
corporate budget, fee filings will be
necessary to ensure that the maximum
Operational Loss Fee in OCC’s schedule
of fees remains consistent with the
amount identified in the Capital
Management Policy. Therefore, OCC
believes that the proposed change to
OCC’s fee schedule is consistent with
Section 19(g)(1) of the Act.
The proposed rule change is not
inconsistent with the existing rules of
OCC, including any other rules
proposed to be amended.
jbell on DSKJLSW7X2PROD with NOTICES
(B) Clearing Agency’s Statement on
Burden on Competition
Section 17A(b)(3)(I) of the Act 33
requires that the rules of a clearing
agency not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act. OCC does not
believe that the proposed rule change
would have any impact or impose a
burden on competition. Although the
proposed Operational Loss Fee affects
Clearing Members, their customers, and
the markets that OCC serves, OCC
believes that the proposed rule change
would not disadvantage or favor any
particular user of OCC’s services in
relationship to another user because the
proposed Operational Loss Fee would
apply equally to all Clearing Members.
In addition, OCC does not believe that
the proposed Operational Loss Fee
imposes a significant burden on smaller
firms because the maximum Operational
Loss Fee imposes a contingent
obligation on Clearing Members that is
approximately the same amount as a
Clearing Member’s contingent obligation
for Clearing Fund assessments for a
Clearing Member operating at the
minimum Clearing Fund deposit.34
Moreover, the proposed rule change
would lower the maximum contingent
obligation, which would be a benefit to
all Clearing Members. Accordingly, OCC
does not believe that the proposed rule
30 15
U.S.C. 78s(b).
31 17 CFR 240.19b–4.
32 Order Approving OCC’s Capital Management
Policy, 85 FR at 5503.
33 15 U.S.C. 78q–1(b)(3)(I).
34 See note 18, supra.
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change would have any impact or
impose a burden on competition.
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants or Others
Written comments on the proposed
rule change were not and are not
intended to be solicited with respect to
the proposed rule change and none have
been received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A)(ii) 35
of the Act, and Rule 19b–4(f)(2)
thereunder,36 the proposed rule change
is filed for immediate effectiveness as it
constitutes a change in fees charged to
OCC Clearing Members. 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. The proposal shall
not take effect until all regulatory
actions required with respect to the
proposal are completed.37
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–
OCC–2020–002 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–OCC–2020–002. 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
35 15
U.S.C. 78s(b)(3)(A)(ii).
36 17 CFR 240.19b–4(f)(2).
37 Notwithstanding its immediate effectiveness,
implementation of this rule change will be delayed
until this change is deemed certified under CFTC
Regulation 40.6.
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only one method. The Commission will
post all comments on the Commission’s
internet website (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 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 such
filing also will be available for
inspection and copying at the principal
office of OCC.
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–OCC–2020–002 and should
be submitted on or before April 24,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.38
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–06954 Filed 4–2–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88516; File No. SR–
NASDAQ–2020–007]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing of Amendment No. 1 and Order
Granting Accelerated Approval of a
Proposed Rule Change, as Modified by
Amendment No. 1, To Assume
Operational Responsibility for Certain
Enforcement Functions Currently
Performed by FINRA Under the
Exchanges Authority and Supervision
March 30, 2020.
I. Introduction
On February 3, 2020, The Nasdaq
Stock Market LLC (‘‘Exchange’’ or
‘‘Nasdaq’’) filed with the Securities and
38 17
E:\FR\FM\03APN1.SGM
CFR 200.30–3(a)(12).
03APN1
Federal Register / Vol. 85, No. 65 / Friday, April 3, 2020 / Notices
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to assume
operational responsibility for certain
enforcement functions currently
performed by the Financial Industry
Regulatory Authority (‘‘FINRA’’) under
the Exchange’s authority and
supervision. The proposed rule change
was published for comment in the
Federal Register on February 20, 2020.3
On March 24, 2020, the Exchange filed
Amendment No. 1 to the proposed rule
change, which amended and replaced
the proposed rule change.4 The
Commission did not receive any
comment letters on the proposed rule
change. The Commission is publishing
this notice to solicit comments on
Amendment No. 1 from interested
persons, and is approving the proposed
rule change, as modified by Amendment
No. 1, on an accelerated basis.
II. Description of the Proposal
According to the Exchange, since it
became a national securities exchange,
the Exchange has contracted with
FINRA through various regulatory
services agreements to perform certain
regulatory functions on its behalf.5 At
the same time, the Exchange retained
operational responsibility for a number
of regulatory functions, including realtime surveillance, qualification of
companies listed on the Exchange, and
most surveillance related to its affiliated
options markets.6 In April 2019, the
Exchange reallocated operational
responsibility from FINRA to Nasdaq
Regulation for certain investigative and
enforcement activity, including the
investigation and enforcement
responsibilities for conduct occurring
on The Nasdaq Options Market,7 and
investigation and enforcement
responsibilities for conduct occurring
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 88209
(February 13, 2020), 85 FR 9870.
4 In Amendment No. 1, the Exchange: (1) Clarified
that the Exchange itself, not a third-party, would be
assuming operational responsibility for certain
contested disciplinary matters; (2) clarified that
FINRA’s Office of Hearing Officers would continue
to administer the hearing process for all contested
disciplinary matters; and (3) made other technical,
clarifying, and conforming changes. Amendment
No. 1 is available at https://www.sec.gov/comments/
sr-nasdaq-2020-007/srnasdaq2020007-6990674214688.pdf.
5 See Amendment No. 1, supra note 4 at 4.
6 See id.
7 According to the Exchange, as appropriate,
Nasdaq Regulation coordinates with other SROs to
the extent it is investigating activity occurring on
non-Nasdaq options markets to ensure no regulatory
duplication occurs.
jbell on DSKJLSW7X2PROD with NOTICES
2 17
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17:45 Apr 02, 2020
Jkt 250001
on Nasdaq’s equity market only, i.e., not
also on non-Nasdaq-affiliated equities
markets.8 According to the Exchange,
notwithstanding the changes made in
April 2019, FINRA continues to perform
certain functions pursuant to an RSA,9
including the handling of contested
disciplinary proceedings arising out of
Nasdaq Regulation-led investigation and
enforcement activities.
The Exchange now proposes to
reallocate operational responsibility
from FINRA to Nasdaq Regulation for
certain enforcement activity,
specifically, the handling of certain
contested disciplinary proceedings.10
The Exchange states that it anticipates
handling those contested disciplinary
proceedings that FINRA is unable or
unwilling to handle due to strained
resources or other similar limitations.11
Furthermore, the Exchange states that in
all cases, the Exchange will continue to
use FINRA’s Office of Hearing Officers
to administer the hearing process, and
that the rules applicable to the
disciplinary process will remain the
same.12
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change, as
modified by Amendment No. 1, is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange 13 and, in particular,
with Sections 6(b)(5) and 6(b)(7) of the
Act.14 As noted above, since it became
a national securities exchange, the
Exchange has contracted with FINRA
through various regulatory services
agreements to perform certain regulatory
functions on its behalf.15 Nasdaq
General Rule 1, Section 7 requires that,
8 Securities Exchange Act Release No. 85505
(April 3, 2019), 84 FR 14170 (April 9, 2019).
9 In addition to work performed pursuant to a
RSA, FINRA also performs work for matters covered
by agreements to allocate regulatory responsibility
under Rule 17d–2 of the Act.
10 See Amendment No. 1, supra note 4, at 6. The
Exchange states that Nasdaq Regulation’s decision
to assume operational responsibility for any given
contested disciplinary proceeding with be made on
a case by case basis. See Amendment No. 1, supra
note 4, at 6, fn.13. Furthermore, the Exchange states
that for those contested disciplinary proceedings
that Nasdaq Regulation does not assume operational
responsibility for, the Exchange will continue to use
FINRA to litigate those matters. See Amendment
No. 1, supra note 4, at 6.
11 See Amendment No. 1, supra note 4, at 6.
12 See Amendment No. 1, supra note 4, at 6, fn.12;
7.
13 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
14 15 U.S.C. 78f(b)(5), (7).
15 See supra note 5 and accompanying text.
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Fmt 4703
Sfmt 4703
19043
unless Nasdaq obtains prior
Commission approval, the regulatory
functions subject to the regulatory
services agreement in effect at the time
when Nasdaq began to operate a
national securities exchange must at all
times continue to be performed by
FINRA or an affiliate thereof or by
another independent self-regulatory
organization. The Exchange now
proposes to reallocate operational
responsibility for the certain contested
disciplinary activities discussed above
from FINRA to Nasdaq Regulation.16
The Commission believes that the
Exchange could leverage its knowledge
of its markets and members, its
experience with investigation and
enforcement work, and its surveillance,
investigation, and enforcement staff, in
helping to effectively, efficiently, and
with immediacy, litigate certain
contested disciplinary proceeds.17 The
Commission also notes that, as
discussed above, the proposal would
not change or alter in any way the
disciplinary process around how
contested matters are handled, and
FINRA’s Office of Hearing Officers will
continue to administer the hearing
process for all contested disciplinary
proceedings.18 Furthermore, as the
Exchange states, by assuming
operational responsibility for certain
contested disciplinary proceedings, the
Exchange may be able to deliver
increased efficiencies in the regulation
of its markets and to act promptly and
provide more effective regulation by
enabling timely and more efficient
action.19 Accordingly, the Commission
believes that the proposed rule change,
as modified by Amendment No. 1, is
consistent with the Act.
IV. Solicitation of Comments on
Amendment No. 1 to the Proposed Rule
Change
Interested persons are invited to
submit written data, views, and
arguments concerning whether
Amendment No. 1 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–2020–007 on the subject line.
16 See
supra notes 10 and 11 and accompanying
text.
17 See
Amendment No. 1, supra note 4, at 7.
id.
19 See Amendment No. 1, supra note 4, at 7, 9.
18 See
E:\FR\FM\03APN1.SGM
03APN1
19044
Federal Register / Vol. 85, No. 65 / Friday, April 3, 2020 / Notices
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–2020–007. 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 (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2020–007 and
should be submitted on or before April
24, 2020.
jbell on DSKJLSW7X2PROD with NOTICES
V. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 1, prior to
the thirtieth day after the date of
publication of notice of the filing of
Amendment No. 1 in the Federal
Register. The Commission notes that, in
Amendment No. 1, the Exchange
provided additional information to
clarify and support the proposal, and
did not materially change the substance
of the proposal. The Commission also
notes that the original proposal was
subject to a 21-day comment period and
no comments were received.
Accordingly, the Commission finds
good cause, pursuant to Section 19(b)(2)
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17:45 Apr 02, 2020
Jkt 250001
of the Act,20 to approve the proposed
rule change, as modified by Amendment
No. 1, on an accelerated basis.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,21 that the
proposed rule change (SR–NASDAQ–
2020–007), as modified by Amendment
No. 1 be, and hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–06959 Filed 4–2–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88512; File No. SR–FICC–
2020–003]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Revise the
Clearing Agency Investment Policy
March 30, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 26,
2020, Fixed Income Clearing
Corporation (‘‘FICC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the clearing agency. FICC filed the
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change would
revise the Clearing Agency Investment
Policy (‘‘Investment Policy’’) of FICC
and its affiliates, The Depository Trust
Company (‘‘DTC’’) and National
Securities Clearing Corporation
(‘‘NSCC,’’ and together with DTC and
FICC, the ‘‘Clearing Agencies’’) in order
20 15
U.S.C. 78s(b)(2).
21 Id.
22 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
1 15
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Frm 00132
Fmt 4703
Sfmt 4703
to (1) include the proceeds of the
issuance of term debt by NSCC as part
of the description of ‘‘Default Liquidity
Funds’’ within the section for
‘‘Investable Funds’’; (2) clarify the
allowable investments for DTC’s
Participants Fund; 5 and (3) enhance the
description of collateral that may be
posted in connection with investments
in reverse repurchase agreements; as
described in greater detail below.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency 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
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
The Clearing Agencies are proposing
to revise the Investment Policy, which
was adopted for each clearing agency in
December 2016 6 and is maintained in
compliance with Rule 17Ad–22(e)(16)
under the Act,7 in order to (1) include
the proceeds of the issuance of term
debt by NSCC as part of the description
of ‘‘Default Liquidity Funds’’ within the
section for ‘‘Investable Funds’’; (2)
clarify the allowable investments for
DTC’s Participants Fund; and (3)
enhance the description of collateral
that may be posted in connection with
investments in reverse repurchase
5 The respective Clearing Funds of NSCC and
FICC, and the DTC Participants Fund are described
in the Rules & Procedures of NSCC (‘‘NSCC Rules’’),
the DTC Rules, By-laws and Organization
Certificate (‘‘DTC Rules’’), the Clearing Rules of the
Mortgage-Backed Securities Division of FICC
(‘‘MBSD Rules’’) and the Rulebook of the
Government Securities Division of FICC (‘‘GSD
Rules’’), respectively, available at https://dtcc.com/
legal/rules-and-procedures. See Rule 4 (Clearing
Fund) of the NSCC Rules, Rule 4 (Participants Fund
and Participants Investment) of the DTC Rules, Rule
4 (Clearing Fund and Loss Allocation) of the GSD
Rules and Rule 4 (Clearing Fund and Loss
Allocation) of the MBSD Rules.
6 See Securities Exchange Act Release No. 79528
(December 12, 2016), 81 FR 91232 (December 16,
2016) (SR–DTC–2016–007, SR–FICC–2016–005,
SR–NSCC–2016–003).
7 17 CFR 240.17Ad–22(e)(16). As discussed in
this filing, the Investment Policy also addresses
compliance with the requirements of Rule 17Ad–
22(e)(3). 17 CFR 240.17Ad–22(e)(3).
E:\FR\FM\03APN1.SGM
03APN1
]]>Agencies
[Federal Register Volume 85, Number 65 (Friday, April 3, 2020)]
[Notices]
[Pages 19042-19044]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06959]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88516; File No. SR-NASDAQ-2020-007]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Amendment No. 1 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To
Assume Operational Responsibility for Certain Enforcement Functions
Currently Performed by FINRA Under the Exchanges Authority and
Supervision
March 30, 2020.
I. Introduction
On February 3, 2020, The Nasdaq Stock Market LLC (``Exchange'' or
``Nasdaq'') filed with the Securities and
[[Page 19043]]
Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to assume operational
responsibility for certain enforcement functions currently performed by
the Financial Industry Regulatory Authority (``FINRA'') under the
Exchange's authority and supervision. The proposed rule change was
published for comment in the Federal Register on February 20, 2020.\3\
On March 24, 2020, the Exchange filed Amendment No. 1 to the proposed
rule change, which amended and replaced the proposed rule change.\4\
The Commission did not receive any comment letters on the proposed rule
change. The Commission is publishing this notice to solicit comments on
Amendment No. 1 from interested persons, and is approving the proposed
rule change, as modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 88209 (February 13,
2020), 85 FR 9870.
\4\ In Amendment No. 1, the Exchange: (1) Clarified that the
Exchange itself, not a third-party, would be assuming operational
responsibility for certain contested disciplinary matters; (2)
clarified that FINRA's Office of Hearing Officers would continue to
administer the hearing process for all contested disciplinary
matters; and (3) made other technical, clarifying, and conforming
changes. Amendment No. 1 is available at https://www.sec.gov/comments/sr-nasdaq-2020-007/srnasdaq2020007-6990674-214688.pdf.
---------------------------------------------------------------------------
II. Description of the Proposal
According to the Exchange, since it became a national securities
exchange, the Exchange has contracted with FINRA through various
regulatory services agreements to perform certain regulatory functions
on its behalf.\5\ At the same time, the Exchange retained operational
responsibility for a number of regulatory functions, including real-
time surveillance, qualification of companies listed on the Exchange,
and most surveillance related to its affiliated options markets.\6\ In
April 2019, the Exchange reallocated operational responsibility from
FINRA to Nasdaq Regulation for certain investigative and enforcement
activity, including the investigation and enforcement responsibilities
for conduct occurring on The Nasdaq Options Market,\7\ and
investigation and enforcement responsibilities for conduct occurring on
Nasdaq's equity market only, i.e., not also on non-Nasdaq-affiliated
equities markets.\8\ According to the Exchange, notwithstanding the
changes made in April 2019, FINRA continues to perform certain
functions pursuant to an RSA,\9\ including the handling of contested
disciplinary proceedings arising out of Nasdaq Regulation-led
investigation and enforcement activities.
---------------------------------------------------------------------------
\5\ See Amendment No. 1, supra note 4 at 4.
\6\ See id.
\7\ According to the Exchange, as appropriate, Nasdaq Regulation
coordinates with other SROs to the extent it is investigating
activity occurring on non-Nasdaq options markets to ensure no
regulatory duplication occurs.
\8\ Securities Exchange Act Release No. 85505 (April 3, 2019),
84 FR 14170 (April 9, 2019).
\9\ In addition to work performed pursuant to a RSA, FINRA also
performs work for matters covered by agreements to allocate
regulatory responsibility under Rule 17d-2 of the Act.
---------------------------------------------------------------------------
The Exchange now proposes to reallocate operational responsibility
from FINRA to Nasdaq Regulation for certain enforcement activity,
specifically, the handling of certain contested disciplinary
proceedings.\10\ The Exchange states that it anticipates handling those
contested disciplinary proceedings that FINRA is unable or unwilling to
handle due to strained resources or other similar limitations.\11\
Furthermore, the Exchange states that in all cases, the Exchange will
continue to use FINRA's Office of Hearing Officers to administer the
hearing process, and that the rules applicable to the disciplinary
process will remain the same.\12\
---------------------------------------------------------------------------
\10\ See Amendment No. 1, supra note 4, at 6. The Exchange
states that Nasdaq Regulation's decision to assume operational
responsibility for any given contested disciplinary proceeding with
be made on a case by case basis. See Amendment No. 1, supra note 4,
at 6, fn.13. Furthermore, the Exchange states that for those
contested disciplinary proceedings that Nasdaq Regulation does not
assume operational responsibility for, the Exchange will continue to
use FINRA to litigate those matters. See Amendment No. 1, supra note
4, at 6.
\11\ See Amendment No. 1, supra note 4, at 6.
\12\ See Amendment No. 1, supra note 4, at 6, fn.12; 7.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 1, is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange \13\ and, in particular,
with Sections 6(b)(5) and 6(b)(7) of the Act.\14\ As noted above, since
it became a national securities exchange, the Exchange has contracted
with FINRA through various regulatory services agreements to perform
certain regulatory functions on its behalf.\15\ Nasdaq General Rule 1,
Section 7 requires that, unless Nasdaq obtains prior Commission
approval, the regulatory functions subject to the regulatory services
agreement in effect at the time when Nasdaq began to operate a national
securities exchange must at all times continue to be performed by FINRA
or an affiliate thereof or by another independent self-regulatory
organization. The Exchange now proposes to reallocate operational
responsibility for the certain contested disciplinary activities
discussed above from FINRA to Nasdaq Regulation.\16\
---------------------------------------------------------------------------
\13\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\14\ 15 U.S.C. 78f(b)(5), (7).
\15\ See supra note 5 and accompanying text.
\16\ See supra notes 10 and 11 and accompanying text.
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The Commission believes that the Exchange could leverage its
knowledge of its markets and members, its experience with investigation
and enforcement work, and its surveillance, investigation, and
enforcement staff, in helping to effectively, efficiently, and with
immediacy, litigate certain contested disciplinary proceeds.\17\ The
Commission also notes that, as discussed above, the proposal would not
change or alter in any way the disciplinary process around how
contested matters are handled, and FINRA's Office of Hearing Officers
will continue to administer the hearing process for all contested
disciplinary proceedings.\18\ Furthermore, as the Exchange states, by
assuming operational responsibility for certain contested disciplinary
proceedings, the Exchange may be able to deliver increased efficiencies
in the regulation of its markets and to act promptly and provide more
effective regulation by enabling timely and more efficient action.\19\
Accordingly, the Commission believes that the proposed rule change, as
modified by Amendment No. 1, is consistent with the Act.
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\17\ See Amendment No. 1, supra note 4, at 7.
\18\ See id.
\19\ See Amendment No. 1, supra note 4, at 7, 9.
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IV. Solicitation of Comments on Amendment No. 1 to the Proposed Rule
Change
Interested persons are invited to submit written data, views, and
arguments concerning whether Amendment No. 1 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 [email protected]. Please include
File Number SR-NASDAQ-2020-007 on the subject line.
[[Page 19044]]
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-2020-007. 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 (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2020-007 and should be submitted
on or before April 24, 2020.
V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 1, prior to the thirtieth day
after the date of publication of notice of the filing of Amendment No.
1 in the Federal Register. The Commission notes that, in Amendment No.
1, the Exchange provided additional information to clarify and support
the proposal, and did not materially change the substance of the
proposal. The Commission also notes that the original proposal was
subject to a 21-day comment period and no comments were received.
Accordingly, the Commission finds good cause, pursuant to Section
19(b)(2) of the Act,\20\ to approve the proposed rule change, as
modified by Amendment No. 1, on an accelerated basis.
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\20\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\21\ that the proposed rule change (SR-NASDAQ-2020-007), as
modified by Amendment No. 1 be, and hereby is, approved on an
accelerated basis.
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\21\ Id.
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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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-06959 Filed 4-2-20; 8:45 am]
BILLING CODE 8011-01-P
