Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the GEMX Disciplinary Rules in General 5 To Incorporate by Reference The Nasdaq Stock Market LLC's Series 8000 and 9000 Rules, 37129-37133 [2020-13208]

Download as PDF Federal Register / Vol. 85, No. 119 / Friday, June 19, 2020 / Notices khammond on DSKJM1Z7X2PROD with NOTICES Finally, as noted above, with respect to the non-display use declaration late fee and the multiple data feed fee, NYSE National claims that these fees are reasonable, equitable, and not unfairly discriminatory because they would offset NYSE National’s administrative burdens and costs associated with incorrect billing, late payments, and tracking data usage locations.75 The Commission again believes that its analysis would benefit from a fuller explanation, with supporting facts, of NYSE National’s ‘‘administrative burdens’’ and ‘‘administrative costs’’ associated with these activities. The Commission believes that such information would inform the Commission’s analysis of the nondisplay use declaration late fee and the multiple data feed fee. 4. General Request for Comment The Commission asks that commenters address the sufficiency and merit of NYSE National’s statements in support of the proposal, in addition to any other comments they may wish to submit about the proposed rule change. For example, the Commission believes that its analysis may benefit from comment, including, where relevant, any specific data, statistics, or studies, on the following: • Do the proposed fees represent an equitable allocation of reasonable fees, not permit unfair discrimination, and not impose any unnecessary or inappropriate burden on competition? Please explain and provide supporting information. • Are the proposed fees constrained by robust competition? Please explain and provide supporting information. • Are NYSE National’s characterization of platform competition and characterization of market data and transaction services as two sides of an exchange platform correct? Are there any other sides of an exchange platform (e.g., connectivity, listing) and should these other sides be considered in analyzing the proposed fees? • Should the question of whether the NYSE National Integrated Feed fees are constrained by competitive forces be analyzed using any separate methodology not discussed in the proposal (i.e., other than substitution and platform competition)? If so, please explain such methodology. • Does an analysis of the total market data revenue from NYSE National’s parent company demonstrate or support NYSE National’s assertion that the market for proprietary market data products is characterized by robust competition? 76 Why or why not? Should other data, such as operating profit margins and returns on assets for the entirety of NYSE National and for each of its business lines (including proprietary market data products, consolidated market data products, market connectivity services, and transaction services), also be analyzed in order to evaluate NYSE National’s assertion? Why or why not? • Does an analysis of the effect of the introduction of the NYSE Integrated Feed on trading volume on NYSE demonstrate or support NYSE National’s assertions that platform economics applies to exchanges’ sale of proprietary market data products and trading services and that platform competition effectively constrains the pricing of those data products? 77 Why or why not? 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 No. SR– NYSENAT–2020–05 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 No. SR–NYSENAT–2020–05. The 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 such filing also will be available for inspection and copying at the principal 76 See 75 See id. VerDate Sep<11>2014 77 See 17:17 Jun 18, 2020 Jkt 250001 PO 00000 Jones Paper, supra note 31. Rysman Paper, supra note 24. Frm 00070 Fmt 4703 Sfmt 4703 37129 office of NYSE National. 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 publicly available. All submissions should refer to File No. SR–NYSENAT–2020–05 and should be submitted on or before July 10, 2020. By the Commission. Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2020–13201 Filed 6–18–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–89071; File No. SR–GEMX– 2020–15] Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the GEMX Disciplinary Rules in General 5 To Incorporate by Reference The Nasdaq Stock Market LLC’s Series 8000 and 9000 Rules June 15, 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 June 10, 2020, Nasdaq GEMX, LLC (‘‘GEMX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the GEMX Disciplinary Rules in General 5 to incorporate by reference The Nasdaq Stock Market LLC’s (‘‘Nasdaq’’) Series 8000 and 9000 Rules, currently located under the General 5 title of the Nasdaq rulebook,3 instead of the BX Rules, which the Exchange currently incorporates by reference. The text of the proposed rule change is available on the Exchange’s website at https://nasdaqgemx.cchwallstreet.com/, 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 87778 (December 17, 2019), 84 FR 70590 (December 23, 2019) (SR–NASDAQ–2019–098). 2 17 E:\FR\FM\19JNN1.SGM 19JNN1 37130 Federal Register / Vol. 85, No. 119 / Friday, June 19, 2020 / Notices 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 khammond on DSKJM1Z7X2PROD with NOTICES 1. Purpose In connection with a recent rule change to relocate the Nasdaq BX, Inc. (‘‘BX’’) Disciplinary Rules under the General 5 title (‘‘Discipline’’),4 and incorporate by reference The Nasdaq Stock Market LLC’s (‘‘Nasdaq’’) Series 8000 and 9000 Rules, GEMX proposes to similarly incorporate by reference Nasdaq’s Series 8000 and 9000 Rules. The BX Disciplinary Rules, which were relocated to General 5 of the BX Rules,5 were replaced with introductory paragraphs that respectively incorporate by reference the Nasdaq Series 8000 and 9000 Rules (located under the General 5 title in the Nasdaq rulebook).6 Currently, GEMX incorporates the BX Disciplinary Rules within the Series 8000 and 9000 Rules, which were relocated to General 5 of the BX Rules with the aforementioned rule change.7 At this time, GEMX proposes to incorporate by reference the Nasdaq Series 8000 and 9000 Rules (located in General 5 Discipline), respectively, and state that such Nasdaq Rules shall be 4 See Securities Exchange Act Release No. 88938 (May 26, 2020), 88 FR 33235 (June 1, 2020) (SR– BX–2020–009). 5 Id. 6 Id. The Exchange notes that the proposed changes will not become operative unless and until the Commission approves the Exchange’s request, to be filed pursuant to Section 36 of the Exchange Act and SEC Rule 0–12 thereunder, for an exemption from the rule filing requirements of Section 19(b) of the Exchange Act as to changes to the Current GEMX 8000 Series (new General 5, Section 1) and Current GEMX 9000 Series (new General 5, Section 2) that are effected solely by virtue of a change to the Nasdaq Series 8000 or 9000 Rules Series. 7 Securities Exchange Act Release No. 88938 (May 26, 2020), 88 FR 33235 (June 1, 2020) (SR–BX– 2020–009). VerDate Sep<11>2014 17:17 Jun 18, 2020 Jkt 250001 applicable to Exchange Members, associated persons, and other persons subject to GEMX’s jurisdiction. Except as noted below, the Nasdaq Series 8000 and 9000 Rules are substantially similar to BX’s Disciplinary Rules, which the Exchange currently incorporates by reference. The following discussions identify the differences between the current BX Disciplinary Rules and the corresponding Nasdaq Disciplinary Rules to be incorporated by reference into GEMX: Current BX IM–8310–3(b) Current BX Rule 9120(f) provides that ‘‘[t]he term ‘‘Department of Enforcement’’ means the Department of Enforcement of FINRA Regulation, acting on behalf of the Exchange pursuant to the FINRA Regulatory Contract.’’ 8 Current BX IM–8310–3(b), however, uses the term ‘‘Department of Enforcement of FINRA.’’ Since Nasdaq IM–8310–3(b) uses the term ‘‘Department of Enforcement’’ GEMX believes it is appropriate to utilize the Nasdaq terms going forward and incorporate by reference into the GEMX rule. Current BX Rule 8320 In 2010, Nasdaq created Rule 7007 (‘‘Collection of Fees’’) to facilitate an efficient method of collecting undisputed or final fees, fines, charges and/or other monetary sanctions or monies due and owing to Nasdaq from The Nasdaq Option Market (‘‘NOM’’) Participants.9 Similarly, in 2012, BX adopted its options market rules (‘‘BX Options Market’’) to operate as a fully automated, price/time priority execution system built on the core functionality of NOM.10 In its filing, BX proposed to adopt, under respective Chapter XV, Section 2, a rule identical to the Nasdaq Collection of Fees rule.11 Although, at the time of its creation, the 8 This definition mirrors the one in the Nasdaq rulebook under Rule 9120(f). 9 See Securities Exchange Act Release No. 63536 (December 14, 2010), 75 FR 80102 (December 21, 2010) (SR–NASDAQ–2010–163). Nasdaq Rule 7007 was later relocated to Options Chapter XV, Section 1 and then moved to its current location under Options 7, Section 1, in the Nasdaq rulebook shell. See Securities Exchange Act Release No. 66158 (January 13, 2012), 75 FR 80102 (January 13, 2012) (SR–NASDAQ–2012–006) and Securities Exchange Act Release No.84684 (November 29, 2018), 83 FR 62936 (December 6, 2018) (SR–NASDAQ–2018– 098). 10 Securities Exchange Act Release No. 67256 (June 26, 2012), 77 FR 39277 (July 2, 2012) (SR–BX– 2012–030). This rule was later relocated to the BX Rulebook shell. See Securities Exchange Act Release No. 84326 (October 1, 2018), 83 FR 50414 (October 1, 2018) (SR–BX–2018–046). 11 Id. PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 Nasdaq Collection of Fees rule was cross-referenced to current Nasdaq Rule 8320(a)(1),12 such cross-reference was not included in the filing that created the BX Options Market. GEMX also has the same Collection of Fees rule,13 that is identical to the Nasdaq rule. Because BX Rule 8320, which GEMX incorporates by reference, does not include a cross-reference to the Collection of Fees rule, GEMX will follow the Nasdaq rule going forward, which has the correct cross-reference. The Exchange also proposes to add rule text, within General 5, Section 3, to note the distinction between the location of the Collection of Fees rules. Specifically, the Exchange proposes to add rule text to provide that references in the Nasdaq 8000 Series to ‘‘Nasdaq’s Options 7, Section 1’’ shall be read to refer to GEMX Options 7, Section 2. Based on the above, the Exchange believes that it is appropriate that GEMX adopts the aforementioned crossreference to make the collection of fees owed to the Exchange more efficient. Therefore, the Exchange believes that it is appropriate to incorporate by reference Nasdaq Rule 8320 into GEMX Rules. Current BX Rule 9120 In 2018, BX amended its Disciplinary Rules to align them with the investigatory and disciplinary processes of Nasdaq PHLX LLC (‘‘Phlx’’).14 As stated in its proposal, the changes to the ‘‘Interested Staff’’ concept (which, at the time, was relocated under 9120(r)) were done to conform the BX rule to Phlx’s definition. At the time, however, the proposed harmonizing changes to BX Rule 9120(r)(1)(B) inadvertently excluded the words ‘‘Head of’’ and omitted to add the word ‘‘the’’; indeed, the text should have read ‘‘Head of the Exchange’s Regulation Department’’ instead of, simply, ‘‘Exchange’s Regulation Department.’’ The correct definition, as explained above, would also align with the term currently defined in Nasdaq Rule 9120(r)(1)(B), which provides that ‘‘Interested Staff’’ shall mean ‘‘an Exchange employee of the Nasdaq Regulation Department who reports, directly or indirectly, to the Head of the Nasdaq Regulation Department.’’ The Exchange believes that it is appropriate to apply Nasdaq Rule 9120 and to incorporate it by reference into the GEMX rule. Additionally, the 12 See supra note 9. GEMX Options 7, Section 2. 14 See Securities Exchange Act Release No. 84354 (October 3, 2018), 83 FR 50723 (October 9, 2018) (SR–BX–2018–042). 13 See E:\FR\FM\19JNN1.SGM 19JNN1 Federal Register / Vol. 85, No. 119 / Friday, June 19, 2020 / Notices Exchange notes that applying Nasdaq Rule 9120 and incorporating it by reference into the Exchange rule should correct a typo in current BX Rule 9120(v) that erroneously uses the term ‘‘RINRA’’ instead of the acronym ‘‘FINRA.’’ Current BX Rule 9231 The Exchange proposes to adopt the cross-reference in Nasdaq Rule 9231(c) concerning the appointment of arbitrators pursuant to the FINRA Rules 12000 and 13000 Series (the ‘‘FINRA Arbitration Rules’’). Current BX Rule 9231(c) provides that arbitrators shall be appointed pursuant to BX General 6 (‘‘BX Arbitration Rules’’).15 The BX Arbitration Rules incorporate by reference the similar Nasdaq arbitration rules (also under Nasdaq’s General 6 title); GEMX’s arbitration rules within General 6 also incorporate Nasdaq’s arbitration rules; in turn, the Nasdaq rules incorporate the FINRA Arbitration Rules by reference into its text. Following the incorporation by reference of Nasdaq Rule 9231, GEMX Rule 9231(c) will directly crossreference the FINRA Arbitration Rules, which will not create any differences from the current ISE rules. khammond on DSKJM1Z7X2PROD with NOTICES Current BX Rule 9232 Currently, Nasdaq Rule 9232(a) provides a cross-reference to subsections (A) through (D) in Nasdaq Rule 9231(b)(1), whereas current BX Rule 9232(a) simply provides a reference to BX Rule 9231(b)(1). The Exchange believes that it is appropriate to apply Nasdaq Rule 9232(a) and incorporate it by reference into the GEMX rule since the Nasdaq rule contains a more precise cross-reference to Nasdaq Rule 9231(b)(1). Current BX Rule 9522 The Exchange proposes to apply and incorporate by reference Nasdaq Rule 9522 in place of current BX Rule 9522. This proposal amends the first sentence in current BX Rule 9522(a)(1) by replacing the term ‘‘Exchange’s Regulation Department’’ with the term ‘‘Department of Member Regulation’’ as currently provided in Nasdaq Rule 9522(a)(1). As previously indicated by the Exchange,16 the FINRA Department of Member Regulation 17 currently performs the functions described in current BX Rule 9522. Therefore, 15 See Securities Exchange Act Release No. 84476 (October 24, 2018), 83 FR 54630 (October 30, 2018) (SR–BX–2018–048). 16 See Securities Exchange Act Release No. 84354 (October 3, 2018), 83 FR 50724 (October 9, 2018) (SR–BX–2018–042). 17 As defined in BX 9120(g). VerDate Sep<11>2014 17:17 Jun 18, 2020 Jkt 250001 applying the Nasdaq rule and incorporating it by reference into GEMX Rule 9522, provides clarity to the rule text and aligns it with Nasdaq and Phlx’s rules. The GEMX introductory paragraphs currently list instances in which various terms and rules within the BX Disciplinary Rules shall be read to refer to Exchange specific rules and terms. Replacing references to ‘‘BX’’ with ‘‘Nasdaq’’ in this introductory paragraph should align the Nasdaq and GEMX rules. All of these specific terms are identical as between the Nasdaq and BX Rules and, therefore, the term ‘‘BX’’ is being replaced with ‘‘Nasdaq.’’ The Exchange also proposes to remove certain references within GEMX General 5, Section 3, Code of Procedure, which are no longer necessary because they align with the current rules referenced within the Nasdaq 9000 Rule Series.18 The Exchange also proposes to amend certain references to Nasdaq Rules, as a result of the relocation of certain Nasdaq Rules in conjunction with a larger Rulebook relocation.19 Specifically, the Exchange proposes to amend: (a) Rule 1160 to relocated General 2, Section 11; (b) Equity Rules 2110 and 2120 to relocated General 9, Section 1; 20 (c) Equity Rule 2150 to relocated General 9, Section 2.21 Additionally, as noted above, the Exchange proposes to add rule text to provide that references in the Nasdaq 8000 Series to ‘‘Nasdaq’s Options 7, Section 1’’ shall be read to refer to GEMX Options 7, Section 2. The Exchange also proposes to update certain GEMX rule references. The proposed updated reference to ‘‘General 9, Section 1’’, replacing Equity Rule 2110, would refer to Nasdaq GEMX Options 9, Section 1. The Section 1 is being added as a more specific reference. Additionally, the proposed updated reference to ‘‘General 9, Section 1’’, replacing Equity Rule 2120, would 18 The following Nasdaq Rules were relocated in connection with a Nasdaq rule relocation filing: Rules 0120, 1070, 1160, 4110A, 4120A; Equity Rules 2110, 2120, 2140, 2150; Rule 1000 Series and Chapter III, Section 16. See Securities Exchange Act Release No. 87778 (December 17, 2019), 84 FR 70590 (December 23, 2019) (SR–NASDAQ–2019– 098) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Relocate Rules From Its Current Rulebook Into Its New Rulebook Shell). 19 See Securities Exchange Act Release No. 87778 (December 17, 2019), 84 FR 70590 (December 23, 2019) (SR–NASDAQ–2019–098) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Relocate Rules From Its Current Rulebook Into Its New Rulebook Shell). 20 Equity Rule 2120 was more specifically relocated to General 9, Section 1(g), however the Nasdaq Rule 9000 Series only reference General 9, Section 1. 21 Id. PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 37131 refer to Nasdaq GEMX Options 9, Section 6. The Section 6 is being added as a more specific reference. Other Technical Amendments Further, the Exchange proposes to amend references to General 5 to more specific references to the Nasdaq 9000 Series Rules, which pursuant to the proposed incorporation by reference will become GEMX Rules. Specifically, the Exchange proposes to amend General 1, Section 1 (Definitions); General 3, Section 2 (Denial of and Conditions to Becoming a Member); and General 3, Section 6 (Dissolution and Liquidation of Members). Further, the Exchange proposes to amend General 1, ‘‘Provisions’’ to General 1, ‘‘General Provisions’’ to mirror the name of the Chapter on Nasdaq Phlx LLC, Nasdaq BX, Inc., and Nasdaq. The Exchange also proposes to amend a typographical error within General 5, Sections 2 and 3 to remove a hyphen. The Exchange also proposes to amend a reference to Nasdaq GEMX Rule 1614 within General 5, Section 3 to instead reference Options 11, Section 1(b) to reflect a relocated rule, and correct a typographical error to remove a stray period. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,22 in general, and furthers the objectives of Section 6(b)(5) of the Act,23 in particular, in that it is designed to promote just and equitable principles of trade and to protect investors and the public interest by consolidating its rules into a single rule set. The various Nasdaq exchanges (‘‘Affiliated Exchanges’’) have filed similar proposed rule changes to amend and relocate their disciplinary rules 24 in order that the Nasdaq 8000 Series and 9000 Series Rules, which govern the investigative and disciplinary processes, are similarly consolidated and incorporated by reference.25 To the extent there will be 22 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 24 See Securities Exchange Act Release No. 86138 (July 18, 2019), 84 FR 29567 (July 24, 2019) (SR– ISE–2019–17); Securities Exchange Act Release No. 86346 (July 10, 2019), 84 FR 33999 (July 16, 2019) (SR–GEMX–2019–08); and Securities Exchange Act Release No. 86424 (July 12, 2019), 84 FR 36134 (July 26, 2019) (SR–MRX–2019–15); and Securities Exchange Act Release No. 87778 (December 17, 2019), 84 FR 70590 (December 23, 2019) (SR– NASDAQ–2019–098). Similarly, Phlx recently submitted a proposal to relocate its disciplinary rules. See Securities Exchange Act Release No. 88519 (March 31, 2020), 85 FR 19203 (April 6, 2020) (SR–Phlx–2020–09). 25 See Securities Exchange Act Release Nos. 88519 (March 31, 2020), 85 FR 19203 (April 6, 23 15 E:\FR\FM\19JNN1.SGM Continued 19JNN1 37132 Federal Register / Vol. 85, No. 119 / Friday, June 19, 2020 / Notices differences remaining between the two rule sets, the Exchange notes those differences in introductory paragraphs to each of GEMX’s Disciplinary Rules. Incorporating the Nasdaq Disciplinary Rules by reference into the GEMX Rules, instead of the BX Disciplinary Rules, will conform the alignment of these rules and permit the rules of Phlx, BX, Nasdaq ISE, LLC, Nasdaq MRX, LLC and GEMX to be incorporated by reference to one rule set. This proposal would permit the Nasdaq Series 8000 and 9000 Rules to be the source document for all of the Nasdaq Exchanges’ investigative and disciplinary processes. The Exchange notes that its current Disciplinary Rules are not substantively changing. The Exchange desires to conform its rules to give its Members and the members of its Affiliated Exchanges the ability to quickly locate rules in one central location and also to have a unified disciplinary rule set. The Exchange also believes that the proposal is consistent with Section 6(b)(6) of the Act,26 which requires that the rules of an exchange provide that its Members be appropriately disciplined for violations of the Act as well as the rules and regulations thereunder, or the rules of the Exchange, by expulsion, suspension, limitation of activities, functions, and operations, fine, censure, being suspended or barred from being associated with a Member, or any other fitting sanction. khammond on DSKJM1Z7X2PROD with NOTICES Other Technical Amendments These technical amendments are intended to align GEMX with other Nasdaq affiliated markets Rulebooks. Nasdaq Phlx LLC and Nasdaq BX, Inc. Rulesets are also incorporating by reference the Nasdaq Rules and those rulesets provide specific references to the Nasdaq disciplinary rules within the 9000 Series. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that this rule change does not impose an undue burden on competition because the Nasdaq Series 8000 and 9000 Rules, which are substantially similar to BX’s Disciplinary Rules, will be incorporated by reference into GEMX’s Rules. Those rules will now apply to GEMX 2020) (SR–Phlx–2020–09); and 88938 (May 26, 2020), 88 FR 33235 (June 1, 2020) (SR–BX–2020– 009), as well as SR–ISE–2020–22 and SR–MRX– 2020–12. 26 15 U.S.C. 78f(b)(6). VerDate Sep<11>2014 17:17 Jun 18, 2020 Jkt 250001 Members, associated persons, and other persons subject to the Exchange’s jurisdiction. To the extent that there will be differences remaining between the two rule sets, the Exchange notes those differences in introductory paragraphs to each of GEMX’s Disciplinary Rules. As noted above, the proposed introductory paragraphs list instances in which cross references in Nasdaq Series 8000 and 9000 Rules to other Nasdaq rules shall be read to refer instead to the Exchange Rules, and references to Nasdaq terms (whether or not defined) shall be read to refer to the Exchange-related meanings of those terms. Because Nasdaq Current Series 8000 and 9000 Rules are substantially similar to BX’s Disciplinary Rules, which GEMX currently incorporates by reference, and because the introductory paragraphs ensure that any differences are preserved, the proposed changes do not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Finally, the Exchange believes that the proposed amendments, including the technical amendments contained herein, do not impose an undue burden on competition because the amendments to relocate the Rules are non-substantive. This rule change is intended to bring greater clarity to the Exchange’s Rules. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 27 and subparagraph (f)(6) of Rule 19b–4 thereunder.28 At any time within 60 days of the filing of the proposed rule change, the 27 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 28 17 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 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– GEMX–2020–15 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–GEMX–2020–15. 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 E:\FR\FM\19JNN1.SGM 19JNN1 Federal Register / Vol. 85, No. 119 / Friday, June 19, 2020 / Notices submit only information that you wish to make available publicly. All submissions should refer to File Number SR–GEMX–2020–15 and should be submitted on or before July 10, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–13208 Filed 6–18–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–89074] Order Granting a Temporary Conditional Exemption From the Broker Registration Requirements of Section 15(a) of the Securities Exchange Act of 1934 for Certain Activities of Registered Municipal Advisors June 16, 2020. Securities and Exchange Commission. ACTION: Temporary exemptive order. AGENCY: The Securities and Exchange Commission (‘‘Commission’’) is granting a temporary conditional exemption from broker registration under Section 15 of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) for registered municipal advisors to address disruption in the municipal securities markets as a result of the coronavirus disease 2019 (‘‘COVID–19’’) pandemic. The temporary conditional exemption permits registered municipal advisors to solicit banks, their wholly-owned subsidiaries that are engaged in commercial lending and financing activities, and credit unions in connection with direct placements of securities issued by their municipal issuer clients, subject to the requirements set forth below. DATES: This exemptive order is effective from the date of this Order until December 31, 2020. FOR FURTHER INFORMATION CONTACT: Emily Westerberg Russell, Chief Counsel, Joanne Rutkowski, Assistant Chief Counsel, Kelly Shoop, Special Counsel, or Geeta Dhingra, Special Counsel, at 202–551–5550, in the Division of Trading and Markets; Rebecca Olsen, Director, Adam Wendell, Senior Special Counsel, or Emily Hanson Santana, Attorney Adviser, at 202–551–5680, in the Office khammond on DSKJM1Z7X2PROD with NOTICES SUMMARY: 29 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:17 Jun 18, 2020 Jkt 250001 of Municipal Securities; Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. I. Overview The Commission continues to closely monitor the impacts of the COVID–19 pandemic. The Commission understands that the outbreak has had far-reaching and unanticipated effects, including disruption to the municipal securities market.1 Municipal issuers have been experiencing COVID–19related stress, but must continue to operate despite facing increased unbudgeted costs coupled with revenue uncertainty.2 Timely and efficient access to the capital markets is critical in order for municipal issuers to continue to meet their operational needs. On June 3, 2020, the Federal Reserve Board announced the revised terms of its Municipal Liquidity Facility, originally established in April 2020 to purchase debt from state and local governments.3 The revised facility will support lending to U.S. states and the District of Columbia, U.S. cities with a population exceeding 250,000 residents, and U.S. counties with a population exceeding 500,000 residents that had an investment grade rating as of April 8, 2020, from at least one credit 1 See, e.g., Heather Gillers and Gunjan Banerji, ‘‘How the Muni Market Became the Epicenter of the Liquidity Crisis’’ Wall Street Journal, April 2, 2020; Lynne Funk, ‘‘Virus Leads to Growing, Severe Selling Pressure on Muni Market,’’ The Bond Buyer, March 18, 2020 and Lynne Funk, ‘‘Billions Pulled from Funds as Investors Flee Munis,’’ The Bond Buyer, March 19, 2020. 2 On April 14, 2020, the United States Conference of Mayors (USCM) and the National League of Cities (NLC) released findings of a survey that reported nearly nine in 10 cities expect a budget shortfall due to the impact of the COVID–19 pandemic on their economies. See ‘‘Cities Report Pandemic Creating Painful Budget Shortfalls, May Force Furloughs and Layoffs’’ April 14, 2020 available at https://www.usmayors.org/2020/04/14/cities-reportpandemic-creating-painful-budget-shortfalls-mayforce-furloughs-and-layoffs/ (‘‘USCM and NLC Survey’’); Tony Romm, ‘‘More than 2,100 U.S. cities brace for budget shortfalls due to coronavirus, survey finds, with many planning cuts and layoffs,’’ The Washington Post, April 14, 2020. See also National League of Cities—COVID available at https://www.nlc.org/topics/health-wellness/covid19 for general information on the impact of COVID on cities and COVID–19 Pandemic County Response Efforts & Priorities available at https:// www.naco.org/covid19 for general information the impact of COVID on counties. 3 See Federal Reserve Board Term Sheet, June 3, 2020 (‘‘Term Sheet’’) available at https:// www.federalreserve.gov/newsevents/pressreleases/ files/monetary20200603a1.pdf. In addition, to ensure that each U.S. state has at least two total cities and counties (on a combined basis) that may participate in the facility, certain U.S. state governors are permitted to designate up to two of the state’s most populous cities and/or counties (on a combined basis) to access the facility, resulting in an additional 34 cities and/or counties that may access the facility as of June 2020. See Term Sheet —Appendix A for details of the allocation. PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 37133 rating agency that the Federal Reserve has classified as a ‘‘major nationally recognized statistical rating organization.’’ 4 In addition to the population and ratings requirements, in order to access the facility, an eligible issuer must also provide a written certification that it is unable to secure adequate credit accommodations from other banking institutions and that it is not insolvent.5 Most municipal issuers, including many small cities, towns and villages, facing significant budget shortfalls do not meet the population thresholds and are not eligible to access the facility.6 At the same time, municipal issuers have faced challenges accessing the primary market, and as an alternative many municipal issuers have 4 For further information on the cities and counties that meet the population requirement, see Federal Reserve Bank of New York FAQs: Municipal Liquidity Facility and FAQs Appendix A available at https://www.newyorkfed.org/ medialibrary/media/markets/municipal-liquidityfacility-eligible-issuers. For details of the required ratings criteria, see Federal Reserve Bank of New York FAQs: Municipal Liquidity Facility and FAQs Appendix B available at https:// www.newyorkfed.org/medialibrary/media/markets/ municipal-liquidity-facility-pricing. 5 Id. 6 There are 19,495 incorporated cities, towns, and villages in the U.S. Only 87 have populations above the required 250,000 threshold. See City and Town Population Totals: 2010–2018, available at https:// www.census.gov/data/tables/time-series/demo/ popest/2010s-total-cities-and-towns.html. There are 3,142 counties in the U.S. Only 140 have populations above the 500,000 required threshold. See County Population Totals 2010–2019, available at https://www.census.gov/data/tables/time-series/ demo/popest/2010s-counties-total.html. An additional 34 cities and/or counties that do not meet these population thresholds may be ‘‘designated’’ as eligible to access the facility. See Term Sheet —Appendix A; see also USCM and NCL Survey. A total of 2,463 cities, towns and villages provided information to NLC and USCM. 2,191 of the cities are under 50,000 population; 181 are between 50,000 and 199,999; 56 are between 200,000 and 499,999; and 35 have a population of 500,000 and above—a group that includes 19 of the nation’s 20 largest cities. The cities who participated in the survey represent 57% of the nation’s municipal finance sector and 10% of its municipal governments, and their population totals 93,015,252, which is 28% of the total U.S. population. The Government Finance Officers Association also conducted an online survey of finance officers regarding the fiscal impacts of the COVID–19. See ‘‘Survey Results Quick Snapshot as of March 23, 2020,’’ available at https:// www.gfoa.org/early-data-gfoa-survey-showssubstantial-fiscal-impact-governments-covid-19outbreak-and-response (‘‘March 2020 GFOA Survey’’). Approximately 1,100 finance officers responded, more than half of whom represent smaller jurisdictions. The survey responses indicated that for respondents with operating budgets of $100 million or less, nearly 15% projected that unanticipated expenses for the next six months could be anywhere from 1 percent to over 30 percent of their operating budget (e.g., for a small government with an operating budget of $75 million, 1 percent is $750,000). These unanticipated expenses are expected to be driven largely by staff sick leave, equipment and technology, and staff overtime. E:\FR\FM\19JNN1.SGM 19JNN1

Agencies

[Federal Register Volume 85, Number 119 (Friday, June 19, 2020)]
[Notices]
[Pages 37129-37133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13208]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89071; File No. SR-GEMX-2020-15]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the GEMX 
Disciplinary Rules in General 5 To Incorporate by Reference The Nasdaq 
Stock Market LLC's Series 8000 and 9000 Rules

June 15, 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 June 10, 2020, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the GEMX Disciplinary Rules in 
General 5 to incorporate by reference The Nasdaq Stock Market LLC's 
(``Nasdaq'') Series 8000 and 9000 Rules, currently located under the 
General 5 title of the Nasdaq rulebook,\3\ instead of the BX Rules, 
which the Exchange currently incorporates by reference.
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    \3\ See Securities Exchange Act Release No. 87778 (December 17, 
2019), 84 FR 70590 (December 23, 2019) (SR-NASDAQ-2019-098).
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    The text of the proposed rule change is available on the Exchange's 
website at https://nasdaqgemx.cchwallstreet.com/,

[[Page 37130]]

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
    In connection with a recent rule change to relocate the Nasdaq BX, 
Inc. (``BX'') Disciplinary Rules under the General 5 title 
(``Discipline''),\4\ and incorporate by reference The Nasdaq Stock 
Market LLC's (``Nasdaq'') Series 8000 and 9000 Rules, GEMX proposes to 
similarly incorporate by reference Nasdaq's Series 8000 and 9000 Rules.
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    \4\ See Securities Exchange Act Release No. 88938 (May 26, 
2020), 88 FR 33235 (June 1, 2020) (SR-BX-2020-009).
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    The BX Disciplinary Rules, which were relocated to General 5 of the 
BX Rules,\5\ were replaced with introductory paragraphs that 
respectively incorporate by reference the Nasdaq Series 8000 and 9000 
Rules (located under the General 5 title in the Nasdaq rulebook).\6\ 
Currently, GEMX incorporates the BX Disciplinary Rules within the 
Series 8000 and 9000 Rules, which were relocated to General 5 of the BX 
Rules with the aforementioned rule change.\7\ At this time, GEMX 
proposes to incorporate by reference the Nasdaq Series 8000 and 9000 
Rules (located in General 5 Discipline), respectively, and state that 
such Nasdaq Rules shall be applicable to Exchange Members, associated 
persons, and other persons subject to GEMX's jurisdiction.
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    \5\ Id.
    \6\ Id. The Exchange notes that the proposed changes will not 
become operative unless and until the Commission approves the 
Exchange's request, to be filed pursuant to Section 36 of the 
Exchange Act and SEC Rule 0-12 thereunder, for an exemption from the 
rule filing requirements of Section 19(b) of the Exchange Act as to 
changes to the Current GEMX 8000 Series (new General 5, Section 1) 
and Current GEMX 9000 Series (new General 5, Section 2) that are 
effected solely by virtue of a change to the Nasdaq Series 8000 or 
9000 Rules Series.
    \7\ Securities Exchange Act Release No. 88938 (May 26, 2020), 88 
FR 33235 (June 1, 2020) (SR-BX-2020-009).
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    Except as noted below, the Nasdaq Series 8000 and 9000 Rules are 
substantially similar to BX's Disciplinary Rules, which the Exchange 
currently incorporates by reference. The following discussions identify 
the differences between the current BX Disciplinary Rules and the 
corresponding Nasdaq Disciplinary Rules to be incorporated by reference 
into GEMX:
Current BX IM-8310-3(b)
    Current BX Rule 9120(f) provides that ``[t]he term ``Department of 
Enforcement'' means the Department of Enforcement of FINRA Regulation, 
acting on behalf of the Exchange pursuant to the FINRA Regulatory 
Contract.'' \8\ Current BX IM-8310-3(b), however, uses the term 
``Department of Enforcement of FINRA.'' Since Nasdaq IM-8310-3(b) uses 
the term ``Department of Enforcement'' GEMX believes it is appropriate 
to utilize the Nasdaq terms going forward and incorporate by reference 
into the GEMX rule.
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    \8\ This definition mirrors the one in the Nasdaq rulebook under 
Rule 9120(f).
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Current BX Rule 8320
    In 2010, Nasdaq created Rule 7007 (``Collection of Fees'') to 
facilitate an efficient method of collecting undisputed or final fees, 
fines, charges and/or other monetary sanctions or monies due and owing 
to Nasdaq from The Nasdaq Option Market (``NOM'') Participants.\9\
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    \9\ See Securities Exchange Act Release No. 63536 (December 14, 
2010), 75 FR 80102 (December 21, 2010) (SR-NASDAQ-2010-163). Nasdaq 
Rule 7007 was later relocated to Options Chapter XV, Section 1 and 
then moved to its current location under Options 7, Section 1, in 
the Nasdaq rulebook shell. See Securities Exchange Act Release No. 
66158 (January 13, 2012), 75 FR 80102 (January 13, 2012) (SR-NASDAQ-
2012-006) and Securities Exchange Act Release No.84684 (November 29, 
2018), 83 FR 62936 (December 6, 2018) (SR-NASDAQ-2018-098).
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    Similarly, in 2012, BX adopted its options market rules (``BX 
Options Market'') to operate as a fully automated, price/time priority 
execution system built on the core functionality of NOM.\10\ In its 
filing, BX proposed to adopt, under respective Chapter XV, Section 2, a 
rule identical to the Nasdaq Collection of Fees rule.\11\ Although, at 
the time of its creation, the Nasdaq Collection of Fees rule was cross-
referenced to current Nasdaq Rule 8320(a)(1),\12\ such cross-reference 
was not included in the filing that created the BX Options Market. GEMX 
also has the same Collection of Fees rule,\13\ that is identical to the 
Nasdaq rule. Because BX Rule 8320, which GEMX incorporates by 
reference, does not include a cross-reference to the Collection of Fees 
rule, GEMX will follow the Nasdaq rule going forward, which has the 
correct cross-reference. The Exchange also proposes to add rule text, 
within General 5, Section 3, to note the distinction between the 
location of the Collection of Fees rules. Specifically, the Exchange 
proposes to add rule text to provide that references in the Nasdaq 8000 
Series to ``Nasdaq's Options 7, Section 1'' shall be read to refer to 
GEMX Options 7, Section 2.
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    \10\ Securities Exchange Act Release No. 67256 (June 26, 2012), 
77 FR 39277 (July 2, 2012) (SR-BX-2012-030). This rule was later 
relocated to the BX Rulebook shell. See Securities Exchange Act 
Release No. 84326 (October 1, 2018), 83 FR 50414 (October 1, 2018) 
(SR-BX-2018-046).
    \11\ Id.
    \12\ See supra note 9.
    \13\ See GEMX Options 7, Section 2.
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    Based on the above, the Exchange believes that it is appropriate 
that GEMX adopts the aforementioned cross-reference to make the 
collection of fees owed to the Exchange more efficient. Therefore, the 
Exchange believes that it is appropriate to incorporate by reference 
Nasdaq Rule 8320 into GEMX Rules.
Current BX Rule 9120
    In 2018, BX amended its Disciplinary Rules to align them with the 
investigatory and disciplinary processes of Nasdaq PHLX LLC 
(``Phlx'').\14\ As stated in its proposal, the changes to the 
``Interested Staff'' concept (which, at the time, was relocated under 
9120(r)) were done to conform the BX rule to Phlx's definition. At the 
time, however, the proposed harmonizing changes to BX Rule 
9120(r)(1)(B) inadvertently excluded the words ``Head of'' and omitted 
to add the word ``the''; indeed, the text should have read ``Head of 
the Exchange's Regulation Department'' instead of, simply, ``Exchange's 
Regulation Department.''
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    \14\ See Securities Exchange Act Release No. 84354 (October 3, 
2018), 83 FR 50723 (October 9, 2018) (SR-BX-2018-042).
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    The correct definition, as explained above, would also align with 
the term currently defined in Nasdaq Rule 9120(r)(1)(B), which provides 
that ``Interested Staff'' shall mean ``an Exchange employee of the 
Nasdaq Regulation Department who reports, directly or indirectly, to 
the Head of the Nasdaq Regulation Department.''
    The Exchange believes that it is appropriate to apply Nasdaq Rule 
9120 and to incorporate it by reference into the GEMX rule. 
Additionally, the

[[Page 37131]]

Exchange notes that applying Nasdaq Rule 9120 and incorporating it by 
reference into the Exchange rule should correct a typo in current BX 
Rule 9120(v) that erroneously uses the term ``RINRA'' instead of the 
acronym ``FINRA.''
Current BX Rule 9231
    The Exchange proposes to adopt the cross-reference in Nasdaq Rule 
9231(c) concerning the appointment of arbitrators pursuant to the FINRA 
Rules 12000 and 13000 Series (the ``FINRA Arbitration Rules''). Current 
BX Rule 9231(c) provides that arbitrators shall be appointed pursuant 
to BX General 6 (``BX Arbitration Rules'').\15\ The BX Arbitration 
Rules incorporate by reference the similar Nasdaq arbitration rules 
(also under Nasdaq's General 6 title); GEMX's arbitration rules within 
General 6 also incorporate Nasdaq's arbitration rules; in turn, the 
Nasdaq rules incorporate the FINRA Arbitration Rules by reference into 
its text. Following the incorporation by reference of Nasdaq Rule 9231, 
GEMX Rule 9231(c) will directly cross-reference the FINRA Arbitration 
Rules, which will not create any differences from the current ISE 
rules.
---------------------------------------------------------------------------

    \15\ See Securities Exchange Act Release No. 84476 (October 24, 
2018), 83 FR 54630 (October 30, 2018) (SR-BX-2018-048).
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Current BX Rule 9232
    Currently, Nasdaq Rule 9232(a) provides a cross-reference to 
subsections (A) through (D) in Nasdaq Rule 9231(b)(1), whereas current 
BX Rule 9232(a) simply provides a reference to BX Rule 9231(b)(1). The 
Exchange believes that it is appropriate to apply Nasdaq Rule 9232(a) 
and incorporate it by reference into the GEMX rule since the Nasdaq 
rule contains a more precise cross-reference to Nasdaq Rule 9231(b)(1).
Current BX Rule 9522
    The Exchange proposes to apply and incorporate by reference Nasdaq 
Rule 9522 in place of current BX Rule 9522. This proposal amends the 
first sentence in current BX Rule 9522(a)(1) by replacing the term 
``Exchange's Regulation Department'' with the term ``Department of 
Member Regulation'' as currently provided in Nasdaq Rule 9522(a)(1). As 
previously indicated by the Exchange,\16\ the FINRA Department of 
Member Regulation \17\ currently performs the functions described in 
current BX Rule 9522. Therefore, applying the Nasdaq rule and 
incorporating it by reference into GEMX Rule 9522, provides clarity to 
the rule text and aligns it with Nasdaq and Phlx's rules.
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    \16\ See Securities Exchange Act Release No. 84354 (October 3, 
2018), 83 FR 50724 (October 9, 2018) (SR-BX-2018-042).
    \17\ As defined in BX 9120(g).
---------------------------------------------------------------------------

    The GEMX introductory paragraphs currently list instances in which 
various terms and rules within the BX Disciplinary Rules shall be read 
to refer to Exchange specific rules and terms. Replacing references to 
``BX'' with ``Nasdaq'' in this introductory paragraph should align the 
Nasdaq and GEMX rules. All of these specific terms are identical as 
between the Nasdaq and BX Rules and, therefore, the term ``BX'' is 
being replaced with ``Nasdaq.''
    The Exchange also proposes to remove certain references within GEMX 
General 5, Section 3, Code of Procedure, which are no longer necessary 
because they align with the current rules referenced within the Nasdaq 
9000 Rule Series.\18\ The Exchange also proposes to amend certain 
references to Nasdaq Rules, as a result of the relocation of certain 
Nasdaq Rules in conjunction with a larger Rulebook relocation.\19\ 
Specifically, the Exchange proposes to amend: (a) Rule 1160 to 
relocated General 2, Section 11; (b) Equity Rules 2110 and 2120 to 
relocated General 9, Section 1; \20\ (c) Equity Rule 2150 to relocated 
General 9, Section 2.\21\ Additionally, as noted above, the Exchange 
proposes to add rule text to provide that references in the Nasdaq 8000 
Series to ``Nasdaq's Options 7, Section 1'' shall be read to refer to 
GEMX Options 7, Section 2.
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    \18\ The following Nasdaq Rules were relocated in connection 
with a Nasdaq rule relocation filing: Rules 0120, 1070, 1160, 4110A, 
4120A; Equity Rules 2110, 2120, 2140, 2150; Rule 1000 Series and 
Chapter III, Section 16. See Securities Exchange Act Release No. 
87778 (December 17, 2019), 84 FR 70590 (December 23, 2019) (SR-
NASDAQ-2019-098) (Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Relocate Rules From Its Current Rulebook 
Into Its New Rulebook Shell).
    \19\ See Securities Exchange Act Release No. 87778 (December 17, 
2019), 84 FR 70590 (December 23, 2019) (SR-NASDAQ-2019-098) (Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change To 
Relocate Rules From Its Current Rulebook Into Its New Rulebook 
Shell).
    \20\ Equity Rule 2120 was more specifically relocated to General 
9, Section 1(g), however the Nasdaq Rule 9000 Series only reference 
General 9, Section 1.
    \21\ Id.
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    The Exchange also proposes to update certain GEMX rule references. 
The proposed updated reference to ``General 9, Section 1'', replacing 
Equity Rule 2110, would refer to Nasdaq GEMX Options 9, Section 1. The 
Section 1 is being added as a more specific reference. Additionally, 
the proposed updated reference to ``General 9, Section 1'', replacing 
Equity Rule 2120, would refer to Nasdaq GEMX Options 9, Section 6. The 
Section 6 is being added as a more specific reference.
Other Technical Amendments
    Further, the Exchange proposes to amend references to General 5 to 
more specific references to the Nasdaq 9000 Series Rules, which 
pursuant to the proposed incorporation by reference will become GEMX 
Rules. Specifically, the Exchange proposes to amend General 1, Section 
1 (Definitions); General 3, Section 2 (Denial of and Conditions to 
Becoming a Member); and General 3, Section 6 (Dissolution and 
Liquidation of Members). Further, the Exchange proposes to amend 
General 1, ``Provisions'' to General 1, ``General Provisions'' to 
mirror the name of the Chapter on Nasdaq Phlx LLC, Nasdaq BX, Inc., and 
Nasdaq.
    The Exchange also proposes to amend a typographical error within 
General 5, Sections 2 and 3 to remove a hyphen. The Exchange also 
proposes to amend a reference to Nasdaq GEMX Rule 1614 within General 
5, Section 3 to instead reference Options 11, Section 1(b) to reflect a 
relocated rule, and correct a typographical error to remove a stray 
period.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\22\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\23\ in particular, in that it is designed to 
promote just and equitable principles of trade and to protect investors 
and the public interest by consolidating its rules into a single rule 
set. The various Nasdaq exchanges (``Affiliated Exchanges'') have filed 
similar proposed rule changes to amend and relocate their disciplinary 
rules \24\ in order that the Nasdaq 8000 Series and 9000 Series Rules, 
which govern the investigative and disciplinary processes, are 
similarly consolidated and incorporated by reference.\25\ To the extent 
there will be

[[Page 37132]]

differences remaining between the two rule sets, the Exchange notes 
those differences in introductory paragraphs to each of GEMX's 
Disciplinary Rules.
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    \22\ 15 U.S.C. 78f(b).
    \23\ 15 U.S.C. 78f(b)(5).
    \24\ See Securities Exchange Act Release No. 86138 (July 18, 
2019), 84 FR 29567 (July 24, 2019) (SR-ISE-2019-17); Securities 
Exchange Act Release No. 86346 (July 10, 2019), 84 FR 33999 (July 
16, 2019) (SR-GEMX-2019-08); and Securities Exchange Act Release No. 
86424 (July 12, 2019), 84 FR 36134 (July 26, 2019) (SR-MRX-2019-15); 
and Securities Exchange Act Release No. 87778 (December 17, 2019), 
84 FR 70590 (December 23, 2019) (SR-NASDAQ-2019-098). Similarly, 
Phlx recently submitted a proposal to relocate its disciplinary 
rules. See Securities Exchange Act Release No. 88519 (March 31, 
2020), 85 FR 19203 (April 6, 2020) (SR-Phlx-2020-09).
    \25\ See Securities Exchange Act Release Nos. 88519 (March 31, 
2020), 85 FR 19203 (April 6, 2020) (SR-Phlx-2020-09); and 88938 (May 
26, 2020), 88 FR 33235 (June 1, 2020) (SR-BX-2020-009), as well as 
SR-ISE-2020-22 and SR-MRX-2020-12.
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    Incorporating the Nasdaq Disciplinary Rules by reference into the 
GEMX Rules, instead of the BX Disciplinary Rules, will conform the 
alignment of these rules and permit the rules of Phlx, BX, Nasdaq ISE, 
LLC, Nasdaq MRX, LLC and GEMX to be incorporated by reference to one 
rule set. This proposal would permit the Nasdaq Series 8000 and 9000 
Rules to be the source document for all of the Nasdaq Exchanges' 
investigative and disciplinary processes. The Exchange notes that its 
current Disciplinary Rules are not substantively changing. The Exchange 
desires to conform its rules to give its Members and the members of its 
Affiliated Exchanges the ability to quickly locate rules in one central 
location and also to have a unified disciplinary rule set.
    The Exchange also believes that the proposal is consistent with 
Section 6(b)(6) of the Act,\26\ which requires that the rules of an 
exchange provide that its Members be appropriately disciplined for 
violations of the Act as well as the rules and regulations thereunder, 
or the rules of the Exchange, by expulsion, suspension, limitation of 
activities, functions, and operations, fine, censure, being suspended 
or barred from being associated with a Member, or any other fitting 
sanction.
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    \26\ 15 U.S.C. 78f(b)(6).
---------------------------------------------------------------------------

Other Technical Amendments
    These technical amendments are intended to align GEMX with other 
Nasdaq affiliated markets Rulebooks. Nasdaq Phlx LLC and Nasdaq BX, 
Inc. Rulesets are also incorporating by reference the Nasdaq Rules and 
those rulesets provide specific references to the Nasdaq disciplinary 
rules within the 9000 Series.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes that this 
rule change does not impose an undue burden on competition because the 
Nasdaq Series 8000 and 9000 Rules, which are substantially similar to 
BX's Disciplinary Rules, will be incorporated by reference into GEMX's 
Rules. Those rules will now apply to GEMX Members, associated persons, 
and other persons subject to the Exchange's jurisdiction. To the extent 
that there will be differences remaining between the two rule sets, the 
Exchange notes those differences in introductory paragraphs to each of 
GEMX's Disciplinary Rules. As noted above, the proposed introductory 
paragraphs list instances in which cross references in Nasdaq Series 
8000 and 9000 Rules to other Nasdaq rules shall be read to refer 
instead to the Exchange Rules, and references to Nasdaq terms (whether 
or not defined) shall be read to refer to the Exchange-related meanings 
of those terms. Because Nasdaq Current Series 8000 and 9000 Rules are 
substantially similar to BX's Disciplinary Rules, which GEMX currently 
incorporates by reference, and because the introductory paragraphs 
ensure that any differences are preserved, the proposed changes do not 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
    Finally, the Exchange believes that the proposed amendments, 
including the technical amendments contained herein, do not impose an 
undue burden on competition because the amendments to relocate the 
Rules are non-substantive. This rule change is intended to bring 
greater clarity to the Exchange's Rules.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \27\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\28\
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    \27\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \28\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    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 [email protected]. Please include 
File Number SR-GEMX-2020-15 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-GEMX-2020-15. 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

[[Page 37133]]

submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-GEMX-2020-15 and should be 
submitted on or before July 10, 2020.
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    \29\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13208 Filed 6-18-20; 8:45 am]
BILLING CODE 8011-01-P
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