Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt New Conflicts of Interest Rules, 54583-54586 [2022-19114]
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Federal Register / Vol. 87, No. 171 / Tuesday, September 6, 2022 / Notices
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products have been preceded by a
shortened reporting timeframe.42
The Commission believes that
shortening the timeframe for FINRA
members to report transactions in U.S.
Treasury Securities to TRACE to as soon
as practicable, but no later than within
60 minutes of the Time of Execution (or
within 60 minutes after the TRACE
system opens for trades executed during
specified periods, as described above)
will assist FINRA in carrying out its
statutory duties to surveil and regulate
this segment of the market by providing
FINRA with more timely information
about activity in the market for U.S.
Treasury Securities, including more
timely data about intraday pricing and
liquidity.
The Commission recognizes that the
proposal may result in costs for FINRA
members that need to implement
changes to their processes and systems.
The Commission notes that, according
to FINRA, approximately 96 percent of
U.S. Treasury Security transaction
reports were reported within 60 minutes
of the Time of Execution during a
sample period of July 2020 to June
2021.43 In addition, FINRA represents
that some FINRA members who trade in
U.S. Treasury Securities also trade in
other types of TRACE-Eligible Securities
that already require reporting within a
shorter timeframe.44 While these
transactions may occur on separate
trading desks, the Commission agrees
with FINRA that, to the extent that
members are able to leverage existing
technology within the firm, the costs
associated with the proposed reporting
timeframe changes for U.S. Treasury
Securities could potentially be reduced.
With respect to comments suggesting
that FINRA should review the benefits
of a shortened reporting timeframe in
light of how FINRA and its regulatory
partners are using TRACE data,45 the
Commission agrees with FINRA’s
assessment that the proposal strikes an
appropriate balance to provide FINRA
42 See FINRA Response Letter at 3. With respect
to the U.S. Treasury Department’s RFI, FINRA
further states that, should that initiative result in a
proposal or recommendation to increase
transparency for transactions in U.S. Treasury
Securities, such a result would harmonize with a
reduced reporting timeframe for U.S. Treasury
Securities. See id.
43 See Notice, supra note 3, at 33848.
44 For example, FINRA states that transactions in
corporate bonds and Agency Debt Securities
generally are required to be reported to FINRA as
soon as practicable, but no later than within 15
minutes of the Time of Execution. In the FINRA
sample period, of the 750 MPIDs that reported
transactions in U.S. Treasury Securities, 691 MPIDs
also reported transactions in corporate bonds and
Agency Debt Securities. See Notice, supra note 3,
at 33848.
45 See supra note 36 and accompanying text.
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and the official sector with more timely
information about U.S. Treasury
Security market activity. The
Commission notes that FINRA members
already report over 90 percent of
transactions in U.S. Treasury Securities
within 60 minutes of the Time of
Execution.46
Finally, the Commission believes that
it would not be appropriate to delay
implementation of the proposal beyond
the timeframe set forth in the Notice.
The Commission agrees with FINRA in
its assessment that the proposal does
not conflict with other TRACE-related
initiatives and that the benefits of a
shortened reporting timeframe for
transactions in U.S. Treasury Securities
are not reduced in light of these other
initiatives. Moreover, the Commission
believes that further delaying
implementation of the proposal would
undermine the regulatory interest that
the official sector and FINRA have in
obtaining access to more timely
information about activity in the market
for U.S. Treasury Securities.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,47 that the
proposed rule change (SR–FINRA–
2022–013) is approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.48
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–19112 Filed 9–2–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 95637; File No. SR–ISE–2022–
17]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Adopt New Conflicts
of Interest Rules
August 30, 2022.
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 August
18, 2022, Nasdaq ISE, LLC (‘‘ISE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
46 See
FINRA Response Letter at 4.
U.S.C. 78s(b)(2).
48 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
47 15
PO 00000
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54583
III, below, which Items have been
prepared by the Exchange. The
Exchange filed the proposed rule change
as a ‘‘non-controversial’’ proposed rule
change pursuant to Section
19(b)(3)(A)(iii) 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. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt two
new rules within Sections 26 and 27 of
Options 10. Also, the Exchange
proposes to make other technical
amendments.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/ise/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to adopt two
new rules within Sections 26 and 27 of
Options 10. Also, the Exchange
proposes to make technical amendments
to General 2, Organization and
Administration; Options 1, Section 1,
Definitions; and Options 4A, Section 12,
Terms of Index Options Contracts. Each
change is described below.
Proposed Options 10, Section 26
The Exchange proposes to adopt a
new Options 10, Section 26, titled
‘‘Transactions Involving ISE
Employees’’ that is substantively
identical to FINRA Rule 2070. This
proposed rule is intended to address
3 15
4 17
E:\FR\FM\06SEN1.SGM
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
06SEN1
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Federal Register / Vol. 87, No. 171 / Tuesday, September 6, 2022 / Notices
conflicts of interest involving ISE and
its employees.
The Exchange proposes to adopt rule
text within proposed Options 10,
Section 26(a) that requires a Member,
when it has actual notice that an ISE
employee has a financial interest or
controls trading in an account, to
promptly obtain and implement an
instruction from the employee directing
that duplicate account statements be
provided by the Member to ISE.
The Exchange proposes to adopt rule
text within proposed Options 10,
Section 26(b) that prohibits a Member
from directly or indirectly making any
loan of money or securities to an ISE
employee. This proposed prohibition
would not apply to loans made in the
context of disclosed, routine banking
and brokerage agreements, or loans that
are clearly motivated by a personal or
family relationship.
Finally, the Exchange proposes to
adopt rule text within proposed Options
10, Section 26(c) that prohibits any
Member from directly or indirectly
giving, or permitting to be given,
anything of more than nominal value to
any ISE employee who has
responsibility for a regulatory matter
involving the Member. This prohibition
would apply regardless of the annual
dollar limitation set forth in proposed
Options 10, Section 27, which is
discussed below. The term ‘‘regulatory
matter’’ is proposed to be defined to
include, without limitation,
examinations, disciplinary proceedings,
membership applications, listing
applications, delisting proceedings, and
dispute-resolution proceedings that
involve the Member.
The Exchange believes that requiring
a Member to direct that duplicate
account statements be provided by the
Member to ISE when it has actual notice
that an ISE employee has a financial
interest or controls trading in an
account, prohibiting Members from
making any loan of money or securities
to an ISE employee subject to the
exceptions set forth herein, and
prohibiting Members from directly or
indirectly giving, or permitting to be
given, anything above nominal value to
any ISE employee who has
responsibility for a ‘‘regulatory matter’’
involving the Member will avoid
conflicts of interest for ISE and its
employees in the regulation of its
Members. With this proposal, ISE
Members who are also FINRA members
would be subject to this rule which is
substantively identical to FINRA Rule
2070. Additionally, ISE Members who
are not FINRA members would also be
subject to proposed Options 10, Section
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26 to the extent that such Members
conduct business with the public.
Proposed Options 10, Section 27
The Exchange proposes to adopt a
new Options 10, Section 27, titled
‘‘Influencing or Rewarding Employees
of Others’’ that is substantively identical
to FINRA Rule 3220. This proposed rule
is intended to provide a limitation on
gifts and thereby govern influencing or
rewarding the employees of others.
The Exchange proposes to adopt rule
text within proposed Options 10,
Section 27(a) that prohibits a Member or
person associated with a Member from
directly or indirectly giving or
permitting to be given anything of value,
including gratuities, in excess of one
hundred dollars per individual per year
to any person, principal, proprietor,
employee, agent or representative of
another person where such payment or
gratuity is in relation to the business of
the employer of the recipient of the
payment or gratuity. A gift of any kind
would be considered a gratuity.
The Exchange proposes to adopt rule
text within proposed Options 10,
Section 27(b) that provides that Options
10, Section 27 shall not apply to
contracts of employment with or to
compensation for services rendered by
persons enumerated in paragraph (a)
provided that there is in existence prior
to the time of employment or before the
services are rendered, a written
agreement between the Member and the
person who is to be employed to
perform such services. Such agreement
would include the nature of the
proposed employment, the amount of
the proposed compensation, and the
written consent of such person’s
employer or principal. The Exchange
notes that this express exclusion for
payments made pursuant to a bone fide,
prior written agreement in paragraph (b)
is excluded from the dollar value
consideration in paragraph (a).
The Exchange proposes to adopt rule
text within proposed Options 10,
Section 27(c) that requires a separate
record of all payments or gratuities in
any amount known to the Member, the
employment agreement referred to in
paragraph (b) and further requires the
Member to retain any employment
compensation paid as a result thereof
for the period specified by Rule 17a–4
of the Exchange Act.5
Proposed Options 10, Section 27
prevents gifts in excess of a fixed
amount, currently $100. The Exchange
believes that there is no business need
to justify giving gifts in amounts greater
than the limit specified in the rule. With
5 17
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CFR 240.17a–4.
Frm 00136
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this proposal, ISE Members who are also
FINRA members would be subject to
this rule which is substantively
identical to FINRA Rule 3220.
Additionally, ISE Members who are not
FINRA members would also be subject
to proposed Options 10, Section 27 to
the extent that such Members conduct
business with the public. The Exchange
believes this proposed rule
appropriately protects against
improprieties that might arise when
substantial gifts or monetary payments
are given to certain persons.
Technical Amendments
The Exchange proposes to reserve
rules within General 2, Organization
and Administration in addition to
currently reserved Sections 13 through
22, to harmonize ISE’s rules with those
of Nasdaq affiliate exchanges.
Specifically, the Exchange proposes to
reserve new Sections 23 and 24 within
General 2 and add an ‘‘s’’ to the word
‘‘Section.’’
The Exchange proposes to amend a
citation within the definition of
‘‘proprietary trading’’ at Options 1,
Section 1(a)(41). The citation to
‘‘General 4, Section 1.1210’’ is incorrect.
The citation should be to ‘‘General 4,
Section 1210’’. Correcting this citation
will avoid confusion.
The Exchange proposes to remove the
word ‘‘pilot’’ within Supplementary
Material to Options 4A, Section 12.
Options 4A, Section 12 describes the
options listing rules. The Quarterly
Options Series pilot program was
approved in 2009.6 The Exchange
proposes to remove this updated
reference to the pilot.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,7 in general, and furthers the
objectives of Section 6(b)(5) of the Act,8
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest.
Together, proposed Options 10, Sections
26 and 27 address conflicts of interest
by adopting rules that govern
influencing or rewarding the employees
of others and transactions involving ISE
6 See Securities Exchange Act Release No. 60275
(July 9, 2009), 74 FR 34809 (July 17, 2009) (SR–ISE–
2009–50) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To
Permanently Establish the Quarterly Options Series
Pilot Program).
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 87, No. 171 / Tuesday, September 6, 2022 / Notices
employees. The Exchange believes that
adopting rules substantively identical to
FINRA will help avoid confusion among
Members of the Exchange who conduct
business with the public that are also
members of FINRA and would
harmonize the Exchange’s rules with
FINRA rules with respect to conflicts of
interest, resulting in greater uniformity
and less burdensome and more efficient
regulatory compliance. As such, the
proposed rule change would foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities and would
remove impediments to and perfect the
mechanism of a free and open market
and a national market system.
Proposed Options 10, Section 26 is
consistent with the Act and protects
investors and the general public by
requiring a Member to direct that
duplicate account statements be
provided by the Member to ISE when it
has actual notice that an ISE employee
has a financial interest or controls
trading in an account, prohibiting
Members from making any loan of
money or securities to an ISE employee
subject to the exceptions set forth
herein, and prohibiting Members from
directly or indirectly giving, or
permitting to be given, anything above
nominal value to any ISE employee who
has responsibility for a ‘‘regulatory
matter’’ involving the Member. These
proposed rules are intended to avoid
conflicts of interest for ISE and its
employees in the regulation of its
Members.
Proposed Options 10, Section 27 is
consistent with the Act and protects
investors and the general public by
preventing gifts in excess of a fixed
amount, currently $100, because there is
no business need to justify giving gifts
in amounts greater than the limit
specified in the rule. Options 10,
Section 27 in conjunction with Options
10, Section 26, as proposed, protects
investors and the general public by
addressing conflicts of interest and
governs influencing or rewarding the
employees of others and transactions
involving ISE employees.
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Technical Amendments
The Exchange’s proposal to reserve
new Sections 23 and 24 within General
2, amend a citation within the definition
of ‘‘proprietary trading’’ within Options
1, Section 1, and remove the word
‘‘pilot’’ within Supplementary Material
to Options 4A, Section 12 are nonsubstantive amendments.
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20:04 Sep 02, 2022
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
Proposed Options 10, Sections 26 and
27
The proposed rule change is not
designed to address any competitive
issues but rather to provide greater
harmonization among Exchange and
FINRA rules of similar purpose,
resulting in less burdensome and more
efficient regulatory compliance for
common members. The Exchange’s
proposal to adopt new Options 10,
Sections 26 and 27 does not impose an
undue burden on competition as all
Members that conduct business with the
public would be subject to the proposed
rules. Further, ISE Members who are
also FINRA members would be subject
to these rules which are substantively
identical to FINRA Rules 2070 and
3220.
Technical Amendments
The Exchange’s proposal to reserve
new Sections 23 and 24 within General
2, amend a citation within the definition
of ‘‘proprietary trading’’ within Options
1, Section 1, and remove the word
‘‘pilot’’ within Supplementary Material
to Options 4A, Section 12 are nonsubstantive amendments.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 9 and
subparagraph (f)(6) of Rule 19b–4
thereunder.10
9 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.
10 17
PO 00000
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54585
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
ISE–2022–17 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–ISE–2022–17. 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
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54586
Federal Register / Vol. 87, No. 171 / Tuesday, September 6, 2022 / Notices
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–ISE–2022–17 and should be
submitted on or before September 27,
2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–19114 Filed 9–2–22; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #17583 and #17584;
INDIANA Disaster Number IN–00078]
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
jspears on DSK121TN23PROD with NOTICES
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
20:04 Sep 02, 2022
Jkt 256001
2.935
Percent
1.875
(Catalog of Federal Domestic Assistance
Number 59008)
This is a notice of an
Administrative declaration of a disaster
for the State of Indiana dated 08/30/
2022.
Incident: Severe Storms and Flooding.
Incident Period: 07/23/2022 through
07/25/2022.
DATES: Issued on 08/30/2022.
Physical Loan Application Deadline
Date: 10/31/2022.
Economic Injury (EIDL) Loan
Application Deadline Date: 05/30/2023.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
Administrator’s disaster declaration,
applications for disaster loans may be
filed at the address listed above or other
locally announced locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Daviess.
Contiguous Counties:
Indiana: Dubois, Greene, Knox,
Martin, Pike.
The Interest Rates are:
11 17
For Physical Damage:
Homeowners with Credit Available Elsewhere ......................
Homeowners without Credit
Available Elsewhere ..............
Businesses with Credit Available Elsewhere ......................
Businesses without Credit
Available Elsewhere ..............
Non-Profit Organizations with
Credit Available Elsewhere ...
Non-Profit Organizations without Credit Available Elsewhere .....................................
For Economic Injury:
Businesses & Small Agricultural
Cooperatives without Credit
Available Elsewhere ..............
Non-Profit Organizations without Credit Available Elsewhere .....................................
The number assigned to this disaster
for physical damage is 17583 6 and for
economic injury is 17584 0.
The State which received an EIDL
Declaration # is Indiana.
Administrative Declaration of a
Disaster for the State of Indiana
SUMMARY:
409 3rd Street SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
3.375
President’s major disaster declaration on
1.688 08/26/2022, Private Non-Profit
organizations that provide essential
5.870 services of a governmental nature may
file disaster loan applications at the
2.935 address listed above or other locally
announced locations.
1.875
The following areas have been
determined to be adversely affected by
the disaster:
1.875
Primary Areas: Copper River REAA,
Iditarod Area REAA, Kuspuk REAA
The Interest Rates are:
Percent
Isabella Guzman,
Administrator.
[FR Doc. 2022–19145 Filed 9–2–22; 8:45 am]
BILLING CODE 8026–09–P
For Physical Damage:
Non-Profit Organizations with
Credit Available Elsewhere ...
Non-Profit Organizations without Credit Available Elsewhere .....................................
For Economic Injury:
Non-Profit Organizations without Credit Available Elsewhere .....................................
1.875
1.875
1.875
The number assigned to this disaster
for physical damage is 17585 6 and for
economic injury is 17586 0.
(Catalog of Federal Domestic Assistance
Number 59008)
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #17585 and #17586;
ALASKA Disaster Number AK–00054]
Presidential Declaration of a Major
Disaster for Public Assistance Only for
the State of Alaska
Rafaela Monchek,
Acting Associate Administrator for Disaster
Assistance.
[FR Doc. 2022–19144 Filed 9–2–22; 8:45 am]
BILLING CODE 8026–09–P
U.S. Small Business
Administration.
ACTION: Notice.
DEPARTMENT OF STATE
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Alaska (FEMA–4667–DR),
dated 08/26/2022.
Incident: Flooding.
Incident Period: 05/08/2022 through
05/11/2022.
DATES: Issued on 08/26/2022.
Physical Loan Application Deadline
Date: 10/25/2022.
Economic Injury (EIDL) Loan
Application Deadline Date: 05/26/2023.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
Notice of Determinations; Culturally
Significant Objects Being Imported for
Exhibition—Determinations: ‘‘The
Samaritans: A Biblical People’’
Exhibition
AGENCY:
SUMMARY:
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[Public Notice: 11850]
Notice is hereby given of the
following determinations: I hereby
determine that certain objects being
imported from abroad pursuant to
agreements with their foreign owners or
custodians for temporary display in the
exhibition ‘‘The Samaritans: A Biblical
People’’ at the Museum of the Bible,
Washington, District of Columbia, and
at possible additional exhibitions or
venues yet to be determined, are of
cultural significance, and, further, that
their temporary exhibition or display
within the United States as
aforementioned is in the national
interest. I have ordered that Public
SUMMARY:
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Agencies
[Federal Register Volume 87, Number 171 (Tuesday, September 6, 2022)]
[Notices]
[Pages 54583-54586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19114]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 95637; File No. SR-ISE-2022-17]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Adopt New
Conflicts of Interest Rules
August 30, 2022.
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 August 18, 2022, Nasdaq ISE, LLC (``ISE'' 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 Exchange filed the
proposed rule change as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt two new rules within Sections 26 and
27 of Options 10. Also, the Exchange proposes to make other technical
amendments.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/ise/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to adopt two new rules within Sections 26 and
27 of Options 10. Also, the Exchange proposes to make technical
amendments to General 2, Organization and Administration; Options 1,
Section 1, Definitions; and Options 4A, Section 12, Terms of Index
Options Contracts. Each change is described below.
Proposed Options 10, Section 26
The Exchange proposes to adopt a new Options 10, Section 26, titled
``Transactions Involving ISE Employees'' that is substantively
identical to FINRA Rule 2070. This proposed rule is intended to address
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conflicts of interest involving ISE and its employees.
The Exchange proposes to adopt rule text within proposed Options
10, Section 26(a) that requires a Member, when it has actual notice
that an ISE employee has a financial interest or controls trading in an
account, to promptly obtain and implement an instruction from the
employee directing that duplicate account statements be provided by the
Member to ISE.
The Exchange proposes to adopt rule text within proposed Options
10, Section 26(b) that prohibits a Member from directly or indirectly
making any loan of money or securities to an ISE employee. This
proposed prohibition would not apply to loans made in the context of
disclosed, routine banking and brokerage agreements, or loans that are
clearly motivated by a personal or family relationship.
Finally, the Exchange proposes to adopt rule text within proposed
Options 10, Section 26(c) that prohibits any Member from directly or
indirectly giving, or permitting to be given, anything of more than
nominal value to any ISE employee who has responsibility for a
regulatory matter involving the Member. This prohibition would apply
regardless of the annual dollar limitation set forth in proposed
Options 10, Section 27, which is discussed below. The term ``regulatory
matter'' is proposed to be defined to include, without limitation,
examinations, disciplinary proceedings, membership applications,
listing applications, delisting proceedings, and dispute-resolution
proceedings that involve the Member.
The Exchange believes that requiring a Member to direct that
duplicate account statements be provided by the Member to ISE when it
has actual notice that an ISE employee has a financial interest or
controls trading in an account, prohibiting Members from making any
loan of money or securities to an ISE employee subject to the
exceptions set forth herein, and prohibiting Members from directly or
indirectly giving, or permitting to be given, anything above nominal
value to any ISE employee who has responsibility for a ``regulatory
matter'' involving the Member will avoid conflicts of interest for ISE
and its employees in the regulation of its Members. With this proposal,
ISE Members who are also FINRA members would be subject to this rule
which is substantively identical to FINRA Rule 2070. Additionally, ISE
Members who are not FINRA members would also be subject to proposed
Options 10, Section 26 to the extent that such Members conduct business
with the public.
Proposed Options 10, Section 27
The Exchange proposes to adopt a new Options 10, Section 27, titled
``Influencing or Rewarding Employees of Others'' that is substantively
identical to FINRA Rule 3220. This proposed rule is intended to provide
a limitation on gifts and thereby govern influencing or rewarding the
employees of others.
The Exchange proposes to adopt rule text within proposed Options
10, Section 27(a) that prohibits a Member or person associated with a
Member from directly or indirectly giving or permitting to be given
anything of value, including gratuities, in excess of one hundred
dollars per individual per year to any person, principal, proprietor,
employee, agent or representative of another person where such payment
or gratuity is in relation to the business of the employer of the
recipient of the payment or gratuity. A gift of any kind would be
considered a gratuity.
The Exchange proposes to adopt rule text within proposed Options
10, Section 27(b) that provides that Options 10, Section 27 shall not
apply to contracts of employment with or to compensation for services
rendered by persons enumerated in paragraph (a) provided that there is
in existence prior to the time of employment or before the services are
rendered, a written agreement between the Member and the person who is
to be employed to perform such services. Such agreement would include
the nature of the proposed employment, the amount of the proposed
compensation, and the written consent of such person's employer or
principal. The Exchange notes that this express exclusion for payments
made pursuant to a bone fide, prior written agreement in paragraph (b)
is excluded from the dollar value consideration in paragraph (a).
The Exchange proposes to adopt rule text within proposed Options
10, Section 27(c) that requires a separate record of all payments or
gratuities in any amount known to the Member, the employment agreement
referred to in paragraph (b) and further requires the Member to retain
any employment compensation paid as a result thereof for the period
specified by Rule 17a-4 of the Exchange Act.\5\
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\5\ 17 CFR 240.17a-4.
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Proposed Options 10, Section 27 prevents gifts in excess of a fixed
amount, currently $100. The Exchange believes that there is no business
need to justify giving gifts in amounts greater than the limit
specified in the rule. With this proposal, ISE Members who are also
FINRA members would be subject to this rule which is substantively
identical to FINRA Rule 3220. Additionally, ISE Members who are not
FINRA members would also be subject to proposed Options 10, Section 27
to the extent that such Members conduct business with the public. The
Exchange believes this proposed rule appropriately protects against
improprieties that might arise when substantial gifts or monetary
payments are given to certain persons.
Technical Amendments
The Exchange proposes to reserve rules within General 2,
Organization and Administration in addition to currently reserved
Sections 13 through 22, to harmonize ISE's rules with those of Nasdaq
affiliate exchanges. Specifically, the Exchange proposes to reserve new
Sections 23 and 24 within General 2 and add an ``s'' to the word
``Section.''
The Exchange proposes to amend a citation within the definition of
``proprietary trading'' at Options 1, Section 1(a)(41). The citation to
``General 4, Section 1.1210'' is incorrect. The citation should be to
``General 4, Section 1210''. Correcting this citation will avoid
confusion.
The Exchange proposes to remove the word ``pilot'' within
Supplementary Material to Options 4A, Section 12. Options 4A, Section
12 describes the options listing rules. The Quarterly Options Series
pilot program was approved in 2009.\6\ The Exchange proposes to remove
this updated reference to the pilot.
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\6\ See Securities Exchange Act Release No. 60275 (July 9,
2009), 74 FR 34809 (July 17, 2009) (SR-ISE-2009-50) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To
Permanently Establish the Quarterly Options Series Pilot Program).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\7\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
Together, proposed Options 10, Sections 26 and 27 address conflicts of
interest by adopting rules that govern influencing or rewarding the
employees of others and transactions involving ISE
[[Page 54585]]
employees. The Exchange believes that adopting rules substantively
identical to FINRA will help avoid confusion among Members of the
Exchange who conduct business with the public that are also members of
FINRA and would harmonize the Exchange's rules with FINRA rules with
respect to conflicts of interest, resulting in greater uniformity and
less burdensome and more efficient regulatory compliance. As such, the
proposed rule change would foster cooperation and coordination with
persons engaged in facilitating transactions in securities and would
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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Proposed Options 10, Section 26 is consistent with the Act and
protects investors and the general public by requiring a Member to
direct that duplicate account statements be provided by the Member to
ISE when it has actual notice that an ISE employee has a financial
interest or controls trading in an account, prohibiting Members from
making any loan of money or securities to an ISE employee subject to
the exceptions set forth herein, and prohibiting Members from directly
or indirectly giving, or permitting to be given, anything above nominal
value to any ISE employee who has responsibility for a ``regulatory
matter'' involving the Member. These proposed rules are intended to
avoid conflicts of interest for ISE and its employees in the regulation
of its Members.
Proposed Options 10, Section 27 is consistent with the Act and
protects investors and the general public by preventing gifts in excess
of a fixed amount, currently $100, because there is no business need to
justify giving gifts in amounts greater than the limit specified in the
rule. Options 10, Section 27 in conjunction with Options 10, Section
26, as proposed, protects investors and the general public by
addressing conflicts of interest and governs influencing or rewarding
the employees of others and transactions involving ISE employees.
Technical Amendments
The Exchange's proposal to reserve new Sections 23 and 24 within
General 2, amend a citation within the definition of ``proprietary
trading'' within Options 1, Section 1, and remove the word ``pilot''
within Supplementary Material to Options 4A, Section 12 are non-
substantive amendments.
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
Proposed Options 10, Sections 26 and 27
The proposed rule change is not designed to address any competitive
issues but rather to provide greater harmonization among Exchange and
FINRA rules of similar purpose, resulting in less burdensome and more
efficient regulatory compliance for common members. The Exchange's
proposal to adopt new Options 10, Sections 26 and 27 does not impose an
undue burden on competition as all Members that conduct business with
the public would be subject to the proposed rules. Further, ISE Members
who are also FINRA members would be subject to these rules which are
substantively identical to FINRA Rules 2070 and 3220.
Technical Amendments
The Exchange's proposal to reserve new Sections 23 and 24 within
General 2, amend a citation within the definition of ``proprietary
trading'' within Options 1, Section 1, and remove the word ``pilot''
within Supplementary Material to Options 4A, Section 12 are non-
substantive amendments.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \9\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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-ISE-2022-17 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-ISE-2022-17. 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
[[Page 54586]]
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-ISE-2022-17 and should be
submitted on or before September 27, 2022.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19114 Filed 9-2-22; 8:45 am]
BILLING CODE 8011-01-P