Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 4, Rule 4753 and Equity 4, Rule 4703, 76095-76097 [2022-26865]
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Federal Register / Vol. 87, No. 237 / Monday, December 12, 2022 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96452; File No. SR–
NASDAQ–2022–069]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Equity 4, Rule 4753 and Equity 4, Rule
4703
December 6, 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 November
25, 2022, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to clarify
when Immediate or Cancel Orders for
halted securities are cancelled by
amending Equity 4, Rule 4753 and
Equity 4, Rule 4703. The text of the
proposed rule change is available on the
Exchange’s website at https://
listingcenter.nasdaq.com/rulebook/
nasdaq/rules, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
lotter on DSK11XQN23PROD with NOTICES1
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.
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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1. Purpose
First, the Exchange proposes to
amend Equity 4, Rule 4753,3 which
governs the Nasdaq Halt Cross process,
to clarify the Exchange’s existing
practice that (1) any IOC Order for a
halted security that is entered prior to
the Nasdaq Closing Cross and for which
the halt remains in effect at the
commencement of the Nasdaq Closing
Cross, is cancelled immediately after the
Nasdaq Closing Cross; and (2) any IOC
Order for a halted security that is
entered after the Nasdaq Closing Cross
and for which the halt remains in effect
at 8:00 p.m. ET (or 5:00 p.m. ET in the
event of a Scheduled Early Close), is
cancelled at 8:00 p.m. ET (or 5:00 p.m.
ET in the event of a Scheduled Early
Close). Second, the Exchange proposes
to delete the Time-in-Force definition of
‘‘System Hours Immediate or Cancel’’ or
‘‘SIOC’’ contained in Equity 4, Rule
4703(a)(1) to avoid confusion. Finally,
the Exchange proposes adding a crossreference to Rule 4703(a)(1), which
would reference the new language in
Rule 4753.
An Order with a Time in Force of
‘‘Immediate or Cancel’’ or ‘‘IOC’’ is
designated to deactivate or execute, as
applicable, immediately after
determining whether the Order is
marketable. However, if an IOC Order is
entered for a halted security, the System
cannot determine the marketability of
the Order. Assuming trading of the
halted security does not resume, the
Order is cancelled, either after the
Nasdaq Closing Cross if the Order is
entered prior to the Nasdaq Closing
Cross or at 8:00 p.m. ET (or 5:00 p.m.
ET in the event of a Scheduled Early
Close) if the Order is entered after the
Nasdaq Closing Cross. The proposed
rule change is specific to IOC Orders for
halted securities (for which a halt cross
will occur).4
When an IOC Order for a halted
security is received prior to the Nasdaq
Closing Cross, the Order remains valid
until the Nasdaq Closing Cross. If the
security remains halted at the
commencement of the Nasdaq Closing
Cross, the Exchange cancels the Order
3 Hereinafter, references to the Rule 4000 Series
shall mean the Rule Series set forth in Equity 4 of
the Exchange’s Rulebook.
4 During any trading halt or pause for which a halt
cross under Rule 4753 will not occur, orders
entered during the trading halt or pause are not
accepted, unless subject to instructions that the
order will be directed to another exchange as
described in Rule 4758. Rule 4120(c)(4)(B).
PO 00000
Frm 00072
Fmt 4703
Sfmt 4703
76095
immediately after the Nasdaq Closing
Cross. For example, consider Stock A is
halted at 11:00 a.m. ET. The Exchange
receives an IOC Order for Stock A at
2:00 p.m. ET. The Nasdaq Closing Cross
commences at 4:00 p.m. ET and Stock
A remains halted. The IOC Order for
Stock A is cancelled immediately after
the Nasdaq Closing Cross. This practice
is consistent with customer expectations
and how the Exchange currently
operates. If the halt is lifted prior to the
Nasdaq Closing Cross, the Orders
execute in the re-opening auction, if
marketable, or otherwise cancel. To the
extent the halt remains in place at the
commencement of the Nasdaq Closing
Cross, participants do not expect the
Orders to remain eligible after hours and
therefore, expect the IOC Orders to
expire immediately after the Nasdaq
Closing Cross.5 If the IOC Order for
Stock A described above was not
cancelled after the Nasdaq Closing Cross
and the halt was lifted in the extended
trading hours, the Order could get filled
at an unexpected price, particularly
during extended trading hours when
many securities are thinly traded.
When an IOC Order for a halted
security is received after the Nasdaq
Closing Cross, the Order remains valid
until 8:00 p.m. ET (or 5:00 p.m. ET in
the event of a Scheduled Early Close).
If the security remains halted at 8:00
p.m. ET (or 5:00 p.m. ET in the event
of a Scheduled Early Close), the
Exchange cancels the Order at 8:00 p.m.
ET (or 5:00 p.m. ET in the event of a
Scheduled Early Close). For example,
consider Stock A is halted at 11:00 a.m.
ET. The Exchange receives an IOC Order
for Stock A at 4:01 p.m. ET, after the
Nasdaq Closing Cross. In this example,
the IOC Order for Stock A remains valid
until 8:00 p.m. ET. If the security
remains halted at 8:00 p.m. ET, the
Order is cancelled at that time. This
practice is consistent with customer
expectations and how the Exchange
currently operates. Participants who
enter IOC Orders for halted securities
after the Nasdaq Closing Cross intend
for the Order to be eligible for execution
in the extended hours session, ending at
8:00 p.m. ET (or 5:00 p.m. ET in the
event of a Scheduled Early Close). If the
Orders were not cancelled, the security
may resume trading and the Order may
be filled at a price not expected by the
customer.
Notwithstanding the absence of
express language in the Rules, the
5 This is akin to the Exchange’s practice to
deactivate day orders after the Nasdaq Closing
Cross. See Rule 4703(a)(5). The practice is also
consistent with the definition of ‘‘Market Hours
Immediate of Cancel’’ or ‘‘MIOC.’’ See Rule
4703(a)(1).
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Federal Register / Vol. 87, No. 237 / Monday, December 12, 2022 / Notices
Exchange believes that the current
practice is consistent with customer
expectations. The Exchange is aware of
no customer confusion on the issue.
Nevertheless, the Exchange believes that
the existing Rules would benefit from
clarification so as to avoid the potential
for any confusion in the future.
Accordingly, the Exchange proposes to
add a new section (e) to Rule 4753 to
codify the existing practice.
In addition, the Exchange proposes to
delete the Time-in-Force definition of
‘‘System Hours Immediate or Cancel’’ or
‘‘SIOC’’ from Equity 4, Rule 4703(a)(1).
Specifically, the Exchange proposes to
delete the following language:
An Order with a Time-in-Force of IOC that
is entered at any time between 4:00 a.m. ET
and 8:00 p.m. ET may be referred to as
having a Time-in-Force of ‘‘System Hours
Immediate or Cancel’’ or ‘‘SIOC’’.
lotter on DSK11XQN23PROD with NOTICES1
The defined term ‘‘System Hours
Immediate or Cancel’’ or ‘‘SIOC’’ is not
referenced elsewhere in Nasdaq’s Rules.
Moreover, the language and purpose
thereof are unclear. The Exchange
believes that the language should be
deleted to avoid confusion as the
definitions of ‘‘Market Hours Immediate
or Cancel’’ or ‘‘MIOC’’ and SIOC include
overlapping hours. Furthermore, in the
case of IOC Order for halted securities,
the SIOC definition does not make clear
the current practice that any IOC Order
for a halted security that is entered prior
to the Nasdaq Closing Cross is cancelled
immediately after the Nasdaq Closing
Cross if the security remains halted at
the commencement of the Nasdaq
Closing Cross. The Exchange also
proposes adding a cross-reference to
Rule 4703(a)(1), which would reference
the new language in Rule 4753. The
Exchange believes that the proposed
deletion and cross-reference in Rule
4703, coupled with proposed Rule
4753(e), would help to avoid the
potential for any confusion in the
future.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,6 in general, and furthers the
objectives of Section 6(b)(5) of the Act,7
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.
The Exchange believes that it is just
and equitable, and in the interests of the
public and investors, for the Exchange
6 15
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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to (1) remove unnecessary language
from and add a cross-reference in Rule
4703 and (2) amend Rule 4753 to clarify
the Exchange’s existing practice to
cancel IOC Orders for halted securities
as described above. The Exchange
believes that the public and investors
will benefit from increased clarity,
which will help limit any potential
confusion in the future.
The Exchange also believes that the
Exchange’s existing practice that (1) any
IOC Order for a halted security that is
entered prior to the Nasdaq Closing
Cross and for which the halt remains in
effect at the commencement of the
Nasdaq Closing Cross, is cancelled
immediately after the Nasdaq Closing
Cross; and (2) any IOC Order for a
halted security that is entered after the
Nasdaq Closing Cross and for which the
halt remains in effect at 8:00 p.m. ET (or
5:00 p.m. ET in the event of a Scheduled
Early Close), is cancelled at 8:00 p.m.
ET (or 5:00 p.m. ET in the event of a
Scheduled Early Close) is consistent
with the protection of investors and the
public interest. This practice is
consistent with both current practice
and investor expectations. It helps to
avoid unexpected executions that might
occur if such Orders are not cancelled
and there are significant changes in the
price of the security once the halt is
lifted, thereby protecting investors and
the public interest. Furthermore, the
Exchange believes that codifying its
current practice to cancel IOC Orders for
halted securities as described above,
consistent with customer expectations,
is designed to promote just and
equitable principles of trade and remove
impediments to and perfect the
mechanisms of a free and open market
as it adds clarity to the Exchange’s Rules
and avoids the potential for any
confusion.
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 proposal
merely codifies and clarifies an existing
practice of the Exchange to cancel IOC
Orders for halted securities immediately
after the Nasdaq Closing Cross in the
case of an Order entered prior to the
Nasdaq Closing Cross where the security
remains halted upon commencement of
the Nasdaq Closing Cross and at 8:00
p.m. ET (or 5:00 p.m. ET in the event
of a Scheduled Early Close) in the case
of an Order entered after the Nasdaq
Closing Cross where the security
remains halted at 8:00 p.m. ET (or 5:00
p.m. ET in the event of a Scheduled
PO 00000
Frm 00073
Fmt 4703
Sfmt 4703
Early Close). The Exchange would also
make technical changes to improve the
clarity of the proposal. The proposed
changes are designed to more clearly
describe an existing practice and make
technical and conforming changes to the
Rules without changing existing
practice and, therefore, the Exchange
believes that the proposed changes will
not impose a burden on competition.
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) of the Act 8 and Rule 19b–
4(f)(6) 9 thereunder.10
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 11 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 12
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has asked
the Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The proposed rule text codifies
the Exchange’s current practice of
handling IOC orders for halted
securities. In addition, it clarifies the
Exchange’s rules by deleting a term not
used elsewhere and adding a crossreference. The Commission believes that
the proposed rule change does not raise
any new or novel issues, and waiver of
the 30-day operative delay is consistent
with the protection of investors and the
public interest. Accordingly, the
Commission hereby waives the
8 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
10 In addition, Rule 19b–4(f)(6)(iii) requires the
Exchange to give the Commission written notice of
the Exchange’s intent to file the proposed rule
change, along with a brief description and text of
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.
11 17 CFR 240.19b–4(f)(6).
12 17 CFR 240.19b–4(f)(6)(iii).
9 17
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Federal Register / Vol. 87, No. 237 / Monday, December 12, 2022 / Notices
operative delay and designates the
proposal operative upon filing.13
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.14
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:
lotter on DSK11XQN23PROD with NOTICES1
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2022–069.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2022–069. 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
13 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
14 15 U.S.C. 78s(b)(3)(C).
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18:08 Dec 09, 2022
Jkt 259001
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2022–069, and
should be submitted on or before
January 3,2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022–26865 Filed 12–9–22; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–96454; File No. SR–
NYSEAMER–2022–45]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Withdrawal of
a Proposed Rule Change To Amend
the NYSE American Options Fee
Schedule Concerning the Options
Regulatory Fee
December 6, 2022.
On September 28, 2022, NYSE
American LLC (‘‘NYSE American’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 1 and Rule 19b–
4 thereunder,2 a proposed rule change
to amend its Fee Schedule regarding its
Options Regulatory Fee. The proposed
rule change was immediately effective
upon filing with the Commission
pursuant to Section 19(b)(3)(A) of the
Act.3 The proposed rule change was
published for comment in the Federal
Register on October 19, 2022.4 On
November 14, 2022, NYSE American
withdrew the proposed rule change
(SR–NYSEAMER–2022–45).
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A). A proposed rule change
may take effect upon filing with the Commission if
it is designated by the exchange as ‘‘establishing or
changing a due, fee, or other charge imposed by the
self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory
organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii).
4 See Securities Exchange Act Release No. 96066
(October 13, 2022), 87 FR 63565.
1 15
Frm 00074
Fmt 4703
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.5
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022–26867 Filed 12–9–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96453; File No. SR–MEMX–
2022–28]
Self-Regulatory Organizations; MEMX
LLC; Notice of Withdrawal of a
Proposed Rule Change To Amend Its
Fee Schedule To Adopt Market Data
Fees
December 6, 2022.
SECURITIES AND EXCHANGE
COMMISSION
PO 00000
76097
Sfmt 4703
On September 21, 2022, MEMX LLC
(‘‘MEMX’’) filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 1 and
Rule 19b–4 thereunder,2 a proposed rule
change to amend its Fee Schedule to
adopt fees for its market data products.
The proposed rule change was
immediately effective upon filing with
the Commission pursuant to Section
19(b)(3)(A) of the Act.3 The proposed
rule change was published for comment
in the Federal Register on October 11,
2022.4 On November 18, 2022, MEMX
withdrew the proposed rule change
(SR–MEMX–2022–28).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.5
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022–26866 Filed 12–9–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. PA–58; File No. S7–28–22]
Privacy Act of 1974; System of
Records
Securities and Exchange
Commission.
AGENCY:
5 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A). A proposed rule change
may take effect upon filing with the Commission if
it is designated by the exchange as ‘‘establishing or
changing a due, fee, or other charge imposed by the
self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory
organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii).
4 See Securities Exchange Act Release No. 95981
(October 4, 2022), 87 FR 61379.
5 17 CFR 200.30–3(a)(12).
1 15
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Agencies
[Federal Register Volume 87, Number 237 (Monday, December 12, 2022)]
[Notices]
[Pages 76095-76097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-26865]
[[Page 76095]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96452; File No. SR-NASDAQ-2022-069]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Equity 4, Rule 4753 and Equity 4, Rule 4703
December 6, 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 November 25, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to clarify when Immediate or Cancel Orders
for halted securities are cancelled by amending Equity 4, Rule 4753 and
Equity 4, Rule 4703. The text of the proposed rule change is available
on the Exchange's website at https://listingcenter.nasdaq.com/rulebook/nasdaq/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
First, the Exchange proposes to amend Equity 4, Rule 4753,\3\ which
governs the Nasdaq Halt Cross process, to clarify the Exchange's
existing practice that (1) any IOC Order for a halted security that is
entered prior to the Nasdaq Closing Cross and for which the halt
remains in effect at the commencement of the Nasdaq Closing Cross, is
cancelled immediately after the Nasdaq Closing Cross; and (2) any IOC
Order for a halted security that is entered after the Nasdaq Closing
Cross and for which the halt remains in effect at 8:00 p.m. ET (or 5:00
p.m. ET in the event of a Scheduled Early Close), is cancelled at 8:00
p.m. ET (or 5:00 p.m. ET in the event of a Scheduled Early Close).
Second, the Exchange proposes to delete the Time-in-Force definition of
``System Hours Immediate or Cancel'' or ``SIOC'' contained in Equity 4,
Rule 4703(a)(1) to avoid confusion. Finally, the Exchange proposes
adding a cross-reference to Rule 4703(a)(1), which would reference the
new language in Rule 4753.
---------------------------------------------------------------------------
\3\ Hereinafter, references to the Rule 4000 Series shall mean
the Rule Series set forth in Equity 4 of the Exchange's Rulebook.
---------------------------------------------------------------------------
An Order with a Time in Force of ``Immediate or Cancel'' or ``IOC''
is designated to deactivate or execute, as applicable, immediately
after determining whether the Order is marketable. However, if an IOC
Order is entered for a halted security, the System cannot determine the
marketability of the Order. Assuming trading of the halted security
does not resume, the Order is cancelled, either after the Nasdaq
Closing Cross if the Order is entered prior to the Nasdaq Closing Cross
or at 8:00 p.m. ET (or 5:00 p.m. ET in the event of a Scheduled Early
Close) if the Order is entered after the Nasdaq Closing Cross. The
proposed rule change is specific to IOC Orders for halted securities
(for which a halt cross will occur).\4\
---------------------------------------------------------------------------
\4\ During any trading halt or pause for which a halt cross
under Rule 4753 will not occur, orders entered during the trading
halt or pause are not accepted, unless subject to instructions that
the order will be directed to another exchange as described in Rule
4758. Rule 4120(c)(4)(B).
---------------------------------------------------------------------------
When an IOC Order for a halted security is received prior to the
Nasdaq Closing Cross, the Order remains valid until the Nasdaq Closing
Cross. If the security remains halted at the commencement of the Nasdaq
Closing Cross, the Exchange cancels the Order immediately after the
Nasdaq Closing Cross. For example, consider Stock A is halted at 11:00
a.m. ET. The Exchange receives an IOC Order for Stock A at 2:00 p.m.
ET. The Nasdaq Closing Cross commences at 4:00 p.m. ET and Stock A
remains halted. The IOC Order for Stock A is cancelled immediately
after the Nasdaq Closing Cross. This practice is consistent with
customer expectations and how the Exchange currently operates. If the
halt is lifted prior to the Nasdaq Closing Cross, the Orders execute in
the re-opening auction, if marketable, or otherwise cancel. To the
extent the halt remains in place at the commencement of the Nasdaq
Closing Cross, participants do not expect the Orders to remain eligible
after hours and therefore, expect the IOC Orders to expire immediately
after the Nasdaq Closing Cross.\5\ If the IOC Order for Stock A
described above was not cancelled after the Nasdaq Closing Cross and
the halt was lifted in the extended trading hours, the Order could get
filled at an unexpected price, particularly during extended trading
hours when many securities are thinly traded.
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\5\ This is akin to the Exchange's practice to deactivate day
orders after the Nasdaq Closing Cross. See Rule 4703(a)(5). The
practice is also consistent with the definition of ``Market Hours
Immediate of Cancel'' or ``MIOC.'' See Rule 4703(a)(1).
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When an IOC Order for a halted security is received after the
Nasdaq Closing Cross, the Order remains valid until 8:00 p.m. ET (or
5:00 p.m. ET in the event of a Scheduled Early Close). If the security
remains halted at 8:00 p.m. ET (or 5:00 p.m. ET in the event of a
Scheduled Early Close), the Exchange cancels the Order at 8:00 p.m. ET
(or 5:00 p.m. ET in the event of a Scheduled Early Close). For example,
consider Stock A is halted at 11:00 a.m. ET. The Exchange receives an
IOC Order for Stock A at 4:01 p.m. ET, after the Nasdaq Closing Cross.
In this example, the IOC Order for Stock A remains valid until 8:00
p.m. ET. If the security remains halted at 8:00 p.m. ET, the Order is
cancelled at that time. This practice is consistent with customer
expectations and how the Exchange currently operates. Participants who
enter IOC Orders for halted securities after the Nasdaq Closing Cross
intend for the Order to be eligible for execution in the extended hours
session, ending at 8:00 p.m. ET (or 5:00 p.m. ET in the event of a
Scheduled Early Close). If the Orders were not cancelled, the security
may resume trading and the Order may be filled at a price not expected
by the customer.
Notwithstanding the absence of express language in the Rules, the
[[Page 76096]]
Exchange believes that the current practice is consistent with customer
expectations. The Exchange is aware of no customer confusion on the
issue. Nevertheless, the Exchange believes that the existing Rules
would benefit from clarification so as to avoid the potential for any
confusion in the future. Accordingly, the Exchange proposes to add a
new section (e) to Rule 4753 to codify the existing practice.
In addition, the Exchange proposes to delete the Time-in-Force
definition of ``System Hours Immediate or Cancel'' or ``SIOC'' from
Equity 4, Rule 4703(a)(1). Specifically, the Exchange proposes to
delete the following language:
An Order with a Time-in-Force of IOC that is entered at any time
between 4:00 a.m. ET and 8:00 p.m. ET may be referred to as having a
Time-in-Force of ``System Hours Immediate or Cancel'' or ``SIOC''.
The defined term ``System Hours Immediate or Cancel'' or ``SIOC''
is not referenced elsewhere in Nasdaq's Rules. Moreover, the language
and purpose thereof are unclear. The Exchange believes that the
language should be deleted to avoid confusion as the definitions of
``Market Hours Immediate or Cancel'' or ``MIOC'' and SIOC include
overlapping hours. Furthermore, in the case of IOC Order for halted
securities, the SIOC definition does not make clear the current
practice that any IOC Order for a halted security that is entered prior
to the Nasdaq Closing Cross is cancelled immediately after the Nasdaq
Closing Cross if the security remains halted at the commencement of the
Nasdaq Closing Cross. The Exchange also proposes adding a cross-
reference to Rule 4703(a)(1), which would reference the new language in
Rule 4753. The Exchange believes that the proposed deletion and cross-
reference in Rule 4703, coupled with proposed Rule 4753(e), would help
to avoid the potential for any confusion in the future.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\7\ 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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that it is just and equitable, and in the
interests of the public and investors, for the Exchange to (1) remove
unnecessary language from and add a cross-reference in Rule 4703 and
(2) amend Rule 4753 to clarify the Exchange's existing practice to
cancel IOC Orders for halted securities as described above. The
Exchange believes that the public and investors will benefit from
increased clarity, which will help limit any potential confusion in the
future.
The Exchange also believes that the Exchange's existing practice
that (1) any IOC Order for a halted security that is entered prior to
the Nasdaq Closing Cross and for which the halt remains in effect at
the commencement of the Nasdaq Closing Cross, is cancelled immediately
after the Nasdaq Closing Cross; and (2) any IOC Order for a halted
security that is entered after the Nasdaq Closing Cross and for which
the halt remains in effect at 8:00 p.m. ET (or 5:00 p.m. ET in the
event of a Scheduled Early Close), is cancelled at 8:00 p.m. ET (or
5:00 p.m. ET in the event of a Scheduled Early Close) is consistent
with the protection of investors and the public interest. This practice
is consistent with both current practice and investor expectations. It
helps to avoid unexpected executions that might occur if such Orders
are not cancelled and there are significant changes in the price of the
security once the halt is lifted, thereby protecting investors and the
public interest. Furthermore, the Exchange believes that codifying its
current practice to cancel IOC Orders for halted securities as
described above, consistent with customer expectations, is designed to
promote just and equitable principles of trade and remove impediments
to and perfect the mechanisms of a free and open market as it adds
clarity to the Exchange's Rules and avoids the potential for any
confusion.
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 proposal merely codifies
and clarifies an existing practice of the Exchange to cancel IOC Orders
for halted securities immediately after the Nasdaq Closing Cross in the
case of an Order entered prior to the Nasdaq Closing Cross where the
security remains halted upon commencement of the Nasdaq Closing Cross
and at 8:00 p.m. ET (or 5:00 p.m. ET in the event of a Scheduled Early
Close) in the case of an Order entered after the Nasdaq Closing Cross
where the security remains halted at 8:00 p.m. ET (or 5:00 p.m. ET in
the event of a Scheduled Early Close). The Exchange would also make
technical changes to improve the clarity of the proposal. The proposed
changes are designed to more clearly describe an existing practice and
make technical and conforming changes to the Rules without changing
existing practice and, therefore, the Exchange believes that the
proposed changes will not impose a burden on competition.
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) of the Act \8\ and Rule 19b-
4(f)(6) \9\ thereunder.\10\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6).
\10\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to
give the Commission written notice of the Exchange's intent to file
the proposed rule change, along with a brief description and text of
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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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \11\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The proposed
rule text codifies the Exchange's current practice of handling IOC
orders for halted securities. In addition, it clarifies the Exchange's
rules by deleting a term not used elsewhere and adding a cross-
reference. The Commission believes that the proposed rule change does
not raise any new or novel issues, and waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission hereby waives the
[[Page 76097]]
operative delay and designates the proposal operative upon filing.\13\
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.\14\
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\14\ 15 U.S.C. 78s(b)(3)(C).
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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-NASDAQ-2022-069.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2022-069. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2022-069, and should be submitted
on or before January 3, 2023.
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-26865 Filed 12-9-22; 8:45 am]
BILLING CODE 8011-01-P