Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To Amend Rule 4120 and Rule 4753, 66913-66916 [2023-21136]
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Federal Register / Vol. 88, No. 187 / Thursday, September 28, 2023 / Notices
to Add Priority Mail & USPS Ground
Advantage Contract 65 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: September 22, 2023; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Jennaca D. Upperman; Comments Due:
October 2, 2023.
This Notice will be published in the
Federal Register.
SECURITIES AND EXCHANGE
COMMISSION
Erica A. Barker,
Secretary.
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 18(a)(2), 18(c), 18(i) and section
61(a) of the Act.
SUMMARY OF APPLICATION: Applicants
request an order to permit certain
closed-end management investment
companies that have elected to be
regulated as business development
companies (‘‘BDCs’’) to issue multiple
classes of shares with varying sales
loads and asset-based service and/or
distribution fees.
APPLICANTS: T. Rowe Price OHA Select
Private Credit Fund and OHA Private
Credit Advisors LLC.
FILING DATES: The application was filed
on July 5, 2023, and amended on
September 13, 2023.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing on any application by
emailing the SEC’s Secretary at
Secretarys-Office@sec.gov and serving
the Applicants with a copy of the
request by email, if an email address is
listed for the relevant Applicant below,
or personally or by mail, if a physical
address is listed for the relevant
Applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on October 20, 2023, and
should be accompanied by proof of
service on the Applicants, in the form
of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0–
5 under the Act, hearing requests should
state the nature of the writer’s interest,
any facts bearing upon the desirability
of a hearing on the matter, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
Gregory S. Rubin, Esq., OHA Private
Credit Advisors LLC, grubin@
oakhilladvisors.com, with copies to
Richard Horowitz, Esq., Dechert, LLP,
richard.horowitz@dechert.com.
[FR Doc. 2023–21253 Filed 9–27–23; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL SERVICE
International Product Change—Priority
Mail Express International, Priority Mail
International & First-Class Package
International Service Agreement
AGENCY:
ACTION:
Postal ServiceTM.
Notice.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a Priority
Mail Express International, Priority Mail
International & First-Class Package
International Service contract to the list
of Negotiated Service Agreements in the
Competitive Product List in the Mail
Classification Schedule.
SUMMARY:
DATES:
Date of notice: September 28,
2023.
FOR FURTHER INFORMATION CONTACT:
Christopher C. Meyerson, (202) 268–
7820.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on September 13,
2023, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express International,
Priority Mail International & First-Class
Package International Service Contract
27 to Competitive Product List.
Documents are available at
www.prc.gov, Docket Nos. MC2023–265
and CP2023–268.
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SUPPLEMENTARY INFORMATION:
Colleen Hibbert-Kapler,
Attorney, Ethics and Legal Compliance.
[FR Doc. 2023–21149 Filed 9–27–23; 8:45 am]
BILLING CODE 7710–12–P
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[Investment Company Act Release No.
35022; File No. 812–15481]
T. Rowe Price OHA Select Private
Credit Fund and OHA Private Credit
Advisors LLC
September 25, 2023.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice.
AGENCY:
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66913
FOR FURTHER INFORMATION CONTACT:
Laura L. Solomon, Senior Counsel or
Kyle R. Ahlgren, Branch Chief, at (202)
551–6825 (Division of Investment
Management, Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: For
Applicants’ representations, legal
analysis, and conditions, please refer to
Applicants’ application, dated
September 13, 2023, which may be
obtained via the Commission’s website
by searching for the file number at the
top of this document, or for an
Applicant using the Company name
search field, on the SEC’s EDGAR
system. The SEC’s EDGAR system may
be searched at https://www.sec.gov/
edgar/searchedgar/legacy/
companysearch.html. You may also call
the SEC’s Public Reference Room at
(202) 551–8090.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–21286 Filed 9–27–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98489; File No. SR–
NASDAQ–2023–036]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing of Proposed Rule Change To
Amend Rule 4120 and Rule 4753
September 22, 2023.
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
September 12, 2023, 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 self-regulatory
organization. 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
Rule 4120 (Limit Up-Limit Down and
Trading Halts) and Rule 4753 (Nasdaq
Halt Cross) to set forth specific
requirements for halting and resuming
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 88, No. 187 / Thursday, September 28, 2023 / Notices
trading in a security that is subject to a
reverse stock split.
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
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1. Purpose
In conjunction with the increase in
overall reverse stock splits in recent
years, Nasdaq proposes to amend Rule
4120 and Rule 4753 to set forth specific
requirements for halting trading in a
security that is subject to a reverse stock
split and resuming trading using the
Nasdaq Halt Cross. Current Rule 4120
does not specifically list rule reverse
stock splits in its numerated
circumstances in which Nasdaq may
halt trading in a security. The proposed
amendments will be specific to the
automatic initiation, pre-market trading
and opening of a Nasdaq-listed security
undergoing a reverse stock split.
Background
Nasdaq has observed that the current
market environment has led to an
increase in reverse stock split activity.
In 2022, Nasdaq processed 196 reverse
stock splits, compared to 35 in 2021 and
98 in 2020. Just in the first quarter of
2023, Nasdaq processed 78 reverse stock
splits, and projects significantly more
throughout 2023. Reverse stock splits
are often effected by smaller companies
that do not have broad media or
research coverage. In most cases, the
companies are listed on the Capital
Market tier and are conducting reverse
stock splits to achieve compliance with
Nasdaq’s $1 minimum bid price
requirement.3
3 Rule 5550(a)(2) specifies that a Company that
has its Primary Equity Security listed on the Capital
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Nasdaq believes that the increase in
companies effecting reverse stock splits
warrants amendments to the trading halt
rules to allow for Nasdaq to help reduce
the potential for errors resulting in a
material effect on the market resulting
from market participants’ processing of
the reverse stock split, including
incorrect adjustment or entry of orders.
Nasdaq currently processes reverse
stock splits overnight, with the security
opening for trading at 4:00 a.m. EST in
the pre-market hours (i.e., the trading
session between 4:00 a.m. to 9:30 a.m.
EST) on a split-adjusted basis. Recently,
market participants have expressed
concerns with allowing trading on an
adjusted basis at 4:00 a.m., noting that
it is not optimal because system errors
or problems with orders may go
unnoticed for a period of time when a
security that has undergone a reverse
stock split opens for trading with the
other thousands of securities. These
errors have the potential to adversely
affect investors, market participants and
the issuer.4 For example, in one recent
instance problems in connection with
the processing of a reverse stock split
resulted in a broker executing trades
selling more shares than customers held
in their accounts, resulting in a
temporary short position.
As such, Nasdaq believes it is
appropriate to impose a regulatory halt,
which would prohibit pre-market
trading immediately after a reverse stock
split and open trading in such securities
using the Nasdaq Halt Cross 5 process
set forth in Rule 4753. The proposed
new rule will allow for Nasdaq and
market participants to better detect any
errors or problems with orders for the
security resulting from the reverse stock
split before trading in the security
begins and thereby avoid any material
effect on the market.
Description of the Proposed
Amendment
Nasdaq is proposing to: (1) amend
Rule 4120(a) to provide the Exchange
Market must have a minimum bid price of at least
$1 per share. See also Rule 5450(a)(1) (Global and
Global Select Markets). Companies are afforded a
grace period pursuant to Rule 5810(c)(3)(A) to
regain compliance.
4 In a separate filing, Nasdaq also proposed
changes to adopt specific notification and
disclosure requirements for reverse stock splits. See
Securities Exchange Act Release No. 98014 (July 28,
2023), 88 FR 51376 (August 3, 2023) (SR–Nasdaq–
2023–21).
5 The ‘‘Nasdaq Halt Cross’’ is the process for
determining the price at which Eligible Interest
shall be executed at the open of trading for a halted
security and for executing that Eligible Interest. See
Rule 4753(a)(4). ‘‘Eligible Interest’’ shall mean any
quotation or any order that has been entered into
the system and designated with a time-in-force that
would allow the order to be in force at the time of
the Halt Cross. See Nasdaq Rule 4753(a)(5).
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with explicit authority to declare a
trading halt before the end of PostMarket Hours 6 on the day immediately
before the market effective date of a
reverse stock split; and (2) amend Rule
4120(c) to include this halt in the
existing procedures for initiating and
terminating a trading halt. More
specifically, proposed Rule 4120(a)(14)
provides that Nasdaq shall halt trading
of a security for which Nasdaq is the
primary listing market before the end of
the Post-Market Hours on the day
immediately before the market effective
date of a reverse stock split. A trading
halt due to a reverse stock split will be
mandatory pursuant to proposed Rule
4120(a)(14). Nasdaq also proposes to
modify Rule 4120(c)(7)(A) to include the
new halt authority proposed in Rule
4120(a)(14) in the reopening process
currently applicable to halts under
Rules 4120(a)(1), (4), (5), (6), (9), (10)
and (11). In general, Nasdaq expects to
initiate the halt at 7:50 p.m., prior to the
close of post-market trading at 8:00 p.m.
on the day immediately before the split
is effective,7 and resume trading at 9:00
a.m. on the day the split is effective.8
Nasdaq believes that this halt and
delayed opening will give sufficient
time for investors to review their orders
and the quotes for the security and
allow market participants to ensure that
their systems have properly adjusted for
the reverse stock split.
Nasdaq is also proposing to update
Rule 4753(b) to include proposed Rule
4120(a)(14) in the list of numerated
provisions that would be subject to the
Nasdaq Halt Cross. As such, any
security that is subject to a reverse stock
split will be reopened using the Nasdaq
Halt Cross prior to trading during
market hours.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
6 The term ‘‘Post-Market Hours’’ means the period
of time beginning immediately after the end of
Market Hours and ending at 8:00 p.m. ET. See
Nasdaq Rule Equity 1, Section 1(a)(9).
7 Initiating the halt at approximately 7:50 p.m.
will provide Nasdaq with a limited buffer to ensure
that trading in a security that is undergoing a
reverse stock split will not continue after the close
of post-market trading.
8 Nasdaq may change the resumption time if, for
example, there was an Extraordinary Market
Activity that could interfere with a fair and orderly
9:00 a.m. resumption. ‘‘Extraordinary Market
Activity’’ is defined in the Fiftieth Amendment to
the Joint Self-Regulatory Organization Plan
Governing the Collection, Consolidation and
Dissemination of Quotation and Transaction
Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privileges Basis.
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Federal Register / Vol. 88, No. 187 / Thursday, September 28, 2023 / Notices
exchange, and, in particular, with the
requirements of section 6(b) of the Act.9
Specifically, the proposal is consistent
with section 6(b)(5) of the Act 10 because
it would promote just and equitable
principles of trade, remove
impediments to, and perfect the
mechanism of, a free and open market
and a national market system, and, in
general, protect investors and the public
interest.
As described above, the Exchange is
seeking to amend rules related to halting
and resuming trading in U.S.-listed
equity securities subject to a reverse
stock split. The Exchange believes that
establishing a reverse stock split trading
halt rule will protect investors by giving
the Exchange automatic authority to act
in situations where it is necessary to
maintain fair and orderly markets. It
will also ensure that the process for
resuming trading following a reverse
stock split halt is consistent with other
types of halts initiated by Nasdaq.
Currently, none of the provisions in
Rule 4120 provide authority to preemptively halt during pre-market hours
the trading in a security undergoing a
significant corporate action that could
lead to investor or market confusion.
The Exchange believes that the
proposed amendments will provide
greater transparency and clarity with
respect to the manner in which trading
will be halted due to a reverse stock
split, and the process through which
that halt will be implemented and
terminated. Particularly, Nasdaq will
not have the discretion of determining
when to halt a security following a
reverse stock split. Rather, following the
reverse stock split of the security for
which Nasdaq is the primary listing
market, trading in the security will
automatically halt prior to the close of
post-market trading at 8:00 p.m. The
proposed changes seek to achieve
consistency with respect to the
initiation and termination of a trading
halt with respect to securities that have
undergone a reverse stock split, while
maintaining a fair and orderly market,
protecting investors and protecting the
public interest.
Additionally, establishing a
mandatory trading halt for securities
that have undergone a reverse stock
split and resuming trading thereafter
promotes fair and orderly markets and
the protection of investors, because it
encourages Nasdaq to consider the
broader interests of the national market
system and addresses potential concerns
that system errors may affect immediate
trading in those securities. Based on the
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10 15
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18:09 Sep 27, 2023
foregoing, the Exchange believes that
the proposed rules are consistent with
section 6(b)(5) of the Act 11 because they
will promote just and equitable
principles of trade and will remove any
impediments to a free and open market
and a national market system by
allowing sufficient time for investors to
review their orders and the quotes for a
security that has undergone a reverse
stock split, and allow market
participants to ensure that their systems
have properly accounted for the reverse
stock split. As discussed previously, the
Exchange believes that the proposed
amendments establishing the authority
and process for reverse stock split
trading halts and the resumption of
trading is consistent with the Act,
which itself imposes obligations on
exchanges with respect to issuers that
are listed.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes the proposal is
consistent with section 6(b)(8) of the Act
in that it does not impose any burden
on competition that is not necessary or
appropriate in furtherance of the
purposes of the Act as explained below.
The Exchange believes the proposal
will not impose a burden on intermarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act because the
proposed rule change is designed to
protect investors and facilitate a fair and
orderly market, which are both
important purposes of the Act. To the
extent that there is any impact on
intermarket competition, it is incidental
to these objectives.
The Exchange does not believe that
the proposed rule change imposes a
burden on intra-market competition
because the provisions apply to all
market participants and issuers equally.
In addition, information regarding the
halting and resumption of trading will
be disseminated using several freely
accessible sources to ensure broad
availability of information offered by the
Exchange that are available to
subscribers.
In addition, the proposals include
provisions related to the declaration and
timing of trading halts and the
resumption of trading designed to avoid
any advantage to those who can react
more quickly than other participants.
11 15
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U.S.C. 78f(b)(5).
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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
Within 45 days of the date of
publication of this notice in the Federal
Register or such longer period up to 90
days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) by order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be 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–
NASDAQ–2023–036 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–NASDAQ–2023–036. 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
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Federal Register / Vol. 88, No. 187 / Thursday, September 28, 2023 / Notices
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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NASDAQ–2023–036 and should be
submitted on or before October 19,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–21136 Filed 9–27–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98488]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Declaration of
Effectiveness of the Fingerprint Plan of
the Financial Industry Regulatory
Authority, Inc.
September 22, 2023.
On September 22, 2023, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
Exchange Commission (‘‘Commission’’
or ‘‘SEC’’) a new fingerprint plan
(‘‘Plan’’) 1 pursuant to Rule 17f–2(c) 2
under the Securities Exchange Act of
1934 (‘‘Exchange Act’’ or ‘‘Act’’).3 The
Plan supersedes and replaces FINRA’s
current fingerprint plan, which was
declared effective for the Commission
by the Division of Trading and Markets,
pursuant to delegated authority, on
November 2, 2021 (‘‘2021 Fingerprint
Plan’’).4
12 17
CFR 200.30–3(a)(12).
hereto as Exhibit A. See also Letter
from Richard Pullano, Vice President and Associate
General Counsel, FINRA, to Devin Ryan, Assistant
Director, Office of Chief Counsel and Moshe
Rothman, Assistant Director, Office of Clearance
and Settlement, Division of Trading and Markets,
dated September 22, 2023 (‘‘FINRA Letter’’).
2 17 CFR 240.17f–2(c).
3 15 U.S.C. 78a et seq.
4 See Exchange Act Release No. 93511 (November
2, 2021), 86 FR 61801 (November 8, 2021), https://
www.sec.gov/files/rules/other/2021/34-93511.pdf
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As discussed in the FINRA Letter,
historically FINRA has processed
fingerprints submitted from registered
transfer agent and registered clearing
agency (hereinafter referred to as
‘‘transfer agents’’ and ‘‘clearing
agencies’’) personnel who are required
to be fingerprinted using FINRA’s
fingerprint processing platform.5 FINRA
states that the new Plan is necessary
because FINRA must retire its
fingerprint processing platform, due to
the termination of support of essential
software used by the platform.6 Because
its fingerprint processing platform will
no longer be supported, FINRA states
that there is an exigent need to provide
an option for transfer agents and
clearing agencies that are currently
using FINRA to meet the Exchange Act
fingerprinting requirement.7
Accordingly, FINRA is adopting a new
Plan to reflect that it has arranged for its
FBI-approved channeler (‘‘FBIApproved Channel Partner’’) 8 to serve,
on an interim basis, as a fingerprinting
option for transfer agents and clearing
agencies that elect to use it.9 FINRA
states that it will continue to work with
SEC and FBI staff to find a more
(Declaration of Effectiveness of the Fingerprint Plan
of the Financial Industry Regulatory Authority, Inc.
(‘‘2021 Declaration’’)). See also Letter from Richard
E. Pullano, Vice President and Associate General
Counsel, FINRA, to Devin Ryan, Assistant Director,
Office of Chief Counsel, Division of Trading and
Markets, Commission, dated October 28, 2021,
https://www.sec.gov/files/rules/other/2021/finraincoming-fingerprint-plan-cover-letter.pdf (‘‘FINRA
October 2021 Letter’’).
5 See FINRA Letter at 1. See id. at 3, n.8. See also
2021 Declaration at 5–6, 12 (describing
fingerprinting processing for transfer agent and
clearing agency personnel). As FINRA notes, as a
result of the 2021 Fingerprint Plan transition, the
percentage of fingerprints processed through
FINRA’s fingerprint platform decreased by 97
percent. See FINRA Letter at 1, n.3.
6 See FINRA Letter at 1. FINRA states that, for
over 20 years, it directly channeled fingerprints of
transfer agent and clearing agency personnel to the
Federal Bureau of Investigation (‘‘FBI’’) using a
proprietary platform that used vendor-provided
software and specialized communications
equipment. Although FINRA continues to process
fingerprints submitted by transfer agents and
clearing agencies, it soon will no longer have the
ability to directly channel fingerprints to the FBI as
its fingerprint processing platform must be retired.
Specifically, in addition to the vendor
discontinuing the software used for the platform
and ceasing to support the software, FINRA learned
in late 2022 that other software (an unrelated server
product) that is integral to the platform’s operation
will no longer be supported after October 10, 2023.
See id. at 1–2.
7 See id. at 1–4. FINRA states that it will continue
to channel fingerprints for these personnel
consistent with the 2021 Fingerprint Plan until the
Plan is declared effective or September 29, 2023,
whichever is earlier. See Exhibit A, at 1, n.1.
8 See Exhibit A at 1, n.3. See also 2021
Declaration at 2, n.6 (discussing the FBI’s
conditional approval of FINRA using a specified
FBI-Approved Channel Partner).
9 See FINRA Letter at 3–4.
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permanent solution that does not
involve FINRA acting in a channeler
role for transfer agents and clearing
agencies.10 Importantly, FINRA explains
that the new Plan will continue, without
any changes, the processes established
under the 2021 Fingerprint Plan for
broker-dealer personnel,11 as well as
FINRA’s officers, directors, employees
and contractors, and will extend such
processes to personnel of transfer agents
and clearing agencies with respect to the
use of its FBI-Approved Channel
Partner.12
For the reasons discussed below, the
Commission finds that, pursuant to Rule
17f–2(c) of the Exchange Act, the Plan
is not inconsistent with the public
interest and the protection of investors
and, therefore, declares the Plan to be
effective.
1. Applicable Standard
Section 17(f)(2) of the Act provides, in
pertinent part, that ‘‘every member of a
national securities exchange, broker,
dealer, registered transfer agent and
registered clearing agency . . . and
national securities association shall
require that each of its partners,
directors, officers, and employees be
fingerprinted and shall submit such
fingerprints, or cause the same to be
submitted, to the Attorney General of
the United States for identification and
10 See id. at 3. FINRA states that no additional
action is needed by the FBI to implement this
interim measure because the FBI’s 2021 approval of
FINRA’s outsourcing of its fingerprint channeling
responsibilities extends to all entities identified in
Exchange Act section 17(f)(2), including transfer
agents and clearing agencies. See FINRA Letter at
3, n. 10 (citing letter from Chasity S. Anderson, FBI
Compact Officer, National Crime Prevention and
Privacy Compact Council Office, FBI, to Derek W.
Linden, Executive Vice President, FINRA, dated
September 28, 2021), https://www.sec.gov/files/
rules/other/2021/fbi-compact-officer-approvalletter.pdf.
11 See id. at 1, 4. For purposes of the Plan, brokerdealer personnel includes personnel of FINRA
members and other broker-dealers required to be
fingerprinted pursuant to Exchange Act section
17(f)(2) and Rule 17f–2 thereunder. The term
‘‘members,’’ as used in the Plan, includes Capital
Acquisition Brokers, Funding Portals and
applicants for FINRA membership. See Exhibit A at
1–2, n.2.
12 See id. at 1, 4. FINRA’s 2021 transition to the
FBI-Approved Channel Partner provides brokerdealers an efficient option to comply with the
fingerprinting requirements in section 17(f)(2) and
enables FINRA to fulfill its critical regulatory
responsibilities for those entities. The 2021
transition similarly enables FINRA to efficiently
fingerprint its officers, directors, employees and
contractors consistent with New York General
Business Law Section 359–e and Exchange Act
section 17(f)(2) and thereby safeguard against
potential threats to FINRA personnel, facilities and
records. As a result of the 2021 transition, the
percentage of fingerprints processed through
FINRA’s fingerprint platform decreased by 97
percent. See id. at 1, n.3. See also 2021 Declaration
at 4–6, 11–13.
E:\FR\FM\28SEN1.SGM
28SEN1
]]>Agencies
[Federal Register Volume 88, Number 187 (Thursday, September 28, 2023)]
[Notices]
[Pages 66913-66916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21136]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98489; File No. SR-NASDAQ-2023-036]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Proposed Rule Change To Amend Rule 4120 and Rule
4753
September 22, 2023.
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 September 12, 2023, 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 self-regulatory
organization. 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 Rule 4120 (Limit Up-Limit Down and
Trading Halts) and Rule 4753 (Nasdaq Halt Cross) to set forth specific
requirements for halting and resuming
[[Page 66914]]
trading in a security that is subject to a reverse stock split.
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
In conjunction with the increase in overall reverse stock splits in
recent years, Nasdaq proposes to amend Rule 4120 and Rule 4753 to set
forth specific requirements for halting trading in a security that is
subject to a reverse stock split and resuming trading using the Nasdaq
Halt Cross. Current Rule 4120 does not specifically list rule reverse
stock splits in its numerated circumstances in which Nasdaq may halt
trading in a security. The proposed amendments will be specific to the
automatic initiation, pre-market trading and opening of a Nasdaq-listed
security undergoing a reverse stock split.
Background
Nasdaq has observed that the current market environment has led to
an increase in reverse stock split activity. In 2022, Nasdaq processed
196 reverse stock splits, compared to 35 in 2021 and 98 in 2020. Just
in the first quarter of 2023, Nasdaq processed 78 reverse stock splits,
and projects significantly more throughout 2023. Reverse stock splits
are often effected by smaller companies that do not have broad media or
research coverage. In most cases, the companies are listed on the
Capital Market tier and are conducting reverse stock splits to achieve
compliance with Nasdaq's $1 minimum bid price requirement.\3\
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\3\ Rule 5550(a)(2) specifies that a Company that has its
Primary Equity Security listed on the Capital Market must have a
minimum bid price of at least $1 per share. See also Rule 5450(a)(1)
(Global and Global Select Markets). Companies are afforded a grace
period pursuant to Rule 5810(c)(3)(A) to regain compliance.
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Nasdaq believes that the increase in companies effecting reverse
stock splits warrants amendments to the trading halt rules to allow for
Nasdaq to help reduce the potential for errors resulting in a material
effect on the market resulting from market participants' processing of
the reverse stock split, including incorrect adjustment or entry of
orders. Nasdaq currently processes reverse stock splits overnight, with
the security opening for trading at 4:00 a.m. EST in the pre-market
hours (i.e., the trading session between 4:00 a.m. to 9:30 a.m. EST) on
a split-adjusted basis. Recently, market participants have expressed
concerns with allowing trading on an adjusted basis at 4:00 a.m.,
noting that it is not optimal because system errors or problems with
orders may go unnoticed for a period of time when a security that has
undergone a reverse stock split opens for trading with the other
thousands of securities. These errors have the potential to adversely
affect investors, market participants and the issuer.\4\ For example,
in one recent instance problems in connection with the processing of a
reverse stock split resulted in a broker executing trades selling more
shares than customers held in their accounts, resulting in a temporary
short position.
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\4\ In a separate filing, Nasdaq also proposed changes to adopt
specific notification and disclosure requirements for reverse stock
splits. See Securities Exchange Act Release No. 98014 (July 28,
2023), 88 FR 51376 (August 3, 2023) (SR-Nasdaq-2023-21).
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As such, Nasdaq believes it is appropriate to impose a regulatory
halt, which would prohibit pre-market trading immediately after a
reverse stock split and open trading in such securities using the
Nasdaq Halt Cross \5\ process set forth in Rule 4753. The proposed new
rule will allow for Nasdaq and market participants to better detect any
errors or problems with orders for the security resulting from the
reverse stock split before trading in the security begins and thereby
avoid any material effect on the market.
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\5\ The ``Nasdaq Halt Cross'' is the process for determining the
price at which Eligible Interest shall be executed at the open of
trading for a halted security and for executing that Eligible
Interest. See Rule 4753(a)(4). ``Eligible Interest'' shall mean any
quotation or any order that has been entered into the system and
designated with a time-in-force that would allow the order to be in
force at the time of the Halt Cross. See Nasdaq Rule 4753(a)(5).
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Description of the Proposed Amendment
Nasdaq is proposing to: (1) amend Rule 4120(a) to provide the
Exchange with explicit authority to declare a trading halt before the
end of Post-Market Hours \6\ on the day immediately before the market
effective date of a reverse stock split; and (2) amend Rule 4120(c) to
include this halt in the existing procedures for initiating and
terminating a trading halt. More specifically, proposed Rule
4120(a)(14) provides that Nasdaq shall halt trading of a security for
which Nasdaq is the primary listing market before the end of the Post-
Market Hours on the day immediately before the market effective date of
a reverse stock split. A trading halt due to a reverse stock split will
be mandatory pursuant to proposed Rule 4120(a)(14). Nasdaq also
proposes to modify Rule 4120(c)(7)(A) to include the new halt authority
proposed in Rule 4120(a)(14) in the reopening process currently
applicable to halts under Rules 4120(a)(1), (4), (5), (6), (9), (10)
and (11). In general, Nasdaq expects to initiate the halt at 7:50 p.m.,
prior to the close of post-market trading at 8:00 p.m. on the day
immediately before the split is effective,\7\ and resume trading at
9:00 a.m. on the day the split is effective.\8\ Nasdaq believes that
this halt and delayed opening will give sufficient time for investors
to review their orders and the quotes for the security and allow market
participants to ensure that their systems have properly adjusted for
the reverse stock split.
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\6\ The term ``Post-Market Hours'' means the period of time
beginning immediately after the end of Market Hours and ending at
8:00 p.m. ET. See Nasdaq Rule Equity 1, Section 1(a)(9).
\7\ Initiating the halt at approximately 7:50 p.m. will provide
Nasdaq with a limited buffer to ensure that trading in a security
that is undergoing a reverse stock split will not continue after the
close of post-market trading.
\8\ Nasdaq may change the resumption time if, for example, there
was an Extraordinary Market Activity that could interfere with a
fair and orderly 9:00 a.m. resumption. ``Extraordinary Market
Activity'' is defined in the Fiftieth Amendment to the Joint Self-
Regulatory Organization Plan Governing the Collection, Consolidation
and Dissemination of Quotation and Transaction Information for
Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading
Privileges Basis.
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Nasdaq is also proposing to update Rule 4753(b) to include proposed
Rule 4120(a)(14) in the list of numerated provisions that would be
subject to the Nasdaq Halt Cross. As such, any security that is subject
to a reverse stock split will be reopened using the Nasdaq Halt Cross
prior to trading during market hours.
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities
[[Page 66915]]
exchange, and, in particular, with the requirements of section 6(b) of
the Act.\9\ Specifically, the proposal is consistent with section
6(b)(5) of the Act \10\ because it would promote just and equitable
principles of trade, remove impediments to, and perfect the mechanism
of, a free and open market and a national market system, and, in
general, protect investors and the public interest.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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As described above, the Exchange is seeking to amend rules related
to halting and resuming trading in U.S.-listed equity securities
subject to a reverse stock split. The Exchange believes that
establishing a reverse stock split trading halt rule will protect
investors by giving the Exchange automatic authority to act in
situations where it is necessary to maintain fair and orderly markets.
It will also ensure that the process for resuming trading following a
reverse stock split halt is consistent with other types of halts
initiated by Nasdaq. Currently, none of the provisions in Rule 4120
provide authority to pre-emptively halt during pre-market hours the
trading in a security undergoing a significant corporate action that
could lead to investor or market confusion. The Exchange believes that
the proposed amendments will provide greater transparency and clarity
with respect to the manner in which trading will be halted due to a
reverse stock split, and the process through which that halt will be
implemented and terminated. Particularly, Nasdaq will not have the
discretion of determining when to halt a security following a reverse
stock split. Rather, following the reverse stock split of the security
for which Nasdaq is the primary listing market, trading in the security
will automatically halt prior to the close of post-market trading at
8:00 p.m. The proposed changes seek to achieve consistency with respect
to the initiation and termination of a trading halt with respect to
securities that have undergone a reverse stock split, while maintaining
a fair and orderly market, protecting investors and protecting the
public interest.
Additionally, establishing a mandatory trading halt for securities
that have undergone a reverse stock split and resuming trading
thereafter promotes fair and orderly markets and the protection of
investors, because it encourages Nasdaq to consider the broader
interests of the national market system and addresses potential
concerns that system errors may affect immediate trading in those
securities. Based on the foregoing, the Exchange believes that the
proposed rules are consistent with section 6(b)(5) of the Act \11\
because they will promote just and equitable principles of trade and
will remove any impediments to a free and open market and a national
market system by allowing sufficient time for investors to review their
orders and the quotes for a security that has undergone a reverse stock
split, and allow market participants to ensure that their systems have
properly accounted for the reverse stock split. As discussed
previously, the Exchange believes that the proposed amendments
establishing the authority and process for reverse stock split trading
halts and the resumption of trading is consistent with the Act, which
itself imposes obligations on exchanges with respect to issuers that
are listed.
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\11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposal is consistent with section
6(b)(8) of the Act in that it does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act as explained below.
The Exchange believes the proposal will not impose a burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the proposed rule change
is designed to protect investors and facilitate a fair and orderly
market, which are both important purposes of the Act. To the extent
that there is any impact on intermarket competition, it is incidental
to these objectives.
The Exchange does not believe that the proposed rule change imposes
a burden on intra-market competition because the provisions apply to
all market participants and issuers equally. In addition, information
regarding the halting and resumption of trading will be disseminated
using several freely accessible sources to ensure broad availability of
information offered by the Exchange that are available to subscribers.
In addition, the proposals include provisions related to the
declaration and timing of trading halts and the resumption of trading
designed to avoid any advantage to those who can react more quickly
than other participants.
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
Within 45 days of the date of publication of this notice in the
Federal Register or such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be 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-NASDAQ-2023-036 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-NASDAQ-2023-036. 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
[[Page 66916]]
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 a.m. and 3 p.m. Copies of the
filing also will be available for inspection and copying at the
principal office of the Exchange. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to file number
SR-NASDAQ-2023-036 and should be submitted on or before October 19,
2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21136 Filed 9-27-23; 8:45 am]
BILLING CODE 8011-01-P
