[Federal Register Volume 86, Number 113 (Tuesday, June 15, 2021)]
[Notices]
[Pages 31772-31773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12477]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92136]


Order Granting Applications by Nasdaq GEMX, LLC and Nasdaq MRX, 
LLC for Exemption Pursuant to Section 36(a) of the Exchange Act From 
the Rule Filing Requirements of Section 19(b) of the Exchange Act With 
Respect to the Nasdaq Rule 1000 Series Incorporated by Reference

June 9, 2021.
    Nasdaq GEMX, LLC and Nasdaq MRX, LLC (the ``Exchanges'') have filed 
with the Securities and Exchange Commission (the ``Commission'') an 
application for an exemption under Section 36(a)(1) of the Securities 
Exchange Act of 1934 (``Exchange Act'') \1\ from the rule filing 
requirements of Section 19(b) of the Exchange Act \2\ with respect to 
certain rules of The Nasdaq Stock Market LLC (``Nasdaq'') that the 
Exchanges seek to incorporate by reference (``Nasdaq Rule 1000 
Series'').\3\ Section 36(a)(1) of the Exchange Act,\4\ subject to 
certain limitations, authorizes the Commission to conditionally or 
unconditionally exempt any person, security, or transaction, or any 
class thereof, from any provision of the Exchange Act or rule 
thereunder, if necessary or appropriate in the public interest and 
consistent with the protection of investors.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78mm(a)(1).
    \2\ 15 U.S.C. 78s(b).
    \3\ See letter from Brett M. Kitt, Principal Associate General 
Counsel, Nasdaq Inc., to J. Matthew DeLesDernier, Assistant 
Secretary, Commission, dated April 22, 2021 (``Exemptive Request'').
    \4\ 15 U.S.C. 78mm(a)(1).
---------------------------------------------------------------------------

    The Exchanges each filed a proposed rule change \5\ under Section 
19(b) of the

[[Page 31773]]

Exchange Act to replace its existing membership rules, as set forth in 
General 3 of their respective rulebooks, with the Rule 1000 Series of 
the Nasdaq rulebook, as such rules may be in effect from time to time. 
Namely, in the proposed rule changes, the Exchanges each proposed to 
incorporate by reference the Nasdaq Rule 1000 Series such that Nasdaq 
Rule 1000 Series would be applicable to each of the Exchanges' 
respective applicants, members, associated persons, and other persons 
subject to the Exchanges' jurisdiction as though such rules were fully 
set forth within each of the Exchanges' rulebooks.\6\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release Nos. 91672 (April 26, 
2021), 86 FR 23001 (April 30, 2021) (SR-GEMX-2021-02); 91674 (April 
26, 2021), 86 FR 23013 (April 30, 2021) (SR-MRX-2021-03). Although 
the proposed rule changes were filed pursuant to Section 
19(b)(3)(A)(iii) of the Exchange Act, and thereby became effective 
upon filing with the Commission, the Exchanges stipulated in their 
proposals that the incorporation by reference would not be operative 
until such time as the Commission grants this Exemptive Request.
    \6\ See note 5, supra.
---------------------------------------------------------------------------

    The Exchanges have requested, pursuant to Rule 0-12 under the 
Exchange Act,\7\ that the Commission grant the Exchanges an exemption 
from the rule filing requirements of Section 19(b) of the Exchange Act 
for changes to each of the Exchanges' rules that are effected solely by 
virtue of a change to the Nasdaq Rule 1000 Series that are incorporated 
by reference. Specifically, the Exchanges request that they be 
permitted to incorporate by reference changes made to the Nasdaq Rule 
1000 Series that are cross-referenced in each of the Exchanges' rules 
without the need for each of the Exchanges to file separately the same 
proposed rule change pursuant to Section 19(b) of the Exchange Act.\8\
---------------------------------------------------------------------------

    \7\ 17 CFR 240.0-12.
    \8\ See Exemptive Request, supra note 3.
---------------------------------------------------------------------------

    The Exchanges represent that the Nasdaq Rule 1000 Series are not 
trading rules.\9\ Moreover, the Exchanges state that in each instance, 
they propose to incorporate by reference a category of rules (rather 
than individual rules within a category).\10\ The Exchanges also 
represent that, as a condition of this exemption, the Exchanges will 
provide written notice to their respective applicants and members 
whenever Nasdaq proposes a change to Nasdaq Rule 1000 Series.\11\
---------------------------------------------------------------------------

    \9\ Id.
    \10\ Id. at 2 n.7.
    \11\ Id. at 3. The Exchanges state that they will provide such 
notice via a posting on the same website location where the 
Exchanges post their own rule filings pursuant to Rule 19b-4(l) 
within the timeframe required by such Rule. In addition, the 
Exchanges state that the website posting will include a link to the 
location on Nasdaq's website where the applicable proposed rule 
change is posted. Id. at 3 n.8.
---------------------------------------------------------------------------

    According to the Exchanges, this exemption is necessary and 
appropriate because it will result in the Exchanges' membership rules 
and processes being consistent with the relevant cross-referenced 
Nasdaq membership rules and processes at all times.\12\ The Exchanges 
states that harmonization of the membership rules and processes between 
the Exchanges and Nasdaq will ease compliance burdens for those seeking 
membership on the three exchanges and increase internal efficiencies 
associated with administering the membership rules and processes of 
each exchange.\13\
---------------------------------------------------------------------------

    \12\ See id. at 2.
    \13\ See id.
---------------------------------------------------------------------------

    The Commission has issued exemptions similar to the Exchanges' 
request.\14\ In granting similar exemptions, the Commission stated that 
it would consider future exemption requests, provided that:
---------------------------------------------------------------------------

    \14\ See, e.g., Securities Exchange Act Release Nos. 91202 
(February 24, 2021), 86 FR 12250 (March 2, 2021) (order granting 
application by Nasdaq ISE, LLC for exemption pursuant to Section 
36(a) of the Exchange Act from the rule filing requirements of 
section 19(b) of the Exchange Act with respect to the Nasdaq Rule 
1000 Series incorporated by reference); 86896 (September 6, 2019), 
84 FR 48186 (September 12, 2019) (order granting application by 
Nasdaq BX, Inc. for exemption pursuant to section 36(a) of the 
Exchange Act from the rule filing requirements of section 19(b) of 
the Exchange Act with respect to the Nasdaq Rule 1000 Series 
incorporated by reference); 80338 (March 29, 2017), 82 FR 16464 
(April 4, 2017) (order granting exemptive request from MIAX PEARL, 
LLC relating to rules of Miami International Securities Exchange, 
LLC incorporated by reference); 72650 (July 22, 2014), 79 FR 44075 
(July 29, 2014) (order granting exemptive requests from NASDAQ OMX 
BX, Inc. and the NASDAQ Stock Market LLC relating to rules of NASDAQ 
OMX PHLX LLC incorporated by reference); 67256 (June 26, 2012), 77 
FR 39277, 39286 (July 2, 2012) (order approving SR-BX-2012-030 and 
granting exemptive request relating to rules incorporated by 
reference by the BX Options rules); 61534 (February 18, 2010), 75 FR 
8760 (February 25, 2010) (order granting BATS Exchange, Inc.'s 
exemptive request relating to rules incorporated by reference by the 
BATS Exchange Options Market rules) (``BATS Options Market Order''); 
and 57478 (March 12, 2008), 73 FR 14521, 14539-40 (March 18, 2008) 
(order approving SR-NASDAQ-2007-004 and SR-NASDAQ-2007-080, and 
granting exemptive request relating to rules incorporated by 
reference by The NASDAQ Options Market).
---------------------------------------------------------------------------

     A self-regulatory organization (``SRO'') wishing to 
incorporate rules of another SRO by reference has submitted a written 
request for an order exempting it from the requirement in Section 19(b) 
of the Exchange Act to file proposed rule changes relating to the rules 
incorporated by reference, has identified the applicable originating 
SRO(s), together with the rules it wants to incorporate by reference, 
and otherwise has complied with the procedural requirements set forth 
in the Commission's release governing procedures for requesting 
exemptive orders pursuant to Rule 0-12 under the Exchange Act; \15\
---------------------------------------------------------------------------

    \15\ See 17 CFR 240.0-12 and Securities Exchange Act Release No. 
39624 (February 5, 1998), 63 FR 8101 (February 18, 1998) 
(``Commission Procedures for Filing Applications for Orders for 
Exemptive Relief Pursuant to Section 36 of the Exchange Act; Final 
Rule'').
---------------------------------------------------------------------------

     The incorporating SRO has requested incorporation of 
categories of rules (rather than individual rules within a category) 
that are not trading rules (e.g., the SRO has requested incorporation 
of rules such as margin, suitability, or arbitration); and
     The incorporating SRO has reasonable procedures in place 
to provide written notice to its members each time a change is proposed 
to the incorporated rules of another SRO.\16\
---------------------------------------------------------------------------

    \16\ See BATS Options Market Order, supra note 14 (citing 
Securities Exchange Act Release No. 49260 (February 17, 2004), 69 FR 
8500 (February 24, 2004) (order granting exemptive request relating 
to rules incorporated by reference by several SROs) (``2004 
Order'')).
---------------------------------------------------------------------------

    The Commission believes that the Exchanges have satisfied each of 
these conditions. Further, the Commission also believes that granting 
the Exchanges an exemption from the rule filing requirements under 
Section 19(b) of the Exchange Act will promote efficient use of the 
Commission's and the Exchanges' resources by avoiding duplicative rule 
filings based on simultaneous changes to identical rule text sought by 
more than one SRO.\17\ The Commission therefore finds it appropriate in 
the public interest and consistent with the protection of investors to 
exempt the Exchanges from the rule filing requirements under Section 
19(b) of the Exchange Act with respect to the above-described rules it 
incorporates by reference. This exemption is conditioned upon the 
Exchanges promptly providing written notice to their applicants and 
members whenever Nasdaq changes a rule that the Exchanges incorporate 
by reference.
---------------------------------------------------------------------------

    \17\ See BATS Options Market Order, supra note 14, 75 FR at 
8761; see also 2004 Order, supra note 16, 69 FR at 8502.
---------------------------------------------------------------------------

    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act,\18\ that the Exchanges are exempt from the rule filing 
requirements of Section 19(b) of the Exchange Act solely with respect 
to changes to the rules identified in the Exemptive Request, provided 
that the Exchanges promptly provide written notice to their applicants 
and members whenever Nasdaq proposes to change a rule that the 
Exchanges have incorporated by reference.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78mm.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(76).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-12477 Filed 6-14-21; 8:45 am]
BILLING CODE 8011-01-P


