[Federal Register Volume 85, Number 250 (Wednesday, December 30, 2020)]
[Notices]
[Pages 86614-86617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28803]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90774; File No. SR-NASDAQ-2020-092]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Extend the Expiration Date of the Temporary Amendments Set Forth in
SR-NASDAQ-2020-076 Concerning Video Conference Hearings
December 22, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on December 17, 2020, 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 Exchange has designated the proposed rule change as constituting a
``non-controversial'' rule change under paragraph (f)(6) of Rule 19b-4
under the Act,\3\ which renders the proposal effective upon receipt of
this filing by the Commission. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the expiration date of the
temporary amendments in SR-NASDAQ-2020-076 from December 31, 2020 to
April 30, 2021. The proposed rule change would not make any changes to
the text of the Exchange rules.
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
[[Page 86615]]
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 response to the COVID-19 global health crisis and the
corresponding need to restrict in-person activities, the Exchange filed
proposed rule change SR-NASDAQ-2020-076, which allows the Exchange's
Office of Hearing Officers (``OHO'') and the Exchange Review Council
(``ERC'') to conduct hearings, on a temporary basis, by video
conference, if warranted by the current COVID-19-related public health
risks posed by an in-person hearing. The COVID-19 conditions
necessitating these temporary amendments persist, with cases rapidly
escalating nationwide. Based on its assessment of current COVID-19
conditions, and the lack of certainty as to when COVID-19-related
health concerns will subside, the Exchange has determined that there is
a continued need for this temporary relief for several months beyond
December 31, 2020. Accordingly, the Exchange proposes to extend the
expiration date of the temporary rule amendments in SR-NASDAQ-2020-076
from December 31, 2020, to April 30, 2021.
On November 5, 2020, the Exchange filed with the Commission a
proposed rule change for immediate effectiveness, SR-NASDAQ-2020-076,
to temporarily amend Exchange Rules 1015, 9261, 9524 and 9830 to grant
OHO and the ERC authority \4\ to conduct hearings in connection with
appeals of Membership Application Program decisions, disciplinary
actions, eligibility proceedings and temporary and permanent cease and
desist orders by video conference, if warranted by the current COVID-
19-related public health risks posed by an in-person hearing (the
``November 5 Filing'').\5\ The Commission published its notice of
filing and immediate effectiveness for the November 5 Filing on
November 10, 2020.\6\ The temporary amendments, as originally proposed
in the November 5 Filing, will expire on December 31, 2020, absent
another proposed rule change filing by the Exchange.
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\4\ For OHO hearings under Exchange Rules 9261 and 9830, the
proposed rule change temporarily grants authority to the Chief or
Deputy Chief Hearing Officer to order that a hearing be conducted by
video conference. For ERC hearings under Exchange Rules 1015 and
9524, this temporary authority is granted to the ERC or relevant
Subcommittee.
\5\ The temporary amendments set forth in the November 5 Filing
were subject to a 30-day operative delay and, accordingly, became
operative on December 6, 2020. See infra note 6 and accompanying
text.
\6\ See Exchange Act Release No. 90390 (November 10, 2020), 85
FR 73302 (November 17, 2020) (Notice of Filing and Immediate
Effectiveness of File No. SR-NASDAQ-2020-076).
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The Exchange proposed the temporary amendments allowing for
specified OHO and ERC hearings to be conducted by video conference in
response to the COVID-19-related public health risks posed in
connection with conducting traditional, in-person hearings. As set
forth in the November 5 Filing, the Exchange relies on COVID-19 data
and the guidance issued by public health authorities to determine
whether the current public health risks presented by an in-person
hearing may warrant a hearing by video conference.\7\ As noted above,
the COVID-19-related public health risks necessitating this temporary
relief have not yet abated, with COVID-19 cases surging nationwide.
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\7\ As noted in the November 5 Filing, the temporary proposed
rule change grants discretion to OHO and the ERC to order a video
conference hearing. In deciding whether to schedule a hearing by
video conference, OHO and the ERC may consider a variety of other
factors in addition to COVID-19 trends.
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Based on its assessment of current COVID-19 conditions, including
the recent escalation in COVID-19 cases nationwide, the Exchange does
not believe the COVID-19-related health concerns necessitating this
relief will subside by December 31, 2020, and has determined that there
will be a continued need for this temporary relief for several months
beyond December 31, 2020. Accordingly, the Exchange proposes to extend
the expiration date of the temporary rule amendments in the November 5
Filing from December 31, 2020, to April 30, 2021. The extension of
these temporary amendments allowing for specified OHO and ERC hearings
to proceed by video conference will allow the Exchange's critical
adjudicatory functions to continue to operate effectively in these
extraordinary circumstances--enabling the Exchange to fulfill its
statutory obligations to protect investors and maintain fair and
orderly markets--while also protecting the health and safety of hearing
participants.
The Exchange has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days after the
date of the filing, so the Exchange can implement the proposed rule
change immediately.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\9\ 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,
by continuing to provide greater harmonization between the Exchange
rules and FINRA rules of similar purpose,\10\ resulting in less
burdensome and more efficient regulatory compliance.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ See Exchange Act Release No. 90619 (December 9, 2020), 85
FR 81250 (December 15, 2020) (SR-FINRA-2020-042). In SR-FINRA-2020-
042, FINRA proposed rule changes to extend the expiration date of
the temporary rule amendments set forth in SR-FINRA-2020-015 and SR-
FINRA-2020-027 from December 31, 2020, to April 30, 2021. SR-FINRA-
2020-015 provided temporary relief from some timing, method of
service and other procedural requirements in FINRA's rules. SR-
FINRA-2020-027 allowed FINRA's OHO and the NAC to conduct hearings,
on a temporary basis, by video conference, if warranted by the
current COVID-19-related public health risks posed by an in-person
hearing.
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The proposed rule change, which extends the expiration date of the
temporary amendments to the Exchange rules set forth in the November 5
Filing, will continue to aid the Exchange's efforts to timely conduct
hearings in connection with its core adjudicatory functions. Given
current COVID-19 conditions and the uncertainty around when those
conditions will improve, without this relief allowing OHO and ERC
hearings to continue to proceed by video conference, such hearings may
need to be postponed indefinitely. The Exchange must be able to perform
its critical adjudicatory functions in order to fulfill its statutory
obligations to protect investors and maintain fair and orderly markets.
As such, this relief is essential to the Exchange's ability to fulfill
its statutory obligations and allows hearing participants to avoid the
serious COVID-19-related health and safety risks associated with in-
person hearings.
Among other things, this relief will allow OHO to conduct temporary
cease and desist proceedings by video conference so that the Exchange
can take immediate action to stop ongoing customer harm and will allow
the ERC to timely provide members, disqualified individuals and other
applicants an
[[Page 86616]]
approval or denial of their applications. As set forth in detail in the
November 5 Filing, this temporary relief allowing OHO and ERC hearings
to proceed by video conference accounts for fair process considerations
and will continue to provide fair process while avoiding the COVID-19-
related public health risks for hearing participants. Accordingly, the
proposed rule change extending this temporary relief is in the public
interest and consistent with the Act's purpose.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the temporary proposed rule
change will result in any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Act. As set forth
in the November 5 Filing, the proposed rule change is intended solely
to extend temporary relief necessitated by the continued impacts of the
COVID-19 outbreak and the related health and safety risks of conducting
in-person activities. The Exchange believes that the proposed rule
change will prevent unnecessary impediments to its operations,
including its critical adjudicatory processes, and its ability to
fulfill its statutory obligations to protect investors and maintain
fair and orderly markets that would otherwise result if the temporary
amendments were to expire on December 31, 2020.
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) \11\ of the Act and Rule 19b-
4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its 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 under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative so that the proposed rule change
may become operative immediately upon filing. As noted above, the
Exchange states that the COVID-related health and safety risks of
conducting in-person activities, which necessitated these temporary
amendments, persist and that cases are rapidly escalating nationwide.
Based on the Exchange's assessment of the current COVID-19 conditions,
including the lack of certainty as to when COVID-19-related health
concerns will subside, the Exchange has determined that that there is a
continued need for this temporary relief for several months beyond
December 31, 2020. Accordingly, the Exchange states that waiver of the
operative delay would allow the proposed changes, which are designed to
minimize disruptions to the Exchange's operations in order to maintain
fair processes and fulfill its obligations to protect investors and
maintain fair and orderly markets, to be operative on the date of
filing so the Exchange can implement the extension of these temporary
amendments immediately.
The Exchange also indicates that this filing is eligible to become
operative immediately because the proposal would continue to provide
greater harmonization between the Exchange rules and FINRA rules that
serve a similar purpose, resulting in less burdensome and more
efficient regulatory compliance. This proposal would serve to extend
the expiration date of the temporary amendments to the Exchange rules
set forth in the November 5 Filing, which is consistent with FINRA's
extension to its comparable rules, where FINRA requested and the
Commission granted a waiver of the 30-day operative delay.\13\ The
Exchange also states that this temporary relief is necessary in order
to continue performing critical adjudicatory functions necessary to
meet its statutory obligations in light of COVID-19 related health and
safety risks associated with in-person hearings.
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\13\ See supra note 10 (referencing FINRA's proposal to extend
the expiration date of temporary rule amendments allowing hearings
to be conducted on a temporary basis by video conference if
warranted by COVID-19 related health risks). See also November 5
Filing, 85 FR at 73303 (stating that with certain exceptions, the
text of Exchange Rules 1015, 9261, 9524 and 9830 are substantially
the same as FINRA's rules).
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The Commission observes that this proposal, like the Exchange's
November 5 Filing and FINRA's comparable filing,\14\ provides only
temporary relief during the period in which the Exchange's operations
are impacted by COVID-19. As proposed, the changes would be in place
through April 30, 2021. For these reasons, the Commission believes that
waiver of the 30-day operative delay is consistent with the protection
of investors and the public interest. Accordingly, the Commission
hereby waives the 30-day operative delay and designates the proposal
operative upon filing.\15\
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\14\ See supra note 10 and accompanying text.
\15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change'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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2020-092 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-2020-092. 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 (http://www.sec.gov/
[[Page 86617]]
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, on
business days between the hours of 10:00 a.m. and 3:00 p.m., located at
100 F Street NE, Washington, DC 20549. Copies of such 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-2020-092 and should
be submitted on or before January 20, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020-28803 Filed 12-29-20; 8:45 am]
BILLING CODE 8011-01-P