84 FR 20176 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Delete and Relocate the Exchange's Current Registration, Qualification and Continuing Education Rules

[Federal Register Volume 84, Number 89 (Wednesday, May 8, 2019)]
[Notices]
[Pages 20176-20178]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2019-09374]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85761; File No. SR-Phlx-2019-18]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Delete and 
Relocate the Exchange's Current Registration, Qualification and 
Continuing Education Rules

May 2, 2019.
    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 April 30, 2019, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III, below, 
which Items have been prepared by the Exchange. The 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 delete and relocate the Exchange's current 
Registration, Qualification and Continuing Education rules (``Exchange 
Registration Rules'' and, generally, ``Registration Rules'') under the 
1200 Series (Rules 1210 through 1260), and incorporate by reference The 
Nasdaq Stock Market LLC's (``Nasdaq'') rules at General 4 (``Nasdaq 
Registration Rules''), into General 4 of the Exchange's rulebook's 
(``Rulebook'') shell structure.\3\
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    \3\ In 2017, the Exchange added a shell structure to its 
Rulebook with the purpose of improving efficiency and readability 
and to align its rules closer to those of its five sister exchanges, 
The Nasdaq Stock Market LLC; Nasdaq BX, Inc.; Nasdaq ISE, LLC; 
Nasdaq GEMX, LLC; and Nasdaq MRX, LLC (``Affiliated Exchanges''). 
The shell structure currently contains eight (8) General sections 
which, once complete, will apply a common set of rules to the 
Affiliated Exchanges. See Securities Exchange Act Release No. 82169 
(November 29, 2017), 82 FR 57508 (December 5, 2017) (SR-Phlx-2017-
97).
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    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqphlx.cchwallstreet.com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange recently amended, reorganized, and enhanced certain of 
its membership, registration, and qualification requirement rules 
partly in response to rule changes by the Financial Industry Regulatory 
Authority (``FINRA''), and also in order to conform the Exchange's 
rules more closely to those of its Affiliated Exchanges in the interest 
of uniformity and to facilitate compliance with membership, 
registration and qualification regulatory requirements by members of 
multiple Affiliated Exchanges including the Exchange.\4\ To that end, 
the Exchange adopted a new 1200 Series of rules, captioned 
``Registration, Qualification and Continuing Education,'' generally 
conforming the Exchange Registration Rules to FINRA's new 1200 Series, 
except for a number of Exchange-specific variations.\5\
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    \4\ See Securities Exchange Act Release No. 84352 (October 3, 
2018), 83 FR 50981 (October 10, 2018) (SR-Phlx-2018-61) (the 
``Registration Rules Filing'').
    \5\ Id.
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    The Exchange now proposes to delete the Exchange Registration Rules 
1210, 1220, 1230, 1240, and 1250, currently under the 1200 Series; and 
incorporate by reference the Nasdaq Registration Rules at General 4 of 
Nasdaq's rulebook into General 4 of the Exchange's Rulebook. Relatedly, 
the Exchange will make necessary cross-reference updates throughout the 
Rulebook. Specifically, the Exchange will amend the cross-references in 
Exchange Rules 1, 3202, 9630, the Pricing Schedule at Options 7, 
Section 9, C and the Options Floor Trading Rules at Options 8, Sections 
8 and 12.
    The incorporation by reference of Nasdaq Registration Rules at 
General 4 into the Exchange's General 4 title and

[[Page 20177]]

any necessary cross-reference updates are regulatory in nature.\6\ In 
addition, consistent with the Registration Rules Filing,\7\ the 
incorporation by reference text in the Exchange's General 4, Section 1 
will provide that all references in the Exchange's General 4 series to 
a ``member'' shall be deemed to be references to a ``member 
organization.'' Furthermore, the incorporation by reference text in the 
Exchange's General 4, Section 1 will clarify that the term ``registered 
persons,'' as described in Nasdaq Registration Rules General 4, Section 
1.1210.07, shall be read to refer to ``covered persons'' as defined in 
Nasdaq Registration Rules General 4, Section 1.1240(a)(5).
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    \6\ The General 4 rules are categories of rules that are not 
trading rules. See 17 CFR 200.30-3(a)(76) (contemplating such 
requests). In addition, several other Self-Regulatory Organizations 
(``SROs'') incorporate by reference certain regulatory rules of 
other SROs and have received from the Commission similar exemptions 
from Section 19(b) of the Exchange Act. See e.g., Securities 
Exchange Act Release Nos. 57478 (March 12, 2008), 73 FR 14521 (March 
18, 2008), 53128 (January 13, 2006), 71 FR 3550 (January 23, 2006); 
49260 (February 17, 2004), 69 FR 8500 (February 24, 2004).
    \7\ See supra note 4.
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    The Exchange notes that as a condition of an exemption, which the 
Exchange will request and will need to be approved by the Commission 
pursuant to Section 36 of the Act,\8\ the Exchange agrees to provide 
written notice to its members whenever Nasdaq proposes a change to its 
General 4 title.\9\ Such notice will alert Exchange members to the 
proposed Nasdaq rule change and give them an opportunity to comment on 
the proposal. The Exchange will similarly inform its members in writing 
when the SEC approves any such proposed change.
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    \8\ 15 U.S.C. 78mm.
    \9\ The Exchange will provide such notice via a posting on the 
same website location where the Exchange posts its own rule filings 
pursuant to Rule 19b-4 within the timeframe required by such rule. 
The website posting will include a link to the location on the 
Nasdaq website where the applicable proposed rule change is posted.
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Implementation
    The Exchange proposes that this rule change becomes operative at 
such time as it receives approval for an exemption from the Securities 
and Exchange Commission, pursuant to its authority under Section 36 of 
the Act and Rule 0-12 \10\ thereunder, from the Section 19(b) rule 
filing requirements to separately file a proposed rule change to amend 
the Exchange's General 4 title.
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    \10\ See 17 CFR 240.0-12; Exchange Act Release No. 39624 
(February 5, 1998), 63 FR 8101 (February 18, 1998).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\12\ 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 consolidating its rules into a single rule set. The 
Exchange intends to also file similar proposed rule changes for the 
Nasdaq BX, Inc.; Nasdaq GEMX, LLC; Nasdaq ISE, LLC; and Nasdaq MRX, LLC 
markets so that the General 4 rules which govern Registration Rules are 
conformed.\13\
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ The Commission notes that the exchanges have filed these 
rule changes.
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    Incorporating by reference the Nasdaq Registration Rules at General 
4 into the Exchange's General 4 title will provide an easy reference 
for Exchange members seeking to comply with registration and 
qualification requirements on multiple markets. As noted, the Exchange 
intends to file similar proposed rule changes for other Affiliated 
Exchanges so that Nasdaq General 4 is the source document for all 
Registration Rules. The Exchange notes that the current rule is not 
changing and that Exchange members will be required to continue to 
comply with the Nasdaq Registration Rules as though such rules are 
fully set forth in Exchange's Rulebook. The Exchange desires to conform 
its rules and locate those rules within the same location in each 
Rulebook to provide Exchange members the ability to quickly locate 
rules.

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 Exchange believes that this 
rule change does not impose an undue burden on competition because the 
Exchange is merely incorporating by reference the Nasdaq Registration 
Rules at General 4 into its own Rulebook. The Exchange Registration 
Rules are not being amended and therefore no member is impacted.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \14\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2019-18 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-Phlx-2019-18. This file

[[Page 20178]]

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/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-Phlx-2019-18 and should be submitted on 
or before May 29, 2019.

    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. 2019-09374 Filed 5-7-19; 8:45 am]
 BILLING CODE 8011-01-P