81 FR 17525 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Chapter XI (Doing Business With the Public), Section 8 (Supervision of Accounts) of the Exchange's Rulebook

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 60 (March 29, 2016)

[Federal Register Volume 81, Number 60 (Tuesday, March 29, 2016)]
[Notices]
[Pages 17525-17527]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-06993]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77428; File No. SR-NASDAQ-2016-038]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Chapter XI (Doing Business With the Public), Section 8 
(Supervision of Accounts) of the Exchange's Rulebook

March 23, 2016.
    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 March 14, 2016, The NASDAQ Stock Market LLC (``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III, below, which 
Items have been substantially 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 amend Chapter XI (Doing Business with the 
Public), Section 8 (Supervision of Accounts) of the Exchange's rulebook 
to remove outdated references to three National Association of 
Securities Dealers, Inc. (``NASD'') rules and to replace those 
references with references to four successor Financial Industry 
Regulatory Authority, Inc. (``FINRA'') rules which have replaced them.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

[[Page 17526]]

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 is proposing to amend Chapter XI (Doing Business with 
the Public), Section 8 (Supervision of Accounts) of the Exchange's 
rulebook (the ``Options Supervision Rules'') to remove outdated 
references to three NASD rules and to replace those references with 
references to four successor FINRA rules which have replaced them.\3\
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    \3\ The current FINRA rulebook consists of: (1) FINRA rules; (2) 
NASD rules; and (3) rules incorporated from NYSE (Incorporated NYSE 
Rules) (together, the NASD rules and Incorporated NYSE Rules are 
referred to as the ``Transitional Rulebook''). As part of the 
process of developing a new consolidated rulebook (the 
``Consolidated FINRA Rulebook''), FINRA adopted FINRA Rules 3110, 
3120, 3130 and 3170, which the Exchange seeks to incorporate in the 
Options Supervision Rules.
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    Currently, the Options Supervision Rules provide in Section 8(a) 
that each member that conducts a public customer options business shall 
ensure that its written supervisory system policies and procedures 
pursuant to NASD Rules 3010, 3012, and 3013 (the ``Old NASD Rules'') 
adequately address the member's public customer options business. Since 
the adoption by the Exchange of the Options Supervision Rules, FINRA 
has updated its own rulebook and deleted the Old NASD Rules, adopting 
in their place FINRA Rules 3110, 3120, 3130 and 3170.\4\ The Exchange 
therefore proposes to make a conforming change to the Options 
Supervision Rules by deleting references to the Old NASD Rules and 
replacing them with references to FINRA Rules 3110, 3120, 3130 and 
3170.
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    \4\ FINRA Rules 3110 (Supervision) and 3120 (Supervisory Control 
System) were adopted by FINRA to replace NASD Rules 3010 
(Supervision) and 3012 (Supervisory Control System). In addition, 
new FINRA Rule 3170 (Tape Recording of Registered Persons by Certain 
Firms) replaced NASD Rule 3010(b)(2). The new rules became effective 
on December 1, 2014. See Securities Exchange Act Release No. 71179 
(Dec. 23, 2013), 78 FR 79542 (Dec. 30, 2013) (Order Approving 
Proposed Rule Change as Modified by Amendment No. 1) (File No. SR-
FINRA-2013-025); see also FINRA Regulatory Notice 08-24 (May 2008) 
(Proposed Consolidated FINRA Rules Governing Supervision and 
Supervisory Controls). FINRA Rule 3130 (Annual Certification of 
Compliance and Supervisory Processes) replaced NASD Rule 3013 
(Annual Certification of Compliance and Supervisory Processes) in 
2008. See Securities Exchange Act Release No. 58661 (Sept. 26, 
2008), 73 FR 57395 (Oct. 2, 2008) (SR-FINRA-2008-030).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \6\ 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 removing references to outdated NASD rules, thus minimizing any 
potential confusion on the part of members and other market 
participants regarding the standards and rules to which Exchange 
members are subject.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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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. As the amendments merely 
correct the Exchange rules to refer to the current FINRA rules 
discussed above, it has no impact on competition.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \7\ and Rule 
19b-4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \8\ 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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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-NASDAQ-2016-038 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-2016-038. 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 Web site (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 Web site viewing and

[[Page 17527]]

printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549-1090, 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly.

All submissions should refer to File Number SR-NASDAQ-2016-038 and 
should be submitted on or before April 19, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-06993 Filed 3-28-16; 8:45 am]
 BILLING CODE 8011-01-P