82 FR 23690 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Continued Listing Standards for Exchange-Traded Products

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 98 (May 23, 2017)

[Federal Register Volume 82, Number 98 (Tuesday, May 23, 2017)]
[Notices]
[Pages 23690-23692]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-10464]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80708; File No. SR-NASDAQ-2017-040]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Continued Listing Standards for Exchange-Traded Products

May 17, 2017.
    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 May 3, 2017, 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 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the previously approved continued 
listing requirements for exchange-traded products (``ETPs'') in the 
Nasdaq Rule 5700 Series, as well as Nasdaq Rule 5810 (Notification of 
Deficiency by the Listing Qualifications Department), to make a number 
of conforming and housekeeping changes.\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 79784 (Jan. 12, 
2017), 82 FR 6664 (Jan. 19, 2017) (SR-NASDAQ-2016-135).
---------------------------------------------------------------------------

    The Exchange also proposes to delay the implementation date of the 
previously approved changes to the continued listing standards from 
August 1, 2017 to October 1, 2017.
    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 23691]]

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
    Earlier this year, the Commission approved a Nasdaq filing (the 
``Prior Filing'') to amend the continued listing requirements for 
ETPs.\4\ The Exchange now proposes to make a number of housekeeping 
changes, as well as conform the language in the Nasdaq Rule 5700 Series 
(Other Securities) and Nasdaq Rule 5810 (Notification of Deficiency by 
the Listing Qualifications Department) to either the current rule 
language for NYSE Arca, Inc. (``Arca'') and Bats BZX Exchange, Inc. 
(``Bats'') or to the rule language included in approved filings for 
both Arca \5\ and Bats \6\ (the ``Arca and Bats Filings'').
---------------------------------------------------------------------------

    \4\ Id.
    \5\ See Securities Exchange Act Release No. 80189 (Mar. 9, 
2017), 82 FR 13889 (Mar. 15, 2017) (SR-NYSEArca-2017-01).
    \6\ See Securities Exchange Act Release No. 80169 (Mar. 7, 
2017), 82 FR 13536 (Mar. 13, 2017) (SR-BatsBZX-2016-80).
---------------------------------------------------------------------------

    Most of the proposed changes are to the Nasdaq Rule 5700 Series 
where the current rule text refers to statements or representations 
regarding the applicability of Nasdaq rules and surveillance 
procedures. The proposed changes revise this language from ``the 
applicability of Nasdaq rules and surveillance procedures'' to ``the 
applicability of Nasdaq listing rules specified in such proposals''. 
These changes are consistent with the language in the Arca \7\ and Bats 
\8\ Filings.
---------------------------------------------------------------------------

    \7\ Supra note 5.
    \8\ Supra note 6.
---------------------------------------------------------------------------

    The amendment to Nasdaq Rule 5810(c)(2)(A) changes the language 
therein to specify that a failure to meet a continued listing 
requirement contained in the Rule 5700 Series does not require a 
company to pay a compliance plan review fee of $5,000. This change is 
consistent with the practice of Arca and Bats in that neither imposes 
such a fee.
    The proposed change to Nasdaq Rule 5720(c)(7)(F) (Trust Issued 
Receipts) is to reinsert a word deleted by the Prior Filing. 
Specifically, the word ``initially'' will be reinserted into the 
following rule language: ``The most heavily weighted component security 
may not initially represent more than 20% of the overall value of the 
Trust Issued Receipt.'' Adding the word ``initially'' back into the 
designated rule properly reflects the intended meaning of the language 
and is in keeping with language as it was initially adopted and 
conforms to the rules of Arca and Bats.
    The proposed change to Nasdaq Rule 5745(d)(2)(C)(iv)(c) to delete 
the word ``portfolio'' from the phrase ``dissemination and availability 
of the portfolio, reference asset, or intraday indicative values'' is 
because it is not applicable in this context as to Exchange-Traded 
Managed Fund Shares (``NextShares'').
    Additionally, the Exchange proposes to delay the implementation 
date of the previously approved changes to the continued listing 
standards \9\ from August 1, 2017 to October 1, 2017. Given the scope 
of the proposed rule changes, the Exchange believes that this will 
ensure that Nasdaq has adequate time to develop and put into operation 
the new processes and systems necessitated by them. Also, an 
implementation date of October 1, 2017 will match the implementation 
dates set forth in the Arca and Bats Filings. This will benefit those 
impacted by the amended continued listing standards by providing for a 
single implementation date across the exchanges, which will promote 
clarity in the timing of these significant changes to the continued 
listing standards and lessen potential confusion.
---------------------------------------------------------------------------

    \9\ Supra note 3.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\11\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule changes to conform the 
Nasdaq Rule 5700 Series and Nasdaq Rule 5810 with either the current 
rule language for Arca and Bats or to the rule language included in the 
Arca and Bats Filings will promote just and equitable principles of 
trade, and, in general to protect investors and the public interest 
since it will promote the application of consistent listing standards 
across the exchanges. Also, the proposed rule change to reinsert the 
word ``initially'' into Nasdaq Rule 5720(c)(7)(F), as well as to delete 
the word ``portfolio'' in Nasdaq Rule 5745(d)(2)(C)(iv)(c), will 
provide clarity and accurately reflect the intent of the rule to the 
benefit of investors and the public interest. Changing the 
implementation date to October 1, 2017 also will provide clarity and 
lessen confusion to the benefit of investors and the public interest.
    For these reasons, Nasdaq believes the proposed rule change is 
consistent with the requirements of Section 6(b)(5) of the Act.

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 amended. Instead, the 
Exchange believes that the proposed rule change to conform the Nasdaq 
Rule 5700 Series and Nasdaq Rule 5810 with either the current rule 
language for Arca and Bats or the approved rule text included in the 
Arca and Bats Filings may enhance competition since the exchanges will 
have substantially similar and consistent listing requirements for 
ETPs.

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) of the Act \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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.

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

[[Page 23692]]

    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-2017-040 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-2017-040. 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 
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 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; 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-2017-040 and should 
be submitted on or before June 13, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-10464 Filed 5-22-17; 8:45 am]
BILLING CODE 8011-01-P