[Federal Register Volume 81, Number 28 (Thursday, February 11, 2016)]
[Notices]
[Pages 7398-7400]
[FR Doc No: 2016-02731]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77066; File No. SR-NASDAQ-2016-008]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change To Amend Rule 4120

February 5, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 29, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``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.
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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 the
Substance of the Proposed Rule Change

    Nasdaq is proposing to amend Rule 4120 and the Nasdaq process for
commencing trading of a security that is the subject of Nasdaq and non-
Nasdaq-listed initial public offerings (``IPOs'') and trading halts.
    The text of the proposed rule change is available at http://nasdaq.cchwallstreet.com/, at the Exchange's principal office, 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
    Nasdaq is proposing to make a minor modification to the Nasdaq
process for commencing trading of a security that is the subject of
Nasdaq and non-Nasdaq-listed IPOs or trading halts. Specifically, the
Exchange is proposing to modify the way in which orders are accepted
prior to the commencement of trading for securities subject to trading
halt or IPO. This small change will simplify the order submission
operations for market participants during trading halts and IPOs.
    Currently, Nasdaq Rule 4120(c)(4)(B) provides that during any
trading halt or pause for which a halt cross under Rule 4753 will not
occur, market participants may enter orders during the trading halt or
pause and designate such orders to be held until the termination of the
trading halt or pause. Under this rule, such orders will be held in a
suspended state until the termination of the halt or pause, at which
time they will be entered into the system.
    Nasdaq Rules 4120(a)(1), (4), (5), (6), (9), (10), (11), and
(12)(F) provide specific instances when the Exchange may halt trading
of a security listed on Nasdaq. Nasdaq Rule 4120(c)(7)(A) establishes
the process for lifting the

halt and commencing trading. It provides that a trading halt or pause
initiated under the rules listed above is terminated by the Exchange
once it releases the security for trading. For any such security listed
on the Exchange, prior to terminating the halt or pause, there will be
a 5-minute ``Display Only Period'' during which market participants may
enter quotations and orders in that security in Nasdaq systems.
    Additionally, when a trading halt is in effect prior to the
commencement of the Display Only Period, market participants may enter
orders in a security that is the subject of the trading halt on the
Exchange and designate such orders to be held until the beginning of
the Display Only Period. Such orders will be held in a suspended state
until the beginning of the Display Only Period, at which time they will
be entered into the system.
    Nasdaq Rule 4120(a)(7) provides that the Exchange may halt trading
in a security that is the subject of an IPO on Nasdaq. Nasdaq Rule
4120(c)(8)(A) establishes the process for lifting the halt and
commencing trading. Under this rule, prior to terminating the halt,
there is a 15-minute Display-Only Period during which market
participants may enter quotes and orders into the Nasdaq Market Center.
Additionally, beginning at 4:00 a.m. (EST), market participants may
enter orders in a security that is the subject of an IPO on the
Exchange and designate such orders to be held until the beginning of
the Display Only Period. Such orders will be held in a suspended state
until the beginning of the Display Only Period, at which time they will
be entered into the system. At the conclusion of the Display-Only
Period, the security will enter a ``Pre-Launch Period'' of
indeterminate duration. The Pre-Launch Period ends and the security is
released for trading by the Exchange once the conditions described in
paragraphs (c)(8)(A)(i), (ii), and (iii) of Nasdaq Rule 4120 are all
met.
    The process of holding orders in a suspended state prior to the
commencement of the Display Only Period is functionality that is
utilized by just a small portion of orders. The Exchange believes that
the proposed rule change will simplify this process for market
participants by making it easier for them to enter orders prior to the
release of an IPO or halted security for trading on the Exchange.
    The proposed rule change is to amend Nasdaq Rule 4120(c)(4)(B),
Nasdaq Rule 4120(c)(7)(A), and Nasdaq Rule 4120(c)(8)(A) pertaining to
the Nasdaq process for commencing trading of a security that is subject
to Nasdaq and non-Nasdaq-listed IPOs and trading halts.
    For Nasdaq-listed securities, Nasdaq proposes amending Nasdaq Rule
4120(c)(7)(A) and (c)(8)(A). Nasdaq Rule 4120(c)(8)(A) functionality
was added in 2012 to make it easier for firms to enter orders during
halts or IPOs for Nasdaq-listed securities, without regard for the
security being in a Display Only Period or having resumed trading.\3\
The process required special settings on participant ports and, as
mentioned above, the orders are held in a suspended state. With this
change, orders for Nasdaq-listed securities will be immediately
accepted and entered into the system without any special port settings
and will no longer be held in a suspended state. Such orders will be
eligible for cross execution and will remain on the book after the
auction if the order's Time in Force allows.\4\ As mentioned above,
this simplification will streamline the process and make it easier for
firms to submit orders to the Exchange prior to the commencement of
trading in an IPO or halted security.
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    \3\ See Securities Exchange Act Release No. 66652 (March 23,
2012), 77 FR 19044 (March 29, 2012) (SR-NASDAQ-2012-038); see also
Securities Exchange Act Release No. 69563 (May 13, 2013), 78 FR
29187 (May 17, 2013) (SR-NASDAQ-2013-073). Both filings were
designated by the Exchange and accepted by the Commission as filings
submitted under Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)
thereunder.
    \4\ Certain orders' Time in Force allows the order to remain on
the Exchange book after the auction (See e.g., MDAY, MGTC, SDAY and
SGTC in Nasdaq Rule 4703(a)).
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    For non-Nasdaq-listed securities, the functionality will revert
back to what had been done previously, which is that the Exchange will
not accept any order entered during a trading halt prior to its release
on the primary market.\5\ Nasdaq notes that this will reduce confusion
about where to send orders for IPO or halt auctions. Market
participants that want to participate in the IPO auction or halt
resumption for non-Nasdaq-listed securities may use Nasdaq routing
strategies that submit orders to the primary listing exchange for
auctions or submit their orders directly to the primary listing
exchange. The Exchange proposes that Nasdaq Rule 4120(c)(4)(B) be
revised to simply state that during any trading halt or pause for which
a halt cross under Rule 4753 will not occur, which would be the case
for a security not listed on Nasdaq that is subject to a halt or pause,
Nasdaq will not accept orders entered by market participants during the
trading halt or pause.
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    \5\ Any order subject to instructions that it be directed to
another exchange as described in Nasdaq Rule 4758 will be forwarded
to the exchange as per the member's instructions.
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    Both the changes for non-Nasdaq-listed securities and for Nasdaq-
listed securities will clarify references to instances where a trading
halt is in effect prior to the commencement of the Display Only Period
and that market participants may enter orders in a security that is the
subject of the trading halt on the Exchange. Specifically, for both
Nasdaq Rule 4120(c)(7)(A) and (c)(8)(A), the subsections will be
amended by deleting language referencing that orders will be held until
the beginning of the Display Only Period. Nasdaq Rule 4120(c)(7)(A)
will be amended further by deleting language referencing that orders
will be held in a suspended state until the beginning of the Display
Only Period. For both subsections, this language will be replaced with
language that states such orders will now be accepted and entered into
the system.
    The Exchange has also notified FINRA of the proposed rule change
and that Nasdaq would treat the quotes collected during the halt in the
same manner that the Exchange handles the pre-existing quotes (i.e., by
disseminating these quotes in a non-tradable state where they are
clearly identified as being closed and are in fact non-actionable). As
a result, the Exchange believes that the proposed rule change would not
violate Nasdaq Rule 3340 \6\ or the similar FINRA Rule 5260.\7\
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    \6\ See Nasdaq Rule 3340. Prohibition on Transactions,
Publication of Quotations, or Publication of Indications of Interest
During Trading Halts.
    \7\ See FINRA Rule 5260. Prohibition on Transactions,
Publication of Quotations, or Publication of Indications of Interest
During Trading Halts.
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    The implementation of the existing functionality for accepting
orders prior to the commencement of the Display Only Period has not
been widely used and the Exchange believes the proposed rule change
will both improve and simplify the Nasdaq process for market
participants.\8\ The Exchange will issue an Equity Trader Alert
notifying Exchange member firms of the changes.
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    \8\ The New York Stock Exchange LLC (``NYSE'') may accept orders
at any time prior to an IPO for NYSE-listed and NYSE MKT LLC-listed
securities. See https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Opening_and_Closing_Auctions_Fact_Sheet.pdf.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\9\ in general, and with Section
6(b)(5) of the

Act,\10\ in particular, in that the proposal is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, 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.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
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    Nasdaq believes that the proposed rule change will remove
impediments to and perfect the mechanism of a free and open market and
a national market system through an improved and simplified Nasdaq
process for commencing trading of a security that is the subject of
Nasdaq and non-Nasdaq-listed IPOs and trading halts.
    The current functionality for accepting orders prior to the
commencement of the Display Only Period is used infrequently and
consequently the proposed rule change will have little impact on
customers. To the extent that there is any impact, it will be that
accepting orders immediately rather than holding them in a suspended
state will clarify the state of participant orders, which will reduce
confusion for market participants in times of increased activity such
as during a halt or IPO. This simpler Nasdaq process will make it
easier for market participants by streamlining the process for entering
orders in securities subject to an IPO or halt prior to the
commencement of the Display Only Period. Additionally, returning to the
functionality of not accepting orders prior to the resumption of
trading that was previously in place for non-Nasdaq-listed securities
prior to 2013,\11\ will reduce confusion for market participants about
where to send orders for IPO or halt auctions. Orders sent to Nasdaq
will not be accepted unless they are designated to use one of the
routing options that may be sent to the primary listing market.\12\
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    \11\ See Securities Exchange Act Release No. 66652 (March 23,
2012), 77 FR 19044 (March 29, 2012) (SR-NASDAQ-2012-038); see also
Securities Exchange Act Release No. 69563 (May 13, 2013), 78 FR
29187 (May 17, 2013) (SR-NASDAQ-2013-073).
    \12\ For example, the LIST routing option sends orders in non-
Nasdaq-listed securities to the primary listing exchange for
auctions--open, close, IPOs, halts, pauses, etc. See Nasdaq Rule
4758(a)(1)(A)(x).
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    The proposed rule change also will remove impediments to and
perfect the mechanism of a free and open market through competition.
Specifically, the proposed rule change will enhance competition by
increasing Nasdaq's attractiveness as a venue for trading securities
and as a primary listing exchange for securities issuers.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the 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 amended. Nasdaq believes
that the proposed rule change will result in an improved and simplified
process for market participants, which in turn will reduce confusion
during important market events. Nasdaq believes that this change will
enhance competition by increasing its attractiveness as a venue for
trading securities.

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

    Written comments were neither solicited nor received.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be 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_ADDRESS>Please include
File Number SR-NASDAQ-2016-008 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-2016-008. 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 the filing will also 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-2016-008, and should
be submitted on or before March 3, 2016.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Brent J. Fields,
Secretary.
[FR Doc. 2016-02731 Filed 2-10-16; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 222 (Tuesday, November 17, 2020)]
[Notices]
[Pages 73310-73311]
[FR Doc No: 2020-25248]

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SECURITIES AND EXCHANGE COMMISSION

Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736

Extension:
    Rule 3a-8; [SEC File No. 270-516, OMB Control No. 3235-0574]

    Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') has submitted to the Office of Management
and Budget a request for extension of the previously approved
collection of information discussed below.
    Title 17 CFR 270.3a-8 (rule 3a-8 of the Investment Company Act of
1940 (15 U.S.C. 80a) (the ``Act'')), serves as a nonexclusive safe
harbor from investment company status for certain research and
development companies (``R&D companies'').
    The rule requires that the board of directors of an R&D company
seeking to rely on the safe harbor adopt an appropriate resolution
evidencing that the company is primarily engaged in a non-investment
business and record that resolution contemporaneously in its minute
books or comparable documents.\1\ An R&D company seeking to rely on the
safe harbor must retain these records only as long as such records must
be maintained in accordance with state law.
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    \1\ Rule 3a-8(a)(6) (17 CFR 270.3a-8(6)).
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    Rule 3a-8 contains an additional requirement that is also a
collection of information within the meaning of the PRA. The board of
directors of a company that relies on the safe harbor under rule 3a-8
must adopt a written policy with respect to the company's capital
preservation investments. We expect that the board of directors will
base its decision to adopt the resolution discussed above, in part, on
investment guidelines that the company will follow to ensure its
investment portfolio is in compliance with the rule's requirements.
    The collection of information imposed by rule 3a-8 is voluntary
because the rule is an exemptive safe harbor, and therefore, R&D
companies may choose whether or not to rely on it. The purposes of the
information collection requirements in rule 3a-8 are to ensure that:
(i) The board of directors of an R&D company is involved in

determining whether the company should be considered an investment
company and subject to regulation under the Act, and (ii) adequate
records are available for Commission review, if necessary. Rule 3a-8
would not require the reporting of any information or the filing of any
documents with the Commission.
    Commission staff estimates that there is no annual recordkeeping
burden associated with the rule's requirements. Nevertheless, the
Commission requests authorization to maintain an inventory of one
burden hour for administrative purposes.
    Commission staff estimates that approximately 29,999 R&D companies
may take advantage of rule 3a-8.\2\ Given that the board resolutions
and investment guidelines will generally need to be adopted only once
(unless relevant circumstances change),\3\ the Commission believes that
all the R&D companies that existed prior to the adoption of rule 3a-8
adopted their board resolutions and established written investment
guidelines in 2003 when the rule was adopted. We expect that R&D
companies formed subsequent to the adoption of rule 3a-8 would adopt
the board resolution and investment guidelines simultaneously with
their formation documents in the ordinary course of business.\4\
Therefore, we estimate that rule 3a-8 does not impose additional
burdens.
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    \2\ See National Science Foundation, National Center for Science
and Engineering Statistics, Business R&D and Innovation Survey: 2016
(results published May 13, 2019).
    \3\ In the event of changed circumstances, the Commission
believes that the board resolution and investment guidelines will be
amended and recorded in the ordinary course of business and would
not create additional time burdens.
    \4\ In order for these companies to raise sufficient capital to
fund their product development stage, Commission staff believes that
they will need to present potential investors with investment
guidelines. Investors generally want to be assured that the
company's funds are invested consistent with the goals of capital
preservation and liquidity.
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    An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid control number.
    The public may view the background documentation for this
information collection at the following website, www.reginfo.gov.
Comments should be directed to: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10102, New Executive Office
Building, Washington, DC 20503, or by sending an email to:
<EMAIL_ADDRESS>and (ii) David Bottom, Director/Chief
Information Officer, Securities and Exchange Commission, c/o Cynthia
Roscoe, 100 F Street NE, Washington, DC 20549 or send an email to:
<EMAIL_ADDRESS>Written comments and recommendations for the
proposed information collection should be sent within 30 days of
publication of this notice to www.reginfo.gov/public/do/PRAMain. Find
this particular information collection by selecting ``Currently under
30-day Review--Open for Public Comments'' or by using the search
function.

    Dated: November 10, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25248 Filed 11-16-20; 8:45 am]
BILLING CODE 8011-01-P