[Federal Register Volume 84, Number 69 (Wednesday, April 10, 2019)]
[Notices]
[Pages 14429-14438]
[FR Doc No: 2019-07050]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85513; File No. SR-NASDAQ-2019-022]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend and Restate the Exchange's Membership Rules

April 4, 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 March 27, 2019, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``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 Substance
of the Proposed Rule Change

    The Exchange proposes to a proposal [sic] to amend and restate the
Exchange's membership rules, as discussed below.
    The text of the proposed rule change is available on the Exchange's
website at http://nasdaq.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 has adopted Rules, as set forth in the Rule 1000
Series, which prescribe the qualifications for and the procedures for
applying for membership on the Exchange. The Exchange now proposes to
update, reorganize and clarify these Rules, as described below.
    As a general matter, the proposal makes several categories of
changes to the Exchange's membership rules. First, the proposal
reorganizes the rules so that they are arranged in a more logical
order. Second, the proposal removes duplicative provisions, eliminates
unnecessary complexity in the membership process, and otherwise
streamlines the membership rules and their associated procedures.
Third, the proposal relaxes needlessly rigid deadlines that the rules
prescribe for taking certain actions with respect to membership
applications. Fourth and finally, the proposal makes technical
corrections and updates to the Rules, including by updating obsolete
references to the National Association of Securities Dealers (``NASD,''
now known as ``FINRA''), correcting the capitalization of defined terms
(e.g., ``Member''), and generalizing references to the Exchange so as
to facilitate harmonization of the Exchange's membership rules with
those of its sister exchanges.
    The Exchange does not believe that any of the proposed changes will
adversely impact the existing rights of prospective or existing Members
or Associated Persons. Likewise, the Exchange does not believe that the
proposed changes will compromise the ability of the Exchange or its
Membership Department to scrutinize prospective or existing Members or
Associated Persons.
    A summary of specific proposed changes follows.
Rule 1002
    The proposal amends Rule 1002 in several respects. First, it
deletes existing paragraph (c), which pertains to the payment by
Members and Associated Persons of dues, fees, assessments and other
charges, because the requirement of Members and Associated Persons to
make such payments is set forth elsewhere in the Rules, such that
existing paragraph (c) is unnecessary.\3\ The Exchange also proposes to
move existing paragraph (d), which governs the reinstatement of
membership and registration, to a new Rule 1018 that will consolidate
all provisions of the Rules relating to transfer, resignation,
termination, and reinstatement of membership. Additionally, the
Exchange proposes to consolidate and move to this Rule, as newly-
renumbered paragraph (d), largely duplicative provisions relating to
the registration of branch offices and the designation of offices of
supervisory jurisdiction, which presently reside in Rule 1012(j) and
IM-1002-4, respectively.\4\ Within the new paragraph (d), the Exchange
proposes to delete language from existing Rule 1012(j)(1) that requires
a Member to pay dues, fees, and charges associated with a branch
office--as that provision is superfluous for reasons discussed above.
Under renumbered paragraph (d)(3)(A), the Exchange also proposes to
simplify the existing rules for determining compliance with branch
office registration and supervisory office designation requirements.
Whereas the existing processes--as set forth in Rule 1012(j) and IM-
1002-4--provide that Exchange Members that are also FINRA members are
deemed to comply with the branch office and designated supervisory
office requirements to the extent that they comply with NASD-1000-4 and
Article IV, Section 8 of the NASD's By-Laws, the proposal provides that
such Exchange Members are deemed to comply to the extent that they keep
current Form BR, which

contains the requisite information and which is accessible
electronically to the Exchange. Members that are not FINRA members
shall continue to submit to the Exchange a Branch Office Disclosure
Form, as they have done previously.\5\ Lastly, the Exchange proposes to
move IM-1002-1, which prohibits a Member or an Associated Person from
filing with the Exchange misleading information in connection with
membership or registration, and requires misleading information to be
corrected, to proposed amended Rule 1012 (General Application
Provisions), where the Exchange believes it more logically fits.\6\
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    \3\ See Rule 9553.
    \4\ In proposed subparagraph (d)(3)(B), the Exchange proposes to
clarify the existing rule text in Rule 1012(j) and IM-1002-4, which
provide that Members that are not FINRA members shall designate
offices of supervisory jurisdiction and branch offices by submitting
to the Exchange a ``written filing'' to the Exchange ``in such form
as [the Exchange] may prescribe.'' The proposed change clarifies
that this written filing is the ``Branch Office Disclosure Form.''
The Branch Office Disclosure Form is presently in use for this
purpose and it is not a new form. Nevertheless, the Exchange
believes that it will be helpful in the Rule to identify the
specific form that must be filed rather than refer vaguely to a
filing in such form as the Exchange may prescribe.
    \5\ The existing Rule states that Members that are not FINRA
members shall designate offices of supervisory jurisdiction and
branch offices by submitting to the Exchange ``a written filing in
such form as [the Exchange] may prescribe.'' The form that the
Exchange presently prescribes for this purpose is the Branch Office
Disclosure Form. To improve clarity, the Exchange proposes to
identify this form by name in the Rule. The Exchange proposes no
substantive changes to this Form.
    \6\ The Exchange also amends the definition of a ``Proprietary
Trading Firm'' in paragraph (o) to make clear that such entities may
be both Applicants and Members of the Exchange for purposes of the
Rules.
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Rule 1011
    In Rule 1011, which includes definitions for the Rule 1000 Series,
the Exchange proposes to revise the defined term ``Investment banking
or securities business'' to eliminate the reference to ``investment
banking'' because the Exchange does not accept applications from firms
that are engaged in the investment banking business but are not
otherwise brokers or dealers in securities. The Exchange believes that
references to the investment banking business in this provision and
elsewhere in the Exchange's membership rules are unintended errors.
    In Rule 1011(g), the Exchange also proposes to delete the defined
term ``material change in business operations'' and, as discussed
below, to incorporate it into Rule 1017(a)(5), which is the only
context in which it applies.
Rule 1012
    The Exchange proposes to revise Rule 1012, which is presently
entitled ``General Provisions,'' in several ways. Principally, the
Exchange proposes to limit the scope of this Rule to include only
general provisions relating to applications, and it proposes to amend
the title of the Rule to reflect that narrowed scope (``General
Application Provisions''). It also proposes to remove several existing
provisions that are outside of this scope, including existing
paragraphs (b) (lapses in applications), (c) (ex parte communications),
(d) (recusals and disqualifications from membership appeal
proceedings), (g) (resignation of Exchange Members), (i) (transfer and
termination of Exchange membership), and (j) (registration of branch
offices). As is discussed in further detail below, the Exchange
proposes to move these provisions to other Rules to which they more
logically relate. The Exchange does not believe that moving these
provisions as described will have any substantive effect.
    In Rule 1012(a), which is presently entitled ``Filing by Applicant
or Service by Nasdaq,'' the Exchange proposes to retitle the paragraph
for clarity purposes as ``Instructions for Filing Application Materials
with the Exchange and Requirements for Service of Documents by the
Exchange.'' In subparagraph (a)(1), which presently permits an
Applicant to file an application only by first-class mail, overnight
courier, or hand delivery, the Exchange proposes to modernize the
provision by allowing for electronic filing as well. In a new
subparagraph (a)(3)(E), the Exchange proposes to state that service by
electronic filing shall be deemed complete on the day of transmission,
except that service or filing will not be deemed to have occurred if,
subsequent to transmission, the serving or filing party receives notice
that its attempted transmission was unsuccessful.
    Furthermore, the Exchange proposes to eliminate existing paragraph
(f) (similarity of membership names) because the Exchange believes that
it is unnecessary for it to monitor for similarities in the names of
prospective Members given that FINRA, through WebCRD, and the SEC
monitor this.
    Finally, the Exchange proposes to relocate and restate IM-1002-1
(regarding misleading information as to membership or registration) and
the last paragraph of Rule 1013(a)(1) (requiring Members and Applicants
to keep application materials current) to Rule 1012(c). Rather than
state, as does IM-1002-1, that Applicants, Members, and Associated
Persons shall not file false or misleading membership information with
the Exchange, the Exchange proposes to state in paragraph (c)(1) that
they shall have an affirmative duty to ensure that their membership
information is accurate, complete, and current at the time of filing.
The Exchange believes that the proposed formulation is more
comprehensive than the existing one.\7\ Likewise, rather than merely
require, as does existing Rule 1013(a)(1), that Applicants shall keep
current their application materials after filing them, the Exchange
proposes more broadly, in paragraph (c)(2), to require Applicants,
Members, and Associated Persons to ensure that their membership
applications and supporting materials remain accurate, complete, and
current at all times, by filing supplementary amendments with the
Department, as is necessary. (The Exchange proposes to remove the
language in existing Rule 1013(a)(1) that specifies that supplementary
amendments shall be filed by electronic means insofar as Rule 1012(a)
will now specify the acceptable methods by which membership materials
shall be filed with the Department.)
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    \7\ The reformatted text also removes the references in IM-1002-
1 to registration decisions (which are now covered elsewhere in the
Exchange's Rules).
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Rule 1013
    The Exchange proposes to substantially restate Rule 1013, which
sets forth procedures for filing applications for new membership on the
Exchange.
    In paragraph (a) of Rule 1013, which describes the contents of new
membership applications and procedures for filing, the Exchange
proposes to amend subparagraphs (a)(1)(A) and (B), which require an
Applicant to file a copy of its current Form BD as well as an Exchange-
approved fingerprint card for each Associated Person who will be
subject to SEC Rule 17f-2,\8\ to provide that the Applicant must do so
only if the Exchange is not able to access the Form itself or the
fingerprints through the Central Registration Depository (``CRD'' or
``WebCRD'') or a similar source. The Exchange proposes this amendment
to relieve Applicants of the burden of filing a Form or fingerprint
cards that the Exchange can readily retrieve itself.
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    \8\ The existing provision exempts Applicants from filing
fingerprint cards if it has already filed them with another self-
regulatory organization.
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    In subparagraph (a)(1)(C), which presently requires an Applicant to
provide a ``check'' for such fees as it may be required to pay under
the Exchange's Rules, the Exchange proposes to delete the word
``check'' and replace it with a more general term, ``payment,'' so as
to afford an Applicant flexibility to pay the fee through additional
means, such as wire transfer.
    In subparagraph (a)(1)(G), which requires disclosure of the
Applicant's principal place of business and ``all other offices, if
any, whether or not such offices would be required to be registered
under the Nasdaq Rules,'' the Exchange proposes to clarify the
provision by specifying that it applies to

``branch'' offices. The Exchange also proposes to delete the phrase
``whether or not such offices would be required to be registered under
the Nasdaq Rules,'' as the Exchange deems it unnecessary for the
Applicant to list offices other than those that must be registered.
Finally, the Exchange again proposes to state that an Applicant need
not separately provide this branch office information to the Exchange
to the extent that the information is otherwise available to the
Exchange electronically through WebCRD or a similar source.
    Next, the Exchange proposes to consolidate subparagraphs (a)(1)(J)
and (a)(1)(K). In subparagraph (a)(1)(J), where the Exchange presently
requires the Applicant to state whether it is currently or has been in
the prior ten years the subject of certain investigations or
disciplinary proceedings that have not been reported to the CRD, the
Exchange proposes to add language--currently in subparagraph
(a)(1)(K)--which states that the obligation to disclose the Applicant's
disciplinary history pertains, not only to the Applicant itself, but
also ``any person listed on Schedule A of the Applicant's Form BD.''
\9\ With this amendment, subparagraph (a)(1)(K) is duplicative of
(a)(1)(J), such that the Exchange proposes to delete it.
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    \9\ Such persons listed on Form BD include the Applicant's
direct owners (as that term is defined on Form BD), and certain
partners, trusts and trustees, and limited liability company
members, and executive officers of the Applicant.
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    In subparagraph (a)(1)(N), which requires an Applicant to disclose
how it complies with Rule 3011, the Exchange proposes to clarify that
Rule 3011 requires Members to have anti-money laundering compliance
programs.
    In subparagraph (a)(1)(P), the Exchange proposes to delete language
that presently permits an Applicant to submit a Form U-4 for each
person conducting and supervising the conduct of the Applicant's market
making and other trading activities. The Exchange proposes to delete
the requirement that an Applicant submit a Form U-4 because the
information that the Form contains is otherwise accessible to the
Exchange through WebCRD, such that submission of the Form itself is
unnecessary.
    In subparagraph (a)(1)(Q), the Exchange proposes to delete the
requirement that the Applicant provide to the Exchange a FINRA
Entitlement Program agreement and Terms of Use and an Account
Administration Entitlement Form, if not previously provided to FINRA.
The Exchange proposes to delete this requirement because the Exchange
has determined that the requirement is unnecessary. Any Applicant for
membership will have already completed and submitted this agreement and
form prior to applying to the Exchange. The completion and submission
of the agreement and form will be evident to the Exchange from the fact
that FINRA has granted the Applicant access to WebCRD. The Exchange
understands that completion of the Account Administration Entitlement
Form is a prerequisite to the creation of a registered BD and receiving
WebCRD access.
    The Exchange proposes to amend subparagraphs (a)(1)(T), (U), and
(V) of the Rule, which presently require an Applicant to submit to the
Exchange an agreement to comply with the federal securities laws, the
rules and regulations thereunder, the Exchange's Rules, and all
rulings, orders, directions, decisions, and sanctions thereunder, as
well as an agreement to pay such dues, assessments, and other charges
in the manner and in the amount as the Exchange prescribes. The
Exchange proposes to preface these requirements with a more general
requirement that an Applicant submit a duly executed copy of the
Exchange's Membership Agreement. The Membership Agreement comprises the
foregoing commitments, among others, and Applicants presently submit an
executed copy of the Membership Agreement to satisfy existing
subparagraphs (a)(1)(T) and (U). The Exchange proposes to insert the
new language in subparagraph (a)(1)(T) and move the language in
existing subparagraphs (a)(1)(T) and (U) to new subparagraphs
(a)(1)(T)(1) and (2). The Exchange proposes to renumber existing
subparagraph (a)(1)(V) as subparagraph (a)(1)(U).
    The Exchange proposes to delete existing subparagraph (a)(2) of the
Rule, which presently requires an Applicant to submit uniform
registration forms, due to the fact that the information that these
forms contain is readily accessible to the Exchange through WebCRD.
    Next, the Exchange proposes to restate its requirements and
procedures for deeming applications to be filed, for dealing with
incomplete applications, and for requesting additional information from
an Applicant or a third party in connection with a pending application.
The Exchange is restating these requirements and procedures to improve
their clarity, to relax certain procedural deadlines that are
needlessly rigid, and to provide additional due process to Applicants.
    First, in lieu of the deleted text in subparagraph (a)(2), the
Exchange proposes to insert a new provision, entitled ``When an
Application is Deemed to be Filed,'' which states what is now only
implied in Rule 1013--that the Department will deem an application to
be filed on the date when it is ``substantially complete,'' meaning the
date on which the Department receives from the Applicant all material
documentation and information required under Rule 1013. The Exchange
believes that Applicants will benefit from this clarification,
particularly because it affords the Department discretion to deem an
application to be filed when it obtains sufficent information or
documentation from the Applicant to enable the Department to commence
processing the application. The new provision also would require the
Department to inform the Applicant in writing when the Exchange deems
an application to be substantially complete so that there will be no
ambiguity as to when the Department will begin to process the
application.
    Second, the Exchange proposes to delete existing subparagraph
(a)(3), which presently governs the rejection of applications that are
not substantially complete, and it proposes to replace the deleted text
with two new provisions that deal with lapses in applications that are
not substantially complete, and the rejection of filed applications
that remain or become incomplete after filing.
    New subparagraph (a)(3)(A), which will govern lapses of
applications, will also replace existing Rule 1012(b). The new
provision states that if the Department does not deem an application to
be substantially complete (and thereby filed, in accordance with
proposed subparagraph (a)(2)) within 90 calendar days after an
Applicant initiates it, then absent a showing of good cause by the
Applicant, the Department may, at its discretion, deem the application
to have lapsed without filing, such the Department will take no action
in furtherance of the application. The proposal is conceptually
different from existing Rule 1012(b). The proposal conceives of a
lapsed application as one that an Applicant initiates but does not
substantially complete even after a prolonged period of time, such that
the Department treats it as having been abandoned prior to filing.
Under existing Rule 1012(b), by contrast, the Exchange treats lapses
more broadly as any unexcused failure of an Applicant to complete an
application, to respond to the Department's requests for information or
documents, to participate in a membership interview, or to file with

the Exchange an executed membership agreement. As is discussed below,
the proposal will treat an Applicant's post-filing non-responsiveness
to the Department's requirements as a basis for rejection of an
application, not a lapse of an application, because once an application
is deemed filed, the Department will begin to take action in
furtherance of the application. Also unlike the existing Rule, the
proposal provides that the Department merely has discretion to, but
need not deem an application to have lapsed once it meets the
requirements of the subparagraph. Moreover, the proposal requires that
once the Department deems an application to have lapsed, then the
Department must serve a written notice of that determination on the
Applicant and refund any application fees that the Applicant paid to
the Exchange (provided that the Exchange did not, in fact, take action
in furtherance of the lapsed application). Finally, the proposal states
that an Applicant that still wishes to apply for membership on the
Exchange after receiving notice of a lapse in its application must
submit a new application pursuant to these Rules and pay a new
application fee for doing so, if applicable.
    Proposed subparagraph (a)(3)(B) will govern the circumstances in
which the Department may reject an application that it already has
deemed to be ``substantially complete'' and thus filed. Specifically,
the Exchange proposes that if a pending application remains incomplete
after filing, or becomes incomplete after filing due to the fact that
the Applicant has not timely responded to the Department's request for
supplemental information or documents, then the Department will serve
notice on the Applicant of the nature of the incompleteness and afford
the Applicant a reasonable time period in which to address it. If the
Applicant fails to address the incompleteness within the time period
that the Department prescribes in the notice, then, absent a showing of
good cause by the Applicant, the Department may--but again it is not
required to--deem the application to be rejected and it must serve
written notice of any such determination upon the Applicant. The
proposal states, moreover, that if the Department deems an application
to be rejected, then the Applicant shall not be entitled to a refund of
any fees that the Applicant may have paid in connection with its
application so that the Exchange can recover its costs associated with
processing the filed application prior to rejecting it. Finally, the
proposal states that if an Applicant chooses to continue to pursue
membership following a rejection of its application, then it must
submit a new application and pay any associated fees that are required
under the Rule.
    Third, the Exchange proposes to restate subparagraph (a)(4), which
governs requests made by the Department for additional information or
documents during its consideration of an application. The Exchange also
proposes to restate and consolidate into subparagraph (a)(4) the
provision of Rule 1013 that governs membership interviews and
information pertinent to the application that the Department gathers
from third party sources other than the Applicant (existing paragraph
(b)). The Exchange believes that rules governing supplemental
information and document requests, membership interviews, and third
party information are related and should be consolidated into a single
provision. Moreover, the Exchange notes that it does not, as a
practical matter, opt to conduct formal membership interviews because
it is more efficient and less onerous for all parties to instead engage
in informal discussions when questions and concerns arise. Because the
Exchange does not exercise its discretion to conduct formal interviews
the Exchange believes that it is reasonable to eliminate the concept
and the procedures that govern such interviews in the new subparagraph.
    In particular, the proposed restated subparagraph provides that at
any time before the Department serves its decision on a membership
application,\10\ it may issue a request for additional information or
documents--either from the Applicant or from a third party--if the
Department deems such information or documentation to be necessary to
clarify, verify, or supplement the application materials. The proposal
states that the Department may request that the information or
documentation be provided in writing or through an in-person or
telephonic interview. The proposal furthermore states that the
Department shall serve its request in writing. The proposal states that
the Department must afford the recipient a reasonable amount of time
within which to respond to the request \11\ and that the failure of an
Applicant to respond within the allotted time may serve as a basis for
the Department to reject an application under subparagraph (a)(3)(B),
described above. Finally, the proposal for the first time affords the
Applicant due process in the event that the Department obtains
information or documentation about the Applicant from a third party
that the Department reasonably believes could adversely impact its
decision on an application.\12\ In such a circumstance, the proposal
requires the Department to promptly inform the Applicant in writing and
describe the third party information or documentation that the
Department obtained. The Department must also afford the Applicant a
reasonable opportunity to discuss with it or object to the Department's
use of the third party information or documentation in its application
decision prior to the Department rendering the decision.
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    \10\ The restated provision eliminates the requirement in the
existing Rule that the Department must serve an initial supplemental
request for information or documents within 15 business days after
an application is deemed to be filed. The Exchange finds no good
reason to distinguish in the rule between an ``initial'' and a
subsequent supplemental Departmental request or to impose a specific
deadline for the Department to issue any such requests; the
Department has a shared interest with the Applicant in issuing
supplemental requests expeditiously such that no artificial deadline
is necessary.
    \11\ Rather than impose a minimum time period for a response,
the Exchange proposes to require only that the Department prescribe
a reasonable deadline for a response. The Exchange believes that the
appropriate response period will vary depending upon the nature of
the information or documentation requested. Moreover, the Exchange
again believes that the Department and the Applicant have a shared
interest in ensuring that the Applicant has adequate time to respond
to a request.
    \12\ The Department may consult third parties, such as other
SROs of which an Applicant is or was a member previously, to obtain
additional information about or to confirm aspects of an application
or the Applicant's character or history. The Department might also
consult third party services to investigate or verify the
Applicant's financial condition or history.
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    Fourth, the Exchange proposes to establish a new Rule 1013(b),
entitled ``Special Application Procedures,'' which restates and expands
upon the existing special application procedures set forth in
subparagraph (a)(5). Presently, subparagraph (a)(5)(A) states that when
an Applicant is applying for FINRA membership and Exchange membership
at the same time, then the Exchange will wait to process the
application until the applicant becomes a FINRA member.\13\ Presently,
subparagraph (a)(5)(C) states that expedited application procedures
will apply to Applicants that are already members of FINRA and Nasdaq
BX, Inc. or Nasdaq PHLX LLC. The Exchange proposes to delete
subparagraph (a)(5)(A) and (B) because the Exchange, upon review,
believes that these provision add little value, especially in light of
other changes that the Exchange

now proposes to adopt. Likewise, the Exchange proposes to delete
(a)(5)(C) because it has become outdated in that it does not provide
expedited application procedures for Applicants that are members of the
Exchange's other affiliates; this provision also does not explain what
an ``expedited'' application process entails.
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    \13\ Existing subparagraph (a)(5)(B) also specifies that
Applicants that are already members of another registered securities
association or exchange must submit a regular application form.
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    In lieu of the existing subparagraph (a)(5), the Exchange proposes
to adopt two types of special applications in new Rule 1013(b). First,
proposed Rule 1013(b)(1) prescribes a special application process for
Applicants that are already FINRA members. Specifically, the proposal
states that such an Applicant will have the option to ``waive-in'' to
become an Exchange Member and to register with the Exchange all persons
associated with it whose registrations FINRA has approved (in
categories recognized by the Exchange's rules). The proposal defines
the term ``waive-in'' to mean that the Department will rely
substantially upon FINRA's prior determination to approve the Applicant
for FINRA membership when the Department evaluates the Applicant for
Exchange membership. That is, the Department will normally permit a
FINRA member to waive-into Exchange membership without conducting an
independent examination of the Applicant's qualifications for
membership on the Exchange, provided that the Department is not
otherwise aware of any basis set forth in Rule 1014 to deny or
condition approval of the application.
    Procedurally, the proposal states that a FINRA member that wishes
to waive-into Exchange membership must do so by submitting to the
Department an application form (the standard application form contains
an option to select waive-in membership) and an executed Exchange
Membership Agreement. The Department, in turn, will act upon a duly
submitted waive-in application within a reasonable time frame not to
exceed 20 days from submission of the application, unless the
Department and the Applicant agree to a longer time frame for issuing a
decision.\14\ If the Department fails to issue a decision on a waive-in
application within the prescribed time frame, then the Applicant may
petition the Exchange's Board of Directors to force the Department to
act, as set forth in Rule 1014(c)(3). Finally, the proposal states that
a decision issued under this provision shall have the same
effectiveness as set forth in Rule 1014 and shall be subject to review
as set forth in Rules 1015 and 1016.
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    \14\ The Exchange proposes this time frame to accommodate FINRA,
which will review waive-in applications on behalf of the Exchange to
verify that the Applicants are FINRA members in good standing. As a
practical matter, the Exchange expects to act on waive-in
applications prior to the 20 day deadline.
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    The second proposed special application process, to be set forth in
Rule 1013(b)(2), will permit Applicants for Exchange membership that
are already approved members of one or more of the Exchange's
affiliated exchanges \15\ to waive-into the Exchange membership. In
this context, ``waive-in'' means that the Department will rely
substantially upon an Affiliated Exchange's prior determination to
approve the Applicant for membership on the Affiliated Exchange when
the Department evaluates the Applicant for Exchange membership. The
proposed procedures for an Applicant to submit a waive-in application
under this provision and for the Department to issue a decision based
upon such an application are identical to the procedures described
above for FINRA members that seek to waive-into Exchange membership.
The Exchange proposes to amend its application form to reflect the fact
that Applicants may waive-into membership on the Exchange based upon
their membership on any of the other five Affiliated Exchanges.
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    \15\ The Nasdaq Stock Exchange, LLC, Nasdaq BX, Inc., Nasdaq
PHLX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, and Nasdaq GEMX, LLC
are all affiliated exchanges (the ``Affiliated Exchanges'').
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Rule 1014
    In several respects, the Exchange proposes to amend Rule 1014,
which governs the issuance of membership application decisions by the
Department.
    First, to improve clarity, the Exchange proposes to reorganize the
Rule. Rather than begin the Rule with a paragraph that describes the
bases for the Department to issue a decision on an application, as is
the case presently, the Exchange proposes to begin with a paragraph (a)
to be entitled ``Authority of Department to Approve, Approve with
Restrictions, or Deny an Application.'' This new paragraph sets forth
the general authority of the Department to act on an application by
approving it, denying it, or approving it subject to restrictions: (1)
That are reasonably designed to address a specific (financial,
operational, supervisory, disciplinary, investigatory, or other
regulatory) concern; or (2) that mirror a restriction placed upon the
Applicant by FINRA or an Affiliated Exchange. It incorporates elements
of what is now Rule 1014(b) (which the Exchange proposes to delete
going forward).
    Second, the Exchange proposes to renumber existing paragraph (a) as
new paragraph (b). This paragraph will be retitled ``Bases for
Approval, Conditional Approval, or Denial'' but will otherwise remain
the same.
    Third, as noted above, existing paragraph (b) will be deleted.
    Fourth, the Exchange proposes to amend paragraph (c), which
prescribes the time period within which the Department must issue and
serve a written decision on a membership application. Presently, the
provision requires the Department to serve a written decision within 15
business days after the Applicant concludes its membership interview
(if any) or files all of its required information or documents,
whichever is later. The Exchange proposes to relax this requirement by
stating that the Department must respond in a reasonable time period,
not to exceed 45 (calendar) days after the Applicant files and provides
to the Exchange all required and requested information or documents in
connection with the application, unless the Department and the
Applicant agree to further extend the decision deadline.\16\ The
Exchange proposes these amendments because it adjudges the existing
timeframe to be needlessly short and inflexible. In certain instances
where the Department has outstanding questions or concerns associated
with an application, the existing Rule may force the parties to rush to
address outstanding questions and resolve outstanding issues. The
proposal would allow for such questions and issues to be addressed with
less time pressure involved. The Exchange notes that it does not intend
for this proposal to routinely lengthen the Department's timeframe for
serving application decisions. Under the existing Rule, the Exchange
typically issues decisions far in advance of the 15 business day
deadline and the Exchange expects that it will continue to do so in
most instances. Indeed, the Exchange has a self-interest in issuing
decisions as soon as is possible. The proposed 45 day decision period
is merely intended to allow for the parties to have flexibility in
unusual circumstances.
---------------------------------------------------------------------------

    \16\ The Exchange also proposes conforming amendments to Rule
1014(c)(3), which addresses failures of the Department to serve a
decision within the prescribed time frame.
---------------------------------------------------------------------------

    Fifth, the Exchange proposes to delete existing paragraph (d),
which states that a decision by the Department to approve an
application is contingent upon the

Applicant filing with the Department an executed written membership
agreement that contains the Applicant's agreement to abide by any
restriction specified in the Department's decision and to obtain the
Department's approval prior to undertaking a change in ownership,
control, or business operations, or prior to modifying or removing a
membership restriction. The Exchange proposes to delete this provision
because, as explained above, the Exchange proposes in Rule 1013 to
expressly require an Applicant to file a duly executed copy of the
Membership Agreement as part of its application. The existing
Membership Agreement contains the undertakings described in paragraph
(d). Accordingly, paragraph (d) is superfluous.
Rule 1015
    The Exchange proposes to amend Rule 1015, which states that the
Department's membership decisions are subject to review by the Exchange
Review Council. Specifically, the Exchange proposes to move from
existing Rule 1012(c) to new Rule 1015(k) a provision that prohibits ex
parte communications involving membership decisions subject to review
among certain Exchange staff, members of the Exchange Review Council,
members of a Subcommittee of the Council, and the Board of Directors.
Similarly, the Exchange proposes to move from existing Rule 1012(d) to
new Rule 1015(l) a provision that governs the recusal and
disqualification of a member of the Exchange Review Council, a
Subcommittee thereof, or the Board of Directors from participating in a
review of a membership decision. The Exchange proposes these moves
because it believes that these two provisions fit logically within the
section of the membership rules that govern appeals of membership
decisions. The Exchange proposes no substantive changes to these
provisions \17\ and it does not believe that moving them will have any
substantive effect.
---------------------------------------------------------------------------

    \17\ The Exchange proposes to remove the requirement from Rule
1015(a) that an applicant file a request for review ``by first-class
mail.'' Rule 1012(a) now provides for a more modern array of filing
options that includes electronic submission.
---------------------------------------------------------------------------

Rule 1017
    The Exchange proposes substantial changes to Rule 1017, which
requires Members to obtain approval prior to effecting a change in
ownership, control, or business operations. These changes are generally
intended to streamline and simplify the existing Rule, which the
Exchange believes are unnecessary onerous and complex. As much as
possible, the Exchange proposes to apply the same procedures to these
applications for approval as it does to its applications for membership
under Rules 1013 and 1014.
    The first change that the Exchange proposes involves Rule 1017(a),
which defines the events that require Members to file applications. The
existing paragraph states that a Member shall file an application for
approval prior to effecting the following changes: (1) A merger of the
Member with another Member (unless both are members or the surviving
member will continue to be a member of the New York Stock Exchange
(``NYSE'')); (2) a direct or indirect acquisition by the Member of
another Member (unless the acquiring Member is a member of the NYSE);
(3) direct or indirect acquisitions or transfers of 25% or more in the
aggregate of the Member's assets or any asset, business line or line of
operations that generates revenues comprising 25% or more in the
aggregate of the Member's earnings measured on a rolling 36 month basis
(unless both the seller and acquirer are members of the NYSE); (4) a
change in the equity ownership or partnership capital of the Member
that results in one person or entity directly or indirectly owning or
controlling 25 percent or more of the equity or partnership capital; or
(5) a ``material change in business operations.'' Existing Rule
1011(g), in turn, defines a ``material change in business operations''
to mean, among other things: (1) Removing or modifying a membership
restriction; (2) acting as a dealer for the first time; (3) market
making for the first time on the Exchange (except when the member's
market making has been approved previously by FINRA or Nasdaq BX); (4)
adding business activities that require higher minimum net capital
under SEC Rule 15c3-1; and (5) adding business activities that would
cause a proprietary trading firm no longer to meet the definition of
that term contained in the rule.
    For ease of reference, the Exchange proposes to incorporate into
Rule 1017(a)(5) the definition of a ``material change in business
operations'' rather than define it separately in Rule 1011(g). The
Exchange also proposes to take the existing exclusion from that
definition--excluding first time market makers on the Exchange whose
market making activities have been approved previously by FINRA or
Nasdaq BX--and apply it more broadly to all of Rule 1017(a). That is,
the Exchange proposes that none of the changes enumerated in Rule
1017(a) would require prior Departmental approval to the extent that
the Member's Designated Examining Authority (``DEA''), or an Affiliated
Exchange, has approved the change previously in accordance with their
respective rules and provided that the Member provides written evidence
to the Department of such prior approval. The Exchange believes that
this proposal is prudent because in all instances in which a Member's
DEA or any Affiliated Exchange \18\ have already approved a change, the
Exchange can be reasonably confident that such prior approval would be
consistent with its own judgment on the matter, such that no purpose
would be served in requiring the Department to independently approve
the same change.\19\ The proposal would also ease burdens on Members
that wish to make changes to their businesses and which presently
require multiple approvals to do so. The Exchange notes that it
proposes to retain authority to require approval of a proposed change
where the nature, terms, or conditions of the change have altered since
the Member's DEA or an Affiliated Exchange approved it.
---------------------------------------------------------------------------

    \18\ Exchange notes that the existing Rule is under-inclusive in
that it does not account for prior approvals granted by all of the
Affiliated Exchanges. The Exchange believes that there is no
reasonable basis for it to defer to a prior approval granted by
Nasdaq BX and to not do the same with respect to prior approvals
granted by the other Affiliated Exchanges.
    \19\ In Rule 1017(a), the Exchange also proposes to eliminate
exceptions relating to NYSE membership. The Exchange believes that
this proposal is reasonable insofar as the NYSE's rules may, at
times, diverge with those of the Exchange. Going forward, the
Exchange feels more confident deferring to the prior judgment of a
Member's DEA or of an Affiliated Exchange as to the specific change
event at issue than it does to the mere fact that a Member or its
counterparty in a business transaction are NYSE members.
---------------------------------------------------------------------------

    Next, the Exchange proposes to make several organizational and
clarifying amendments to Rule 1017(b), which governs the filing and
content of applications filed under Rule 1017. It proposes to preface
subparagraph (b)(2)--which presently states vaguely that the
``application'' shall contain certain items--with language clarifying
that the provision pertains to applications for approval of a change in
ownership or control or a material change in the business operations of
a member. It also breaks out the last sentence of (b)(2) into new
subparagraphs (2)(A) and (2)(B). Furthermore, it proposes clarifying
changes in (2)(A) (proposing to specify that a description of a
``change in ownership, control, or business operations'' means a
``proposed'' change in ownership, control, or ``material'' business
operations) and (2)(B)

(specifying that the Member must ``attach'' rather than ``include'' a
business plan, pro forma financials, an organizational chart, and
written supervisory procedures relating to the ``proposed'' change).
Finally, the Exchange proposes to renumber the remainder of the Rule.
    The Exchange proposes to amend Rule 1017(c) to limit its scope.
Specifically, it proposes to eliminate from subparagraph (c)(1) the
ability of a Member to effect a change in ownership or control prior to
receiving approval from the Department and the ability of the
Department to impose interim restrictions on the Member pending final
Department approval. The Exchange believes that the concepts of interim
changes and restrictions are overly complex, potentially disruptive,
and ultimately unnecessary given the short time frames that the Rules
prescribe for the Department to act on applications.\20\ Additionally,
the Exchange notes that in its experience reviewing applications under
Rule 1017, these provisions never have been invoked. Finally, the
Exchange proposes to change the title of this provision to reflect the
deletion of the foregoing. Whereas now, the title is ``Effecting Change
and Imposition of Interim Restrictions,'' the Exchange proposes to re-
title it as ``When Applications Shall or May Be Filed.''
---------------------------------------------------------------------------

    \20\ The Exchange also notes that FINRA is also publicly
contemplating eliminating the concept of allowing its members to
effect business changes on an interim basis. See FINRA, Regulatory
Notice 18-23: Membership Application Proceedings (Request for Public
Comment), Attachment B (July 26, 2018), available at http://www.finra.org/sites/default/files/Attachment-B_Regulatory-Notice-18-23.pdf.
---------------------------------------------------------------------------

    Existing paragraphs (d), (e), and (f) of Rule 1017, prescribes
standards for rejecting applications that are not substantially
complete, authorizes the Department to serve a request for additional
documents and information, and permits the Department to conduct
interviews of Applicants, respectively. The Exchange proposes to delete
these provisions and replace them with provisions that are more
consistent with proposed amended Rule 1013(a)(2), (3), and (4). That
is, new Rule 1017(d) will state that the Department will deem an
application to be filed on the date when it is substantially complete,
meaning the date on which the Department receives from the Applicant
all material documentation and information required under the Rule. It
also requires the Department to inform the Applicant in writing when
the Department deems an application to be substantially complete. New
Rule 1017(d) will state that the Department may treat an application
filed under this Rule as having lapsed, and the Department may reject
an application filed under this Rule, in accordance with Rule
1013(a)(3), except that the Department may treat an application as
having lapsed if it is not substantially complete for 30 days or more
after the applicant initiates it.\21\ Finally, proposed Rule 1017(f)
will state that at any time before the Department serves its decision
on an application filed under Rule 1017, the Department may request
additional information or documentation from the Applicant or from a
third party in accordance with Rule 1013(a)(4).\22\
---------------------------------------------------------------------------

    \21\ The Exchange notes that this 30 day time period for deeming
an application to have lapsed derives from existing Rule 1017(d).
    \22\ As stated previously, circumstances where the Department
may consult a third party include to seek additional information
about or to verify aspects of an application. For example, the
Department may consult another SRO to verify the financial status or
prior disciplinary history of a Member's prospective new ownership.
---------------------------------------------------------------------------

    Existing Rule 1017(g) prescribes a complex system for the
Department to issue decisions in response to applications filed under
Rule 1017. For example, it differentiates between decisions issued with
respect to Members that are and are not FINRA members (or required to
be FINRA members). With respect to Members that are FINRA members, the
Rule requires the Department to consider whether the Applicant and its
Associated Persons meet the standards set forth in NASD (FINRA) Rule
1014(a). It also prescribes specific criteria for issuing decisions
where the Applicant seeks a modification or removal of a membership
restriction. The Exchange believes that this complex system is
unnecessary and can be simplified considerably, particularly in light
of the proposal described above to exempt a Member from obtaining the
Exchange's approval to effect a change in ownership or control or a
material change in its business operations when FINRA has already
approved the change previously. That is, there is no reason for the
Exchange to make an independent assessment of whether the proposed
change complies with FINRA rules if FINRA has already made that
determination.
    In lieu of the existing provisions, the Exchange proposes to state
that the Department will render a decision on an application filed
under Rule 1017 in accordance with the standards set forth in Rule
1014, except with respect to applications to modify or remove a
membership restriction, in which case the Department will consider the
factors presently set forth in existing Rule 1017(g)(1)(D) (the
Exchange proposes to renumber this provision as subparagraph (g)(1)).
    Additionally, in lieu of existing Rule 1017(g)(2), which requires
the Department to serve a written decision on an application filed
under Rule 1017 within 30 (calendar days) after conclusion of a
membership interview or the filing of additional information or
documents (whichever is later), the Exchange proposes to state that the
Department will serve a written decision in accordance with Rule
1013(c).\23\ The Exchange proposes this change to 1017(g)(2) for the
same reasons that it discussed above with respect to Rule 1013(c).
---------------------------------------------------------------------------

    \23\ The Exchange notes that the proposed cross-reference to
Rule 1013(c) also addresses the Applicant's rights in the event that
the Department does not serve it with a timely written decision.
Accordingly, the Exchange proposes to delete existing subparagraph
(g)(3), which covers the same topic.
---------------------------------------------------------------------------

    Finally, the Exchange proposes to delete Rule 1017(k). This
provision presently states that if an application for approval of a
change in ownership lapses or is denied and all appeals are exhausted
or waived, the Member must, within 60 days, submit a new application,
unwind the transaction, or file a Form BDW. It also provides for the
Department to shorten or lengthen the 60 day period under certain
circumstances. Due to the fact that the Exchange--as explained
previously--proposes to eliminate the ability of a Member to effect a
change in ownership while its application for Departmental approval is
pending, this provision will no longer be necessary. That is, there
will be no interim change in ownership that will need to be unwound or
otherwise addressed if the Department denies an application or it
lapses.
Rule 1018
    The Exchange proposes to consolidate within Rule 1018, which is
presently reserved, existing provisions of the Rules pertaining to the
resignation of members (existing Rule 1012(g), transfer of membership
(existing Rule 1012(i)(1)), termination of membership (existing Rule
1012(i)(2)), and reinstatement of membership (existing Rule 1002(d)).
The Exchange believes that these provisions are logically related and
belong together in a single Rule. The Exchange generally proposes to
maintain the substance of these consolidated provisions unchanged from
their existing state, except that the Exchange proposes that
resignations will no longer require a 30 day time period to become
effective. Also, the provision on reinstatement will apply to

membership only and not to registration, which is covered separately in
the Exchange's Rules.
Other Miscellaneous Changes
    Lastly, the Exchange proposes to make non-substantive changes
throughout the Rule 1000 Series, as follows. Where the Rules refer
specifically to ``Nasdaq,'' the Exchange proposes to replace such
references with more general terms ``Exchange'' or ``the Exchange.''
The Exchange proposes this change to make it easier in the future to
harmonize the Exchange's membership rules with those of the other
Affiliated Exchanges. The Exchange also proposes to update obsolete
references to the ``NASD'' to reflect the fact that the NASD is now
known as ``FINRA.'' Finally, where applicable, the Exchange proposes to
renumber the Rules and update or correct cross-references.
Implementation
    To facilitate an orderly transition from the existing membership
rules to the new rules, the Exchange is proposing to apply the existing
rules to all applications which have been submitted to the Exchange
(including applications that are not yet complete) and are pending
approval prior to the operative date. The Exchange also will apply the
existing rules to any appeal of an Exchange membership decision or any
request for the Board to direct action on an application is pending
before the Exchange Review Council, the Board, or the Commission, as
applicable. As a consequence of this transition process, the Exchange
will retain the existing processes during the transition period until
such time that there are no longer any applications or matters
proceeding under the existing rules. To facilitate this transition
process, the Exchange will retain a transitional Rulebook that will
contain the Exchange's membership rules as they are at the time that
this proposal is filed with the Commission. This transitional Rulebook
will apply only to matters initiated prior to the operational date of
the changes proposed herein and it will be posted to the Exchange's
public rules website. When the transition is complete, the Exchange
will remove the transitional Rulebook from its public rules website.
    The Exchange will announce and explain this transition process in a
regulatory alert.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\24\ in general, and furthers the objectives of Section
6(b)(5) and of the Act,\25\ 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. It is also consistent with Section 6(b)(7) of the Act in that
it provides for a fair procedure for denying Exchange membership to any
person who seeks it, barring any person from becoming associated with
an Exchange Member, and prohibiting or limiting any person with respect
to access to services offered by the Exchange or a Member thereof.\26\
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
    \26\ 15 U.S.C. 78f(b)(7).
---------------------------------------------------------------------------

    As a general matter, the Exchange believes that its proposal to
amend its membership Rules will promote a free and open market, and
will benefit investors, the public, and the markets, because it will
render the Rules clearer, better organized, simpler, and easier to
comply with.
    The proposal is just and equitable because it will render the
Exchange's membership rules easier for Applicants and Members to read
and understand, including by doing the following:
     Establishing a ``roadmap'' paragraph in proposed Rule
1014(a) that sets forth the basic authority of the Department to
approve, approve with conditions, or deny applications for membership
before the Rule goes on to enumerate criteria for the Department to
apply when taking each of those actions;
     Making the titles of the Rules more accurate and
descriptive (e.g., proposed Rule 1014(b) (amending the existing title
``Bases for Denial'' to also include bases for approval and conditional
approval to make it more accurate and complete));
     Grouping logically-related provisions together in the
Rules (e.g., provisions governing resignation, termination, transfer,
and reinstatement of membership (moving them from Rule 1002(d) and
1012(g) and (i) to proposed Rule 1018); provisions relating to ex parte
communications (existing Rule 1012(c)) and recusals and
disqualifications (existing Rule 1012(d) (moving them into Rule 1015,
which governs reviews of membership decisions));
     Rationalizing and consolidating provisions that presently
govern lapses and rejections of applications, including by making
clearer conceptual distinctions between lapses (i.e., applications that
are not substantially complete and which the Department may deem to be
abandoned, such that the Department will refund any application fees
paid by the Applicant) and rejections (i.e., applications that the
Department deemed to be filed but which it refuses to act upon due to
lingering incompleteness, in which case the Department will not refund
application fees paid to it), and by consolidating Rules 1012(b) and
1013(a)(3) into proposed Rule 1013(a)(3)(A) and (B);
     Consolidating overlapping provisions that govern the
registration of branch offices and office of supervisory jurisdiction
into a single provision (consolidating Rule 1012(j) and IM-1002-4 into
Rule 1002(d));
     Eliminating references in Rule 1002(c), Rule 1012(j), and
Rule 1013(a)(1)(U) to the obligation of Members (and their branch
offices) to pay fees, charges, dues, and assessments to the Exchange
insofar as those obligations are duplicative of Rule 9553;
     Converting IM-1002-1 and IM-1002-4 into rule text;
     Clarifying when the Department will deem an application to
be filed (when the application is ``substantially complete,'' as set
forth in proposed Rule 1013(a)(2)) and by requiring the Department to
notify an Applicant in writing of the filing date;
     Clarifying what the Exchange means when it states that an
Applicant may ``waive-in'' to Exchange membership (as set forth in
proposed Rule 1013(b)); and
     Updating obsolete cross-references throughout the Rules
from NASD to FINRA.
    The proposal will also make compliance with the membership rules
simpler and less burdensome for Applicants and Members by doing the
following:
     Eliminating obsolete requirements to submit paper copies
of Forms U-4 and BD or explain information listed on the forms (Rule
1013(a)(1)(A), (J), (K), and (P) and Rule 1013(a)(2)) where the
Department already has electronic access to the Forms and the
information contained therein;
     Permitting electronic filing of applications (proposed
Rule 1012(a)(1);
     Allowing payment of application fees by means other than
paper check (proposed Rule 1013(a)(1)(C));
     Relaxing deadlines that needlessly rush the process of
responding to the Department's questions and concerns about an
application \27\ or that force the

Department to render a decision when the Applicant is not ready for the
Department to do so; \28\
---------------------------------------------------------------------------

    \27\ Rather than require an Applicant to file a response to a
supplemental request for documents or information within 15 business
days, proposed Rule 1013(a)(3) states that the Applicant must
respond within a ``reasonable period of time'' to be prescribed by
the Department. Even then, Rule 1013(a)(3)(B) states that the
Department must serve upon the Applicant a notice of incompleteness
if it fails to respond to a supplemental request and then afford the
Applicant an additional reasonable time period to remedy the failure
before it may reject the Applicant's application.
    \28\ Rather than require the Department to serve a written
decision within 15 business days, proposed Rule 1014(c) states that
it must issue a decision within a reasonable period of time, not to
exceed 45 calendar days after the application is filed and complete,
unless the parties agree to a later date. As explained above, the
Exchange does not intend for this change to result in the Department
routinely issuing decisions later than it does presently. The
Exchange presently issues decisions, in most instances, well in
advance of the current 15 business day deadline and it has a self-
interest in continuing to do so whenever possible. However, the
Exchange believes that it is in the interest of Applicants for the
Department to have discretion to respond at a later time in the
event that the Applicant needs to address or resolve outstanding
questions or concerns associated with its application.
---------------------------------------------------------------------------

     Eliminating formal membership interviews and procedures
related thereto, which the Exchange has not utilized historically (Rule
1013(b)); \29\
---------------------------------------------------------------------------

    \29\ The elimination of the formal membership interview process
will have no practical effect on the membership process insofar as
the Department otherwise has authority to request additional
information from the Applicant. Under the proposed Rule 1014(a)(4),
this authority may include a request for the Applicant to provide
information or documents in-person or by telephone. In other words,
the Department will retain authority to conduct an informal
interview of the Applicant.
---------------------------------------------------------------------------

     Harmonizing disparate procedures under Rules 1013 and 1017
for filing, evaluating, and responding to initial membership
applications and applications for approval of business changes,
including by streamlining the Rule 1017 procedures;
     Broadening the circumstances in which an Applicant may
waive-into Exchange membership to include the Applicant's membership in
any of the Affiliated Exchanges \30\ and defining procedures for
processing and responding to waive-in applications (proposed Rule
1013(b));
---------------------------------------------------------------------------

    \30\ As noted above, the Exchange believes that it is reasonable
to permit reciprocity in membership among all of the Affiliated
Exchanges. The Exchange believes that there is no reasonable basis
for it to defer to a prior approval granted by Nasdaq BX and to not
do the same with respect to prior approvals granted by the other
Affiliated Exchanges.
---------------------------------------------------------------------------

     Narrowing the circumstances in which a Member must obtain
prior Department approval before effecting a change in ownership,
control, or material business operations by excluding changes for which
a Member has obtained prior approval from the Member's DEA, or an
Affiliated Exchange (proposed Rule 1017(a)); \31\
---------------------------------------------------------------------------

    \31\ As is discussed above, the Exchange believes that deference
to prior approvals of a proposed business change made by an
Affiliated Exchange or the Exchange's DEA is reasonable because the
judgment of these entities on such matters is likely to be the same
as that which the Exchange would itself employ. The Exchange
assesses that any marginal benefit that might be gained from it
applying its own independent judgment outweighs the burden to
Applicants of obtaining multiple approvals for the same proposed
change. The Exchange notes that it will require a Member to obtain
approval for such a change if the nature, terms, or conditions of
the proposed change have altered since its DEA or an Affiliated
Exchange approved it.
---------------------------------------------------------------------------

     Eliminating the unused, unnecessary, and potentially
disruptive ability of Members, pursuant to Rule 1017(c), to effect
ownership changes on an interim basis while an application for
Department approval is pending; and
     Eliminating the 30 day waiting period for Members that
seek to resign their memberships under proposed Rule 1018(a).
    In sum, the foregoing changes will update, rationalize, and
streamline the Exchange's membership rules and processes, all to the
benefit of Applicants and Members. Moreover, these changes will not
adversely impact the rights of Applicants or Members to appeal adverse
Departmental decisions under these Rules or to request Board action to
compel the Department to render decisions on applications.
    Last, the Exchange believes that its proposal to phase-in the
implementation of the new membership rules and processes is consistent
with Section 6(b)(7) of the Act \32\ because both the current and
proposed processes provide fair procedures for granting and denying
applications for becoming an Exchange Member, becoming an Associated
Person, and making material changes to the business operations of a
Member. The Exchange is proposing to provide advanced notice of the
implementation date of the new processes, and will apply the new
processes to new applications, appeals, and requests for Board action
that are initiated on or after that implementation date. Any
application, appeal, or request for Board action initiated prior to the
implementation date will be completed using the current processes. As a
consequence, the Exchange will maintain a transitional Rulebook on the
Exchange's public rules website which will contain the Exchange Rules
as they are at the time of filing this rule change. These transitional
rules will apply exclusively to applications, appeals, and requests for
Board action initiated prior to the implementation date. Upon
conclusion of the last decision on a matter to which the transitional
rules apply, the Exchange will remove the defunct transitional rules
from its public rules website. Thus, the transition will be conducted
in a fair, orderly, and transparent manner.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78f(b)(7).
---------------------------------------------------------------------------

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 does not expect
that its proposed changes to the membership rules will have any
competitive impact on its existing or prospective membership. The
proposed changes will apply equally to all similarly situated
Applicants and Members and they will confer no relative advantage or
disadvantage upon any category of Exchange Applicant or Member.
Moreover, the Exchange does not expect that its proposal will have an
adverse impact on competition among exchanges for members; to the
contrary, the Exchange hopes that by clarifying, reorganizing, and
streamlining its membership rules, and by making the Exchange's
membership process less burdensome for Applicants and Members, the
Exchange will improve its competitive standing relative to other
exchanges.

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 \33\ and Rule
19b-4(f)(6) thereunder.\34\
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \34\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \35\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to

Rule 19b-4(f)(6)(iii),\36\ the Commission may designate a shorter time
if such action is consistent with the protection of investors and the
public interest. The Exchange has asked the Commission to waive the 30-
day operative delay so that the proposal may become operative upon
filing. The Exchange states that the proposed changes are primarily
intended to update and reorganize the Exchange's existing membership
rules and processes. Further, the Exchange states these rules are
intended to streamline and clarify processes and also eliminate unused
and outdated provisions. The Exchange states the effect of these
changes will make the membership process less burdensome for
Applicants, Members, and Associated Persons while not limiting the
Exchange's ability to appropriately scrutinize prospective and existing
Members and Associated Persons. For the foregoing reasons, the
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
and, therefore, the Commission designates the proposed rule change to
be operative upon filing.\37\
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    \35\ 17 CFR 240.19b-4(f)(6).
    \36\ 17 CFR 240.19b-4(f)(6)(iii).
    \37\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule'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 [email protected]. Please include
File Number SR-NASDAQ-2019-022 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-2019-022. 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/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 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-2019-022 and should be submitted on or before May 1, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
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    \38\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-07050 Filed 4-9-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 127 (Tuesday, July 2, 2013)]
[Notices]
[Page 39723]
[FR Doc No: 2013-15804]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings

    Take notice that the Commission has received the following Natural
Gas Pipeline Rate and Refund Report filings:

Filings Instituting Proceedings

    Docket Numbers: RP13-993-000.
    Applicants: Granite State Gas Transmission, Inc.
    Description: Section 4 Rate Change Filing to be effective 8/1/2013.
    Filed Date: 6/24/13.

    Accession Number: 20130624-5063.
    Comments Due: 5 p.m. ET 7/8/13.

    Docket Numbers: RP13-994-000.
    Applicants: North Baja Pipeline, LLC.
    Description: Gas Quality--Measurement Provisions to be effective 7/
25/2013.
    Filed Date: 6/24/13.
    Accession Number: 20130624-5084.
    Comments Due: 5 p.m. ET 7/8/13.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated June 25, 2013.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2013-15804 Filed 7-1-13; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 88, Number 10 (Tuesday, January 17, 2023)]
[Proposed Rules]
[Pages 2561-2562]
[FR Doc No: 2023-00531]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2022-1798 Airspace Docket No. 22-AAL-32]
RIN 2120-AA66

Proposed Revocation of Colored Federal Airway Blue 2 (B-2); Point
Lay, AK

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: This action proposes to revoke Colored Federal airway Blue 2
(B-2) in the vicinity of Point Lay, AK due to the pending
decommissioning of the Point Lay (PIZ) Non-directional Beacon (NDB),
Hotham NDB (HHM), and Fort Davis NDB (FDV) in Alaska.

DATES: Comments must be received on or before March 3, 2023.

ADDRESSES: Send comments on this proposal to the U.S. Department of
Transportation, Docket Operations, 1200 New Jersey Avenue SE, West
Building Ground Floor, Room W12-140, Washington, DC 20590; telephone:
(800) 647-5527, or<PHONE_NUMBER>. You must identify FAA Docket No.
FAA-2022-1798 Airspace Docket No. 22-AAL-32 at the beginning of your
comments. You may also submit comments through the internet at
www.regulations.gov.
    FAA Order JO 7400.11G, Airspace Designations and Reporting Points,
and subsequent amendments can be viewed online at www.faa.gov/air_traffic/publications/. For further information, you can contact the
Rules and Regulations Group, Federal Aviation Administration, 800
Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-
8783.

FOR FURTHER INFORMATION CONTACT: Steven Roff, Rules and Regulations
Group, Office of Policy, Federal Aviation Administration, 800
Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-
3657.

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking

    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the United States Code. Subtitle I, Section 106
describes the authority of the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more detail the scope of the agency's
authority. This rulemaking is promulgated under the authority described
in Subtitle VII, Part A, Subpart I, Section 40103. Under that section,
the FAA is charged with prescribing regulations to assign the use of
the airspace necessary to ensure the safety of aircraft and the
efficient use of airspace. This regulation is within the scope of that
authority as it would modify the route structure as necessary to
preserve the safe and efficient flow of air traffic within the National
Airspace System (NAS).

Comments Invited

    Interested parties are invited to participate in this proposed
rulemaking by submitting such written data, views, or arguments as they
may desire. Comments that provide the factual basis supporting the
views and suggestions presented are particularly helpful in developing
reasoned regulatory decisions on the proposal. Comments are
specifically invited on the overall regulatory, aeronautical, economic,
environmental, and energy-related aspects of the proposal.
    Communications should identify both docket numbers (FAA Docket No.
FAA-2022-1798 Airspace Docket No. 22-AAL-32) and be submitted in
triplicate to the Docket Management Facility (see ADDRESSES section for
address and phone number). You may also submit comments through the
internet at www.regulations.gov.
    Commenters wishing the FAA to acknowledge receipt of their comments
on this action must submit with those comments a self-addressed,
stamped postcard on which the following statement is made: ``Comments
to FAA Docket No. FAA-2022-1798 Airspace Docket No. 22-AAL-32.'' The
postcard will be date/time stamped and returned to the commenter.
    All communications received on or before the specified comment
closing date will be considered before taking action on the proposed
rule. The proposal contained in this action may be changed in light of
comments received. All comments submitted will be available for
examination in the public docket both before and after the comment
closing date. A report summarizing each substantive public contact with
FAA personnel concerned with this rulemaking will be filed in the
docket.

Availability of NPRM

    An electronic copy of this document may be downloaded through the
internet at https://www.regulations.gov. Recently published rulemaking
documents can also be accessed through the FAA's web page at
www.faa.gov/air_traffic/publications/airspace_amendments/.
    You may review the public docket containing the proposal, any
comments received and any final disposition in person in the Dockets
Office (see ADDRESSES section for address and phone number) between
9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal
holidays. An informal docket may also be examined during normal
business hours at the office of the Operations Support Group, Western
Service Center, Federal Aviation Administration, 2200 South 216th St.,
Des Moines, WA 98198.

Availability and Summary of Documents for Incorporation by Reference

    This document proposes to amend FAA Order JO 7400.11G, Airspace
Designations and Reporting Points, dated August 19, 2022, and effective
September 15, 2022. FAA Order JO 7400.11G is publicly available as
listed in the ADDRESSES section of this document. FAA Order JO 7400.11G
lists Class A, B, C, D, and E airspace areas, air traffic service
routes, and reporting points.

Background

    The aviation industry/users have indicated a desire for the FAA to
transition the Alaskan en route navigation structure away from the
dependency on NDBs. Advances in technology have allowed for alternative
navigation methods to support decommissioning high-cost ground
navigation equipment. In 2021, the FAA conducted a study in accordance
with FAA Order JO 7400.2, Procedures for Handling Airspace Matters, on
whether to decommission PIZ, HHM, and FDV due to the ongoing high cost
of maintenance and repairs. Interested parties were invited to submit
comments on the study. No comments were received and the FAA scheduled
PIZ, HHM, and FDV to be decommissioned.
    Colored Federal airway B-2 navigates between PIZ and FDV.
Decommissioning PIZ and FDV would render this route unusable.
Accordingly, the FAA proposes to revoke B-2 in its entirety. United
States Navigational (RNAV) routes T-366, T-367, T-364, and T-260
overlay or parallel the entire route, which mitigates the impact of
revoking B-2.

The Proposal

    The FAA is proposing an amendment to 14 CFR part 71 to revoke
Colored Federal airway B-2 in the vicinity of Pont Lay, AK due to the
scheduled decommissioning of PIZ, HHM, and FDV. B-2 currently extends
between PIZ and FDV. The FAA proposes to revoke B-2 in its entirety.
    Colored Federal airways are published in paragraph 6009(d) of FAA
Order JO 7400.11G dated August 19, 2022 and effective September 15,
2022, which is incorporated by reference in 14 CFR 71.1. The Colored
Federal airway listed in this document would be removed subsequently in
FAA Order JO 7400.11.
    FAA Order JO 7400.11, Airspace Designations and Reporting Points,
is published yearly and effective on September 15.

Regulatory Notices and Analyses

    The FAA has determined that this proposed regulation only involves
an established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore: (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under
Department of Transportation (DOT) Regulatory Policies and Procedures
(44 FR 11034; February 26, 1979); and (3) does not warrant preparation
of a regulatory evaluation as the anticipated impact is so minimal.
Since this is a routine matter that will only affect air traffic
procedures and air navigation, it is certified that this proposed rule,
when promulgated, will not have a significant economic impact on a
substantial number of small entities under the criteria of the
Regulatory Flexibility Act.

Environmental Review

    This proposal will be subject to an environmental analysis in
accordance with FAA Order 1050.1F, ``Environmental Impacts: Policies
and Procedures'' prior to any FAA final regulatory action.

List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

The Proposed Amendment

    In consideration of the foregoing, the Federal Aviation
Administration proposes to amend 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND REPORTING POINTS

0
1. The authority citation for 14 CFR part 71 continues to read as
follows:

    Authority: 49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O.
10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1   [Amended]

0
2. The incorporation by reference in 14 CFR 71.1 of FAA Order JO
7400.11G, Airspace Designations and Reporting Points, dated August 19,
2022, and effective September 15, 2022, is amended as follows:

Paragraph 6009(d) Colored Federal Airways.

* * * * *

B-2 [Remove]

* * * * *

    Issued in Washington, DC, on January 9, 2023.
Brian Konie,
Acting Manager, Airspace Rules and Regulations.
[FR Doc. 2023-00531 Filed 1-13-23; 8:45 am]
BILLING CODE 4910-13-P