Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to…
Self-Regulatory Organizations;
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
FOOTNOTE 1 15 U.S.C. 78s(b)(1). END FOOTNOTE
FOOTNOTE 2 17 CFR 240.19b-4. END FOOTNOTE
I.
NASDAQ proposes to amend Exchange Rule 7007, which is currently reserved, and entitle it "Collection of Exchange Fees and Other Claims" and require each Nasdaq member, and all applicants for registration as such, to provide a clearing account number for an account at the
The text of the proposed rule change is available on the Exchange's Web site at http://www.nasdaq.cchwallstreet.com, at the principal office of the Exchange, and at the
II.
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for 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.
1. Purpose
The purpose of the proposed rule change is to amend Rule 7007 to require NASDAQ members, and all applicants for registration as such, to provide a clearing account number for an account at NSCC for purposes of permitting the Exchange to debit any undisputed or final fees, fines, charges and/or other monetary sanctions or other monies due and owing to the Exchange or other charges related to certain 7000 series rules /3/ and the 8000 /4/ series rules which are due and owing to NASDAQ. The Exchange would entitle Rule 7007 "Collection of Exchange Fees and Other Claims."
FOOTNOTE 3 The 7000 series rules in the NASDAQ Rulebook list charges for membership, services and equipment. Only the Rules which require payment to the Exchange would be subject to direct debit. By way of example, Rule 7003, Registration and Processing Fees, fees are collected by FINRA. END FOOTNOTE
FOOTNOTE 4 The 8000 series rules in the NASDAQ Rulebook list sanctions associated with disciplinary actions. Any disciplinary fines or sanctions collected pursuant to the 8000 series shall be subject to direct debit to the extent described within this rule change. See also note 6 for exceptions to debits. END FOOTNOTE
Currently, the Exchange requires all Options Participants to provide such an NSCC account number. /5/ The Exchange believes that the proposed debiting process for NASDAQ members that conduct an equities business would create an efficient method of collecting undisputed or final fees, fines, charges and/or other monetary sanctions or monies due and owing to the Exchange. /6/ Further, this proposal would provide a cost savings to the Exchange in that it would alleviate administrative processes related to the collection of monies owed to the Exchange by NASDAQ members conducting an equities business, as it does today for Options Participants on the
FOOTNOTE 5 See Chapter XV, Section 1 in the NASDAQ Rules. END FOOTNOTE
FOOTNOTE 6 The Exchange will not debit accounts for fees that are unusually large or for
special circumstances, unless such debiting is requested by the NASDAQ member. END FOOTNOTE
FOOTNOTE 7 See NOM Rules at Chapter XV, Section 1. NOM Participants are subject to the same process for direct debit as specified herein. END FOOTNOTE
The Exchange proposes to require NASDAQ equity members and applicants to provide a clearing account number for an account at NSCC in order to permit the Exchange to debit any undisputed or final fees, fines, charges and/or monetary sanctions or other monies due and owing to the Exchange or other charges related to the 7000 series rules, as specified below, and the 8000 series rules. Specifically, the following 7000 series Rules will be subject to proposed Rule 7007: 7001 (Membership Fees), 7014 (Market Quality Incentive Programs: Investor Support Program), 7015 (
The Exchange would send a monthly invoice /8/ to each NASDAQ equity member on approximately the 3th--10th business day of the following month. /9/ The Exchange would also send a file to NSCC each month on approximately the 23rd of the following month to initiate the debit of the appropriate amount stated on the NASDAQ member's invoice for the prior month. Because the NASDAQ member would receive an invoice well before any monies are debited (normally within two weeks), the NASDAQ member would have adequate time to contact the staff with any questions concerning its invoice. If a NASDAQ member disagrees with the invoice, the Exchange would not commence the debit until the dispute is resolved. Specifically, the Exchange will not include the disputed amount in the debit if the member has disputed the amount in writing to the Exchange's designated staff by the 15th of the month, or the following business day if the 15th is not a business day, and the amount in dispute is at least
FOOTNOTE 8 The monthly invoice will indicate that the amount on the invoice will be debited from the designated NSCC account. Each month, the Exchange will send a file to the NASDAQ member's clearing firm which will indicate the amounts to be debited from each member. If a NASDAQ member is "self-clearing", no such file would be sent as the member would receive the invoice, as noted above, which would indicate the amount to be debited. END FOOTNOTE
FOOTNOTE 9 NASDAQ members may receive invoices either electronically, by mail or by both
methods. END FOOTNOTE
Once NSCC receives the file from the Exchange, NSCC would proceed to debit the amounts indicated from the clearing members account. In the instance where the NASDAQ member clears through an Exchange clearing member, the estimated transaction fees owed to the Exchange are typically debited by the clearing member on a daily basis in order to ensure adequate funds have been escrowed. The Exchange would debit any monies owed including undisputed or final fees, fines, charges and/or monetary sanctions or monies due and owed to the Exchange. /10/ The Exchange believes that the debit process would eliminate the risk of unpaid invoices because of the large amounts of capital held at NSCC by NASDAQ equity members.
FOOTNOTE 10 This includes, among other things, fines and sanctions which result from disciplinary proceedings or actions taken pursuant to the 8000 series of NASDAQ Rules. With respect to disciplinary proceedings, the Exchange would not debit any monies until such action is final. The Exchange would not consider an action final until all appeal periods have run and/or all appeal timeframes are exhausted. With respect to non-disciplinary actions, the Exchange would similarly not take action to debit a member account until all appeal periods have run and/or all appeal timeframes are exhausted. Any uncontested disciplinary or non-disciplinary actions will be debited, and the amount due will appear on the NASDAQ member's invoice prior to the actual NSCC debit. END FOOTNOTE
The Exchange proposes this rule change become operative on
FOOTNOTE 11 The initial debit will include all outstanding fees through
2. Statutory Basis
--This is a summary of a
Citation: "80 FR 25353"
Document Number: "Release No. 34-74823; File No. SR-NASDAQ-2015-046"
Federal Register Page Number: "25353"
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