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Federal Register / Vol. 86, No. 208 / Monday, November 1, 2021 / Notices In addition, the Exchange does not share the commenters concerns regarding arbitrage, and states that any risk that ETC participants would face harm from arbitrageurs is likely to be considerably less than the risks that market participants presently face when they trade after-hours.53 The Exchange also states that because it would suspend ETC executions if significant deviations emerge between the Closing Cross price and the after-hours market price of a security, this should limit the instances in which egregious arbitrage occurs.54 Finally, the Exchange reiterates that participation in the ETC
is voluntary, and therefore any participant that is concerned about arbitrageurs is free to not participate in the ETC or cancel its orders in the ETC.55
IV. Proceedings To Determine Whether To Approve or Disapprove SR
NASDAQ2021040, as Modified by Amendment No. 1, and Grounds for Disapproval Under Consideration
lotter on DSK11XQN23PROD with NOTICES1

The Commission is instituting proceedings pursuant to Section 19b2B of the Act 56 to determine whether the proposed rule change, as modified by Amendment No. 1, should be approved or disapproved. Institution of proceedings is appropriate at this time in view of the legal and policy issues raised by the proposal, as discussed below. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described below, the Commission seeks and encourages interested persons to provide additional comment on the proposed rule change, as modified by Amendment No. 1.
Pursuant to Section 19b2B of the Act,57 the Commission is providing notice of the grounds for disapproval under consideration. As described above, the Exchange has proposed to adopt the ETC, which would be a fiveminute process immediately following the Closing Cross during which ETC
Eligible Orders could match and execute against other ETC Eligible Orders continuously at the NOCP.58 As service is already saturated and whether there is new room for competition. See id.
53 See id. at 3.
54 See id.
55 See id.
56 15 U.S.C. 78sb2B.
57 Id.
58 However, as described above, the Exchange would suspend execution of ETC Eligible Orders in a security whenever it detects: i An order in that same security resting on the Nasdaq continuous book in after-hours trading with a bid offer price
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proposed, the Exchange would disseminate an ETC order imbalance indicator during the ETC, which would include certain information regarding ETC Eligible Orders. As described above, the Commission has received a commenter letter that expresses concerns regarding the potential impact of the ETC on the Closing Cross and on continuous trading, and the potential for the ETC to encourage arbitrage behavior.
The Commission has also received a response letter from the Exchange.
Moreover, on October 25, 2021, the Exchange submitted an amendment to the proposed rule change.
The Commission is instituting proceedings to allow for additional analysis of, and input from commenters with respect to, the consistency of the proposal with Sections 6b5 59 and 6b8 60 of the Act. Section 6b5 of the Act requires that the rules of a national securities exchange be designed, among other things, 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, and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. Section 6b8 of the Act requires that the rules of a national securities exchange not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
V. Procedure: Request for Written Comments The Commission requests that interested persons provide written submissions of their data, views, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested that is higher than lower than the NOCP for that security; or ii the after-hours trading last sale price, or the best after-hours trading bid offer price, of the security other than on the Nasdaq continuous book is more than 0.5% or $0.01 higher than lower than the NOCP for that security, whichever is greater. The Exchange would resume execution of ETC Eligible Orders in a security in scenario i if and when the system determines, during the ETC, that the Nasdaq continuous book in after-hours trading is clear of resting orders in that security with a bid offer price that is higher than lower than the NOCP. The Exchange would resume execution of ETC Eligible Orders in a security in scenario ii if and when the after-hours trading last sale price or the best after-hours trading bid offer price of the security other than on the Nasdaq continuous book returns to within the greater of the 0.5% or $0.01 thresholds during the ETC.
59 15 U.S.C. 78fb5.
60 15 U.S.C. 78fb8.

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persons concerning whether the proposed rule change, as modified by Amendment No. 1, is consistent with Section 6b5, 6b8, or any other provision of the Act, or rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of data, views, and arguments, the Commission will consider, pursuant to Rule 19b4 under the Act,61 any request for an opportunity to make an oral presentation.62
Interested persons are invited to submit written data, views, and arguments regarding whether the proposed rule change, as modified by Amendment No. 1, should be approved or disapproved by November 22, 2021.
Any person who wishes to file a rebuttal to any other persons submission must file that rebuttal by December 6, 2021.
Comments may be submitted by any of the following methods:
Electronic Comments Use the Commissions internet comment form http www.sec.gov/
rules/sro.shtml; or Send an email to rule-comments@
sec.gov. Please include File No. SR
NASDAQ2021040 on the subject line.
Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 205491090.
All submissions should refer to File No.
SRNASDAQ2021040. The 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 Commissions 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 61 17

CFR 240.19b4.
19b2 of the Act, as amended by the Securities Acts Amendments of 1975, Pub. L. 94
29 June 4, 1975, grants to the Commission flexibility to determine what type of proceeding either oral or notice and opportunity for written commentsis appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Acts Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30
1975.
62 Section
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