July 19, 2019

July 19, 2019

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July 18, 2019

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July 17, 2019

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SEC Proposed Rule Changes To Nasdaq Rule and Adopts New Securities Act Rule

SEC Proposed Rule Change To Amend Nasdaq Rule 4756(c)(2)

The Nasdaq Stock Market LLC (Nasdaq) has filed a proposed change to Nasdaq Rule 4756(c)(2) with the Securities and Exchange Commission. Rule 4756(c)(2) provides that, for each security listed on Nasdaq, the aggregate size of all quotes and orders at the best price to buy and sell will be transmitted for display to the appropriate network processor, unless the aggregate size is less than one round lot.

The proposed amendment to Rule 4756(c)(2) provides that Nasdaq will be allowed to aggregate odd-lot-sized displayed orders at multiple price points that equal at least a round lot for purposes of transmitting Nasdaq’s best ranked displayed order(s) to the appropriate processor. Although the amendments to Rule 4756(c)(2) were effective upon filing, Nasdaq has designated the proposed amendments to be operative in the first quarter of 2019, and will announce the exact date at least 30 days prior to such effective date.

On November 28, the SEC issued a notice regarding the proposed amendment to Nasdaq Rule 4756(c)(2) and requested comments regarding such rule change, including whether the proposed rule change is consistent with the Securities Exchange Act of 1934. All comments should be submitted on or before December 26.

The proposed Rule change is available here.

The SEC request for comments is available here.

SEC Adopts Securities Act Rule 139b To Promote Research Reports on Investment Funds

On November 30, the Securities and Exchange Commission adopted new Rule 139b under the Securities Act of 1933. Rule 139 currently provides a safe harbor for the publication or distribution of research reports concerning one or more issuers by a broker-dealer participating in a registered offering of a covered issuer’s securities. However, Rule 139’s safe harbor does not extend to the publication or distribution of research reports by a broker-dealer with respect to registered investment companies or business development companies.

New Rule 139b extends the current safe harbor available under Rule 139 to “covered investment fund research reports.” “Covered investment fund research reports” include research reports published or distributed by a broker-dealer relating to a covered investment fund or any securities issued by such a covered investment fund. However, research reports published or distributed by the covered investment fund or any affiliate thereof, or any research report published or distributed by a broker-dealer that is an investment adviser of such covered investment fund, are not covered under the new safe harbor contained in Rule 139b. A “covered investment fund” includes registered investment companies, business development companies, and certain commodity- or currency-based trust funds. Rule 139b is intended to promote research on mutual funds, exchange-traded funds, registered closed-end funds, business development companies and similar investment funds.

Rule 139b will become effective 30 days following the publication of the notice in the Federal Register.

The final Rule is available here.

©2019 Katten Muchin Rosenman LLP


About this Author

Michael T. Foley, Katten, Lawyer, Finance, FINRA, Chicago
Special Counsel

Michael Foley represents broker-dealers, investment advisers and other financial services industry participants with respect to a broad spectrum of legal and regulatory matters arising under the federal securities laws.

Michael has nearly 20 years of experience in private practice and in-house at both a large, full-service broker-dealer and at an online discount broker-dealer, advising broker-dealers and other financial institutions regarding compliance with the federal securities and commodities laws, and with the regulations of the US Securities and Exchange...

Timothy Nolan, Katten Law Firm, Chicago, Corporate Law Attorney

Timothy Nolan concentrates his practice on transactional, corporate and regulatory aspects of financial services matters. Timothy is able to provide legal services to a wide variety of clients, including proprietary trading firms, hedge funds, broker-dealers, registered investment advisers, commodity trading advisers, financial institutions and general corporate clients.

Prior to joining Katten, Timothy served as the CEO and the president of the board of directors of a small commercial real estate company and spent 10 years in the scrap recycling industry, including several years as general manager of a mid-sized company. In his time in the scrap recycling industry, Timothy worked with traders, brokers, importers and exporters, and other industry professionals around the world relating to ferrous, non-ferrous and precious metal recycling, together with paper and plastic recycling.