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Options 11 Minor Rule Plan Violations
Section 1. Minor Rule Plan Violations

The following NOM rule and policy violations may be determined by Nasdaq Regulation to be minor in nature. If so, Nasdaq Regulation may, with respect to any such violation, proceed under General 5 and impose the fine set forth below. Nasdaq Regulation is not required to proceed under said Sections as to any rule violation and may, whenever such action is deemed appropriate, commence a disciplinary proceeding under General 5 as to any such violation. A subsequent violation is calculated on the basis of a rolling 24-month period ("Period").

(l) Failure to comply with the Consolidated Audit Trail Compliance Rule requirements. For failures to comply with the Consolidated Audit Trail Compliance Rule requirements under General 7, the Exchange may impose a minor rule violation fine of up to $2,500.

(a) Position Limit Violations. Violations of Options 9, Section 13 of these Rules (Position Limit) are subject to fines as follows:

 

 

Number of Cumulative Violations Within Any Twenty four Month Rolling Period *

Sanction (Imposed on Exchange Members or violations occurring in all other accounts)

First Offense

$500

Second Offense

$1,000

Third Offense

$2,500

Fourth and Each Subsequent Offense

$5,000

* A violation that consists of (i) a 1 trade date overage, (ii) a consecutive string of trade date overage violations where the position does not change or where a steady reduction in the overage occurs, or (iii) a consecutive string of trade date overage violations resulting from other mitigating circumstances, may be deemed to constitute one offense, provided that the violations are inadvertent.

(b) Order Entry. Violations of Options 2, Section 5(a) - (c) of these Rules, (Market Maker Quotations) regarding restrictions on orders entered by Market Makers, will be subject to the fines listed below. Each paragraph of such sections subject to this Rule shall be treated separately for purposes of determining the number of cumulative violations.

Number of Violations Fine Amount Within One Period

 

 

1 to 5

Letter of Caution

6 to 10

$500

11 to 15

$1000

16 to 20

$2000

(c) Intra-day Quotes. Violations of Options 2, Section 5(d) of these Rules regarding Market Maker intra-day bids and offers shall be subject to the fines listed below. Violations of the rule that continue over consecutive trading days will be subject to a separate fine, pursuant to this paragraph (d), for each day during which the violation occurs and is continuing up to a limit of fifteen consecutive trading days. In calculating fine thresholds for each Market Maker, all violations occurring within the Period in any of the Market Makers registered series are to be added together.

Number of Cumulative Fine Amount Violations Within One Period

 

 

1

Letter of Caution

2 or more

$300 per day

(d) LOPR Reporting and Position Limit Violations. Violations of Options 9, Section 13-16 of these Rules regarding position limits and maintaining and furnishing reports related to applicable position limits for Options contracts.

 

 

 

FINE SCHEDULE

LOPR Reporting

Position Limits

First Offense

$1,000

$500

Second Offense

$2,500

$1,000

Subsequent Offense

$5,000

$2,500

(e) Expiring Exercise Declaration Rules. Violations of Options 6B, Section 1 of these Rules regarding exercise of Options Contracts, allocation of exercise notices and delivery and payment of the underlying security.

 

 

 

FINE SCHEDULE

Individual

Firm

First Offense

$500

$1,000

Second Offense

$1,000

$2,500

Subsequent Offense

$2,500

$5,000

(f) Audit Trail Submissions and Record Keeping Requirements. Options 6E, Section 9, regarding the submission of audit trail information; and Options 6E, Sections 1-3 of these Rules regarding information to be recorded, retained and provided upon request by Nasdaq Regulation or other applicable regulatory entity.

 

 

 

FINE SCHEDULE

Audit Trail Information

Records Provisions

First Offense

$1,500

$2,000

Second Offense

$3,000

$4,000

Subsequent Offense

$5,000

$5,000

(g) Representation of Orders. Options 3, Section 22 of these Rules regarding Options Participants' restriction on execution of principal orders they represent as agent unless proper exposure parameters are applied.

 

 

FINE SCHEDULE

 

First Offense

$1,000

Second Offense

$2,500

Subsequent Offense

$5,000

(h) Trade Reporting. Options 6, Sections 1 and 2 of these Rules regarding all transactions effected on NOM shall be submitted for clearance to the Clearing Corporation, the Options Participants' obligation to give up the name of the Clearing Participants and the prompt reporting of any change in this identity to NOM.

 

 

FINE SCHEDULE

 

First Offense

$1,500

Second Offense

$3,000

Subsequent Offense

$5,000

(i) Locked and Cross Market Violations. Options 5, Section 3 of these Rules (Locked and Crossed Markets) regarding procedures to be followed in the instance of a Locked or a Crossed Market.

 

 

FINE SCHEDULE

 

First Offense

$500

Second Offense

$1,000

Subsequent Offense

$2,500

(j) Trade-Through Violations. Options 5, Section 2(a) of these Rules (Order Protection) regarding trade throughs.

 

 

FINE SCHEDULE

 

First Offense

$500

Second Offense

$1,000

Subsequent Offense

$2,500

(k) Failure to Timely File Amendments to Form U4, Form U5 and Form BD. Any member and/or participant organization that is required to file Form U4, Form U5 or Form BD pursuant to Section 1031 of the NOM Rules and the Securities and Exchange Act of 1934, and the rules promulgated thereunder, is required to amend the applicable Form U4, Form U5 or Form BD to keep such forms current at all times. Members and/or participant organizations shall amend Form U4, Form U5 and Form BD not later than thirty (30) days after the filer knew of or should have known of the need for the amendment.

 

 

FINE SCHEDULE (Implemented on a running 12 month period)

 

First Offense

$500

Second Offense

$1,000

Subsequent Offense

$2,000

Adopted Dec. 6, 2019 (SR-NASDAQ-2019-098); amended July 17, 2020 (SR-NASDAQ-2020-042).

Section 2. Suspension

(a) Imposition of Suspension. An Options Participant or person associated with an Options Participant that has been expelled or suspended from any SRO or barred or suspended from being associated with a Participant of any SRO, or an Options Participant that is in such financial or operating difficulty that Nasdaq Regulation determines that the Options Participant cannot be permitted to continue to do business as a Participant with safety to investors, creditors, other Options Participants, or NOM, may be summarily suspended. Nasdaq Regulation may limit or prohibit any person with respect to access to services offered by NOM if any of the criteria of the foregoing sentence is applicable to such person or, in the case of a person who is an Options Participant, if the Exchange determines that such person does not meet the qualification requirements or other prerequisites for such access with safety to investors, creditors, Options Participants or the Exchange.

(1) In the event a determination is made to take summary action pursuant to this Rule, notice thereof will be sent to the SEC. Any person aggrieved by any summary action taken under this Rule shall be promptly afforded an opportunity for a hearing by Nasdaq Regulation in accordance with the provisions of General 5, Section 2 of the Exchange. A summary suspension or other action taken pursuant to this Options 11 shall not be deemed to be disciplinary action under General 5, Section 2. The provisions of such General 5, Section 2 shall be applicable regardless of any action taken pursuant to Options 11.

(b) Investigation Following Suspension Violations. Every Options Participant or person associated with a Participant against which action has been taken in accordance with the Summary Suspension procedures of these Rules shall immediately afford every facility required by Nasdaq Regulation for the investigation of his or its affairs and shall forthwith file with the Secretary a written statement covering all information requested, including a complete list of creditors and the amount owing to each and a complete list of each open long and short position in NOM options contracts maintained by the Options Participant and each of his or its Customers. Paragraph (f) includes, without limitation, the furnishing of such books and records of the Options Participant or person associated with an Options Participant and the giving of such sworn testimony as may be requested by Nasdaq Regulation.

(c) Reinstatement Following Suspension

1. General

(A) An Options Participant, person associated with an Options Participant or other person suspended or limited or prohibited with respect to access to services offered by NOM under the Summary Suspension procedures of these Rules may apply for reinstatement within the time period set forth below.

(B) Notice of an application for reinstatement shall be given to the Secretary by the Participant and shall be posted by Nasdaq Regulation at least five (5) business days prior to the consideration by Nasdaq Regulation of said application.

(C) Nasdaq Regulation may approve an application for reinstatement if it finds that the applicant is operationally and financially able to conduct his business with safety to investors, creditors, Participants, and NOM.

(2) Suspension Due to Operating Difficulty.

(A) An applicant that, by reason of operating difficulty, has been suspended or limited or prohibited with respect to NOM services, must file any application for reinstatement within six (6) months from the date of such action. Such application must include a statement of all actions taken by the applicant to remedy the operational difficulty in question.

(B) If the applicant fails to receive reinstatement, or if the application is not acted upon ninety (90) days of its submission, the applicant shall be afforded an opportunity for a hearing in accordance with the provisions of General 5, Section 2.

(3) Suspension Due to Financial Difficulty.

(A) An applicant who, by reason of financial difficulty, has been suspended or limited or prohibited with respect to NOM services, must file any application for reinstatement within thirty (30) days of such action.

(B) Such application must include a list of all creditors of the applicant a statement of the amount originally owing and the nature of the settlement in each case, and such other information as may be requested by Nasdaq Regulation.

(C) The Participant status of an Options Participant summarily suspended by reason of financial difficulty may not be disposed of by Nasdaq Regulation until that Participant has been afforded an opportunity for a hearing respecting such summary suspension pursuant to the provisions of General 5, Section 2.

(d) Failure to Obtain Reinstatement. If an Options Participant suspended under the provisions of Options 11 fails or is unable to apply for reinstatement in accordance with Section 3 of Options 11 or fails to obtain reinstatement as therein provided, his or its Participant status shall be disposed of by Nasdaq Regulation in accordance with General 5, Section 2.

(e) Termination of Rights by Suspension. An Options Participant suspended under the provisions of this Options 11 shall be deprived during the term of his or its suspension of all rights and privileges of Participation.

(f) Contracts of Suspended Participants. When an Options Participant, other than a Clearing Participant, is suspended pursuant to Chapter X of these Rules (Summary Suspension), all open short positions of the suspended Options Participant in options contracts and all open positions resulting from exercise of options contracts, other than positions that are secured in full by a specific deposit or escrow deposit in accordance with the Rules of the Clearing Corporation, shall be closed without unnecessary delay by all Participants carrying such positions for the account of the suspended Participant; provided that Nasdaq Regulation may cause the foregoing requirement to be temporarily waived for such period as it may determine if it shall deem such temporary waiver to be in the interest of the public or the other Participants of NOM. No temporary waiver hereunder by Nasdaq Regulation shall relieve the suspended Options Participant of its obligations or of damages, nor shall it waive the close out requirements of any other Rules. When a Clearing Participant is suspended pursuant to Chapter X (Summary Suspension) of these Rules, the positions of such Clearing Participant shall be closed out in accordance with the Rules of the Clearing Corporation.

Adopted Dec. 6, 2019 (SR-NASDAQ-2019-098).

 
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