Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Harmonize Rules 10.9261 and 10.9830 With Recent Changes by the Financial Industry Regulatory Authority, Inc., 64186-64189 [2020-22376]
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64186
Federal Register / Vol. 85, No. 197 / Friday, October 9, 2020 / Notices
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
NSCC has not received or solicited
any written comments relating to this
proposal. NSCC will notify the
Commission of any written comments it
receives.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 22 and paragraph (f) of Rule
19b–4 thereunder.23 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.
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NSCC–2020–017 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–NSCC–2020–017. 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 (https://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 NSCC and on DTCC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or 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–NSCC–
2020–017 and should be submitted on
or before October 30, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–22379 Filed 10–8–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90088; File No. SR–
NYSEARCA–2020–85]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Harmonize Rules
10.9261 and 10.9830 With Recent
Changes by the Financial Industry
Regulatory Authority, Inc.
October 5, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on
September 23, 2020, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
24 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
22 15
23 17
U.S.C 78s(b)(3)(A).
CFR 240.19b–4(f).
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to harmonize
Rules 10.9261 and 10.9830 with recent
changes by the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
that temporarily grants the Chief or
Deputy Chief Hearing Officer the
authority to order that hearings be
conducted by video conference if
warranted by public health risks posed
by in-person hearings during the
ongoing novel coronavirus (‘‘COVID–
19’’) pandemic. As proposed, these
temporary amendments would be in
effect through December 31, 2020. The
proposed rule change is available on the
Exchange’s website at www.nyse.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
self-regulatory organization 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 those 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 parts 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 proposes to harmonize
Rules 10.9261 (Evidence and Procedure
in Hearing) and 10.9830 (Hearing) with
recent changes by FINRA to its Rules
9261 and 9830 that temporarily grants to
the Chief or Deputy Chief Hearing
Officer the authority to order that
hearings be conducted by video
conference if warranted by public health
risks posed by in-person hearings
during the ongoing COVID–19
pandemic. As proposed, these
temporary amendments would be in
effect through December 31, 2020.4
4 The Exchange may submit a separate rule filing
to extend the expiration date of the proposed
temporary amendments if the Exchange requires
temporary relief from the rule requirements
identified in this proposal beyond December 31,
2020. The amended NYSE Arca rules will revert
back to their current state at the conclusion of the
temporary relief period and any extension thereof.
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Federal Register / Vol. 85, No. 197 / Friday, October 9, 2020 / Notices
Background
In 2019, NYSE Arca adopted
disciplinary rules based on the text of
the Rule 8000 and Rule 9000 Series of
its affiliate NYSE American LLC
(‘‘NYSE American’’), with certain
changes. The NYSE American
disciplinary rules are, in turn,
substantially the same as the Rule 8000
Series and Rule 9000 Series of FINRA
and the New York Stock Exchange
LLC.5 The NYSE Arca disciplinary rules
were implemented on May 27, 2019.6
In adopting disciplinary rules
modeled on FINRA’s rules, NYSE Arca
adopted the hearing and evidentiary
processes set forth in Rule 10.9261 and
in Rule 10.9830 for hearings in matters
involving temporary and permanent
cease and desist orders under the Rule
9800 Series. As adopted, the text of Rule
10.9261 and Rule 10.9830 are
substantially the same as the FINRA
rules with certain modifications.7
In view of the ongoing spread of
COVID–19 and its effect on FINRA’s
adjudicatory functions nationwide,
FINRA recently filed a temporary rule
change to grant FINRA’s Office of
Hearing Officers (‘‘OHO’’) and the
National Adjudicatory Council (‘‘NAC’’)
the authority to conduct certain
hearings by video conference, if
warranted by the current COVID–19related public health risks posed by inperson hearings. Among the rules
FINRA amended were Rules 9261 and
9830.8
FINRA represented in its filing that its
protocol for conducting hearings by
video conference would ensure that
such hearings maintain fair process for
the parties by, among other things,
5 See Securities Exchange Act Release Nos. 85639
(April 12, 2019), 85 FR 16346 (April 18, 2019) (SR–
NYSEARCA–2019–15) (‘‘2019 Notice’’).
6 See NYSE Arca Equities RB–19–060 & NYSE
Arca Options RB–19–02 (April 26, 2019).
7 See 2019 Notice, 84 FR at 16365 & 16373–4.
8 See Securities Exchange Act Release Nos. 83289
(September 2, 2020), 85 FR 55712 (September 9,
2020) (SR–FINRA–2020–027) (‘‘FINRA Filing’’).
FINRA also proposed to temporarily amend FINRA
Rules 1015 and 9524. FINRA Rule 1015 governs the
process by which an applicant for new or
continuing membership can appeal a decision
rendered by FINRA’s Department of Member
Supervision under FINRA Rule 1014 or 1017 and
request a hearing which would be conducted by a
subcommittee of the NAC. See id. at 55714. The
Exchange has not adopted FINRA Rule 1015.
FINRA Rule 9524 governs the process by which a
statutorily disqualified member firm or associated
person can appeal the Department’s
recommendation to deny a firm or sponsoring firm’s
application to the NAC. See id. Under the
Exchange’s version of Rule 10.9524, if the Chief
Regulatory Officer rejects the application, the ETP
Holder, OTP Holder or OTP Firm, or applicant may
request a review by the Exchange Board of
Directors. This differs from FINRA’s process, which
provides for a hearing before the NAC and further
consideration by the FINRA Board of Directors.
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FINRA’s use of a high quality, secure
and user-friendly video conferencing
service and provide thorough
instructions, training and technical
support to all hearing participants.9
According to FINRA, the proposed
changes were a reasonable interim
solution to allow FINRA’s critical
adjudicatory processes to continue to
function while protecting the health and
safety of hearing participants as FINRA
works towards resuming in-person
hearings in a manner that is compliant
with the current guidance of public
health authorities.10
Pursuant to a regulatory services
agreement (‘‘RSA’’), FINRA’s OHO will
administer all aspects of adjudications,
including assigning hearing officers to
serve as NYSE Arca hearing officers. A
hearing officer from OHO will, among
other things, preside over the
disciplinary hearing, select and chair
the hearing panel, and prepare and issue
written decisions. The Chief or Deputy
Hearing Officer for all Exchange
disciplinary hearings are currently
drawn from OHO and are all FINRA
employees. The Exchange believes that
OHO will utilize the same video
conference protocol and processes for
Exchange matters under the RSA as it
proposes for FINRA matters.
Given that FINRA and its OHO
administers disciplinary hearings on the
Exchange’s behalf, and given that the
public health concerns addressed by
FINRA’s amendments apply equally to
the Exchange’s disciplinary hearings,
the Exchange proposes to temporarily
amend its disciplinary rules to allow
FINRA to conduct virtual hearings on its
behalf.
Proposed Rule Change
Rule 10.9261(b) states that if a
disciplinary hearing is held, a party
shall be entitled to be heard in-person,
by counsel, or by the party’s
representative. Absent an agreement by
all parties to proceed in another
manner, Exchange disciplinary hearings
are in-person. As noted, the Chief and
Deputy Hearing Officers for all
Exchange and cross-market matters are
supplied by OHO and are FINRA
employees. Accordingly, absent an
agreement by all parties to proceed in
another manner, under Rule 10.9261(b)
the Chief or Deputy Hearing Officer
conducts disciplinary hearings inperson.
Similarly, Rule 10.9830 outlines the
requirements for hearings for temporary
and permanent cease and desist orders.
Rule 10.9830(a), however, does not
9 See
FINRA Filing, 85 FR at 55713.
id.
10 See
PO 00000
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64187
specify that a party shall be entitled to
be heard in-person, by counsel, or by
the party’s representative.
Consistent with FINRA’s temporary
amendment to FINRA Rules 9261 and
9830, the Exchange proposes to
temporarily grant the Chief or Deputy
Chief Hearing Officer temporary
authority to order, upon consideration
of the current COVID–19-related public
health risks presented by an in-person
hearing, that a hearing under those rules
be conducted by video conference. The
proposed rule change will permit OHO
to make an assessment, based on critical
COVID–19 data and criteria and the
guidance of health and security
consultants, whether an in-person
hearing would compromise the health
and safety of the hearing participants
such that the hearing should proceed by
video conference. As noted, FINRA has
adopted a detailed and thorough
protocol to ensure that hearings
conducted by video conference will
maintain fair process for the parties.11
The Exchange believes that this is a
reasonable procedure to follow in
hearings under Rules 10.9261 and
10.9830 chaired by a FINRA
employee.12
To effectuate these changes, the
Exchange proposes to add the following
sentence to Rule 10.9261(b):
Upon consideration of the current public
health risks presented by an in-person
hearing, the Chief Hearing Officer or Deputy
Chief Hearing Officer may, on a temporary
basis, determine that the hearing shall be
conducted, in whole or in part, by video
conference.
The proposed text is identical to the
language adopted by FINRA.13
Similarly, the Exchange proposes to
add the following text to Rule
10.9830(a):
Upon consideration of the current public
health risks presented by an in-person
hearing, the Chief Hearing Officer or Deputy
Chief Hearing Officer may, on a temporary
basis, determine that the hearing shall be
conducted, in whole or in part, by video
conference.
Once again, the proposed language is
identical to the language adopted by
FINRA.14
11 See
FINRA Filing, 85 FR at 55713.
Exchange notes, as did FINRA, that SEC’s
Rules of Practice pertaining to temporary cease-anddesist orders provide that parties and witnesses
may participate by telephone or, in the
Commission’s discretion, through the use of
alternative technologies that allow remote access,
such as a video link. See SEC Rule of Practice
511(d)(3); Comment (d); see FINRA Filing, 85 FR at
55714, n. 21.
13 See FINRA Filing, 85 FR at 55712.
14 Id.
12 The
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Federal Register / Vol. 85, No. 197 / Friday, October 9, 2020 / Notices
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the
Act,15 in general, and furthers the
objectives of Section 6(b)(5),16 in
particular, because it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, 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. Additionally, the
Exchange believes the proposed rule
change is designed to provide a fair
procedure for the disciplining of
members and persons associated with
members, consistent with Sections
6(b)(7) and 6(d) of the Act.17
The Exchange believes that the
proposed rule change supports the
objectives of the Act by providing
greater harmonization between
Exchange rules and FINRA rules of
similar purpose, resulting in less
burdensome and more efficient
regulatory compliance. As previously
noted, the text of Rule 10.9261 and Rule
10.9830 are substantially the same as
FINRA’s rule. As such, the proposed
rule change will foster cooperation and
coordination with persons engaged in
facilitating transactions in securities and
will remove impediments to and perfect
the mechanism of a free and open
market and a national market system.
The Exchange believes that the
proposed temporary rule change will
permit the Exchange to effectively
conduct hearings during the COVID–19
pandemic in situations where in-person
hearings present likely public health
risks. The ability to conduct hearings by
video conference will thereby permit
the adjudicatory functions of the
Exchange’s disciplinary rules to
continue unabated, thereby avoiding
protracted delays. The Exchange
believes that this is especially important
in matters where temporary and
permanent cease and desist orders are
sought because the proposed rule
change would enable those hearings to
proceed without delay, thereby enabling
the Exchange to take immediate action
to stop significant, ongoing customer
harm, to the benefit of the investing
public.
Conducting hearings via video
conference will give the parties and
adjudicators simultaneous visual and
oral communication without the risks
inherent in physical proximity during a
pandemic. Temporarily permitting
hearings for disciplinary matters to
proceed by video conference maintains
fair process by providing respondents a
timely opportunity to address and
potentially resolve any allegations of
misconduct.
As noted, FINRA will use a high
quality, secure video conferencing
technology with features that will allow
the parties to reasonably approximate
those tasks that are typically performed
at an in-person hearing, such as sharing
documents, marking documents, and
utilizing breakout rooms. FINRA will
also provide training for participants on
how to use the video conferencing
platform and detailed guidance on the
procedures that will govern such
hearings. Moreover, the Chief or Deputy
Chief Hearing Officer may take into
consideration, among other things, a
hearing participant’s access to
connectivity and technology in
scheduling a video conference hearing
and can also, at their discretion, allow
a party or witness to participate by
telephone, if necessary, to address such
access issues.18
For the same reasons, the Exchange
believes that the proposed rule change
is designed to provide a fair procedure
for the disciplining of members and
persons associated with members,
consistent with Sections 6(b)(7) and 6(d)
of the Act.19 The Exchange believes that
the temporary proposed rule change
strikes an appropriate balance between
providing fair process and enabling the
Exchange to fulfill its statutory
obligations to protect investors and
maintain fair and orderly markets while
accounting for the significant health and
safety risks of in-person hearings
stemming from the outbreak of COVID–
19.
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 that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change is not intended to
address competitive issues but is rather
intended solely to provide temporary
relief given the impacts of the COVID–
19 pandemic. In its filing, FINRA
provides an abbreviated economic
impact assessment maintaining that the
changes are necessary to temporarily
rebalance the attendant benefits and
costs of the obligations under FINRA
U.S.C. 78f(b).
16 15 U.S.C. 78f(b)(5).
17 15 U.S.C. 78f(b)(7) and 78f(d).
17:26 Oct 08, 2020
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 21 and Rule
19b–4(f)(6) thereunder.22 Because the
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
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
At any time within 60 days of the
filing of such 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
under Section 19(b)(2)(B) 23 of the Act to
determine whether the proposed rule
change 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:
20 FINRA
Filing, 85 FR at 55716.
U.S.C. 78s(b)(3)(A)(iii).
22 17 CFR 240.19b–4(f)(6).
23 15 U.S.C. 78s(b)(2)(B).
21 15
15 15
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Rules 1015, 9261, 9524 and 9830 in
response to the impacts of the COVID–
19 pandemic that is equally applicable
to the changes the Exchange proposes.20
The Exchange accordingly incorporates
FINRA’s abbreviated economic impact
assessment by reference.
18 See
19 15
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text accompanying notes 9–10, supra.
U.S.C. 78f(b)(7) and 78f(d).
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Federal Register / Vol. 85, No. 197 / Friday, October 9, 2020 / Notices
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEARCA–2020–85 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–NYSEARCA–2020–85. 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 (https://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, on business days
between the hours of 10:00 a.m. and
3:00 p.m., located at 100 F Street NE,
Washington, DC 20549. Copies of such
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 redact or 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–NYSEARCA–2020–85 and
should be submitted on or before
October 30, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–22376 Filed 10–8–20; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90093; File No. SR–CBOE–
2020–088]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating To Update Its
Fees Schedule in Connection With the
Exchange’s Plans To List and Trade
Options on the S&P 500 ESG Index
(‘‘SPESG’’)
October 5, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 23, 2020, Cboe Exchange,
Inc. (the ‘‘Exchange’’ or ‘‘Cboe
Options’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to update
its Fees Schedule in connection with
the Exchange’s plans to list and trade
options on the S&P 500 ESG Index
(‘‘SPESG’’). The text of the proposed
rule change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
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.
BILLING CODE 8011–01–P
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24 17
CFR 200.30–3(a)(12).
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fees Schedule in connection with its
plans to list and trade SPESG, effective
September 21, 2020.3
By way of background, the S&P 500
ESG Index is a broad-based, marketcapitalization-weighted index that is
designed to measure the performance of
securities meeting sustainability criteria,
while maintaining similar overall
industry group weights as the S&P 500.
Each constituent of a S&P 500 ESG
Index is a constituent of the S&P 500
Index. S&P Dow Jones Indices’ (‘‘S&P
DJI’’) assigns constituents to a S&P 500
ESG Index based on S&P DJI ESG Scores
and other environmental, social and
governance (‘‘ESG’’) data to select
companies, targeting 75% of the market
capitalization of each global industry
classification standard (‘‘GICS’’)
industry group within the S&P 500.
Because of the relation between the S&P
500 ESG Index and the S&P 500, which
will likely result in market participants’
investment and hedging strategies
consisting of options over both, the
Exchange will allow the same monthly
expirations, settlement and exercise
style, Market-Maker appointment
weights, as the other options on the S&P
500 (‘‘SPX’’).4 The Exchange now
proposes to amend its Fees Schedule to
accommodate the planned listing and
trading of SPESG. The proposed
changes amend the Fees Schedule so
that the majority of the existing
transactions fees and programs currently
applicable to trading in SPX will also
apply to trading in SPESG.
The proposed rule change adds
SPESG to the list of products in
Underlying Symbol List A in footnote
34 of the Fees Schedule, which
currently includes SPX (and SPX
Weeklys (‘‘SPXW’’)). Underlying
Symbol List A represents a specific set
of proprietary products 5 that are
collectively included or excluded from
a variety of programs, qualification
calculations and transaction fees as a
3 The Exchange initially filed the proposed fee
changes on September 18, 2020 (SR–CBOE–2020–
087). On September 23, 2020, the Exchange
withdrew that filing and submitted this filing.
4 See Securities Exchange Release No. 89749
(September 2, 2020), 85 FR 55723 (September 9,
2020) (SR–CBOE–2020–080), which amends certain
Exchange Rules in connection with the Exchange’s
plans to list and trade S&P 500 ESG Index options.
5 See Cboe Options Fees Schedule, Footnote 34,
Underlying Symbol List A currently includes: OEX,
XEO, RUT, RLG, RLV, RUI, UKXM, SPX (includes
SPXW) and VIX.
E:\FR\FM\09OCN1.SGM
09OCN1
]]>Agencies
[Federal Register Volume 85, Number 197 (Friday, October 9, 2020)]
[Notices]
[Pages 64186-64189]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22376]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90088; File No. SR-NYSEARCA-2020-85]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Harmonize Rules
10.9261 and 10.9830 With Recent Changes by the Financial Industry
Regulatory Authority, Inc.
October 5, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on September 23, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 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 harmonize Rules 10.9261 and 10.9830 with
recent changes by the Financial Industry Regulatory Authority, Inc.
(``FINRA'') that temporarily grants the Chief or Deputy Chief Hearing
Officer the authority to order that hearings be conducted by video
conference if warranted by public health risks posed by in-person
hearings during the ongoing novel coronavirus (``COVID-19'') pandemic.
As proposed, these temporary amendments would be in effect through
December 31, 2020. The proposed rule change is available on the
Exchange's website at www.nyse.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 self-regulatory organization
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 those 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 parts 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 proposes to harmonize Rules 10.9261 (Evidence and
Procedure in Hearing) and 10.9830 (Hearing) with recent changes by
FINRA to its Rules 9261 and 9830 that temporarily grants to the Chief
or Deputy Chief Hearing Officer the authority to order that hearings be
conducted by video conference if warranted by public health risks posed
by in-person hearings during the ongoing COVID-19 pandemic. As
proposed, these temporary amendments would be in effect through
December 31, 2020.\4\
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\4\ The Exchange may submit a separate rule filing to extend the
expiration date of the proposed temporary amendments if the Exchange
requires temporary relief from the rule requirements identified in
this proposal beyond December 31, 2020. The amended NYSE Arca rules
will revert back to their current state at the conclusion of the
temporary relief period and any extension thereof.
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[[Page 64187]]
Background
In 2019, NYSE Arca adopted disciplinary rules based on the text of
the Rule 8000 and Rule 9000 Series of its affiliate NYSE American LLC
(``NYSE American''), with certain changes. The NYSE American
disciplinary rules are, in turn, substantially the same as the Rule
8000 Series and Rule 9000 Series of FINRA and the New York Stock
Exchange LLC.\5\ The NYSE Arca disciplinary rules were implemented on
May 27, 2019.\6\
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\5\ See Securities Exchange Act Release Nos. 85639 (April 12,
2019), 85 FR 16346 (April 18, 2019) (SR-NYSEARCA-2019-15) (``2019
Notice'').
\6\ See NYSE Arca Equities RB-19-060 & NYSE Arca Options RB-19-
02 (April 26, 2019).
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In adopting disciplinary rules modeled on FINRA's rules, NYSE Arca
adopted the hearing and evidentiary processes set forth in Rule 10.9261
and in Rule 10.9830 for hearings in matters involving temporary and
permanent cease and desist orders under the Rule 9800 Series. As
adopted, the text of Rule 10.9261 and Rule 10.9830 are substantially
the same as the FINRA rules with certain modifications.\7\
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\7\ See 2019 Notice, 84 FR at 16365 & 16373-4.
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In view of the ongoing spread of COVID-19 and its effect on FINRA's
adjudicatory functions nationwide, FINRA recently filed a temporary
rule change to grant FINRA's Office of Hearing Officers (``OHO'') and
the National Adjudicatory Council (``NAC'') the authority to conduct
certain hearings by video conference, if warranted by the current
COVID-19-related public health risks posed by in-person hearings. Among
the rules FINRA amended were Rules 9261 and 9830.\8\
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\8\ See Securities Exchange Act Release Nos. 83289 (September 2,
2020), 85 FR 55712 (September 9, 2020) (SR-FINRA-2020-027) (``FINRA
Filing''). FINRA also proposed to temporarily amend FINRA Rules 1015
and 9524. FINRA Rule 1015 governs the process by which an applicant
for new or continuing membership can appeal a decision rendered by
FINRA's Department of Member Supervision under FINRA Rule 1014 or
1017 and request a hearing which would be conducted by a
subcommittee of the NAC. See id. at 55714. The Exchange has not
adopted FINRA Rule 1015. FINRA Rule 9524 governs the process by
which a statutorily disqualified member firm or associated person
can appeal the Department's recommendation to deny a firm or
sponsoring firm's application to the NAC. See id. Under the
Exchange's version of Rule 10.9524, if the Chief Regulatory Officer
rejects the application, the ETP Holder, OTP Holder or OTP Firm, or
applicant may request a review by the Exchange Board of Directors.
This differs from FINRA's process, which provides for a hearing
before the NAC and further consideration by the FINRA Board of
Directors.
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FINRA represented in its filing that its protocol for conducting
hearings by video conference would ensure that such hearings maintain
fair process for the parties by, among other things, FINRA's use of a
high quality, secure and user-friendly video conferencing service and
provide thorough instructions, training and technical support to all
hearing participants.\9\ According to FINRA, the proposed changes were
a reasonable interim solution to allow FINRA's critical adjudicatory
processes to continue to function while protecting the health and
safety of hearing participants as FINRA works towards resuming in-
person hearings in a manner that is compliant with the current guidance
of public health authorities.\10\
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\9\ See FINRA Filing, 85 FR at 55713.
\10\ See id.
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Pursuant to a regulatory services agreement (``RSA''), FINRA's OHO
will administer all aspects of adjudications, including assigning
hearing officers to serve as NYSE Arca hearing officers. A hearing
officer from OHO will, among other things, preside over the
disciplinary hearing, select and chair the hearing panel, and prepare
and issue written decisions. The Chief or Deputy Hearing Officer for
all Exchange disciplinary hearings are currently drawn from OHO and are
all FINRA employees. The Exchange believes that OHO will utilize the
same video conference protocol and processes for Exchange matters under
the RSA as it proposes for FINRA matters.
Given that FINRA and its OHO administers disciplinary hearings on
the Exchange's behalf, and given that the public health concerns
addressed by FINRA's amendments apply equally to the Exchange's
disciplinary hearings, the Exchange proposes to temporarily amend its
disciplinary rules to allow FINRA to conduct virtual hearings on its
behalf.
Proposed Rule Change
Rule 10.9261(b) states that if a disciplinary hearing is held, a
party shall be entitled to be heard in-person, by counsel, or by the
party's representative. Absent an agreement by all parties to proceed
in another manner, Exchange disciplinary hearings are in-person. As
noted, the Chief and Deputy Hearing Officers for all Exchange and
cross-market matters are supplied by OHO and are FINRA employees.
Accordingly, absent an agreement by all parties to proceed in another
manner, under Rule 10.9261(b) the Chief or Deputy Hearing Officer
conducts disciplinary hearings in-person.
Similarly, Rule 10.9830 outlines the requirements for hearings for
temporary and permanent cease and desist orders. Rule 10.9830(a),
however, does not specify that a party shall be entitled to be heard
in-person, by counsel, or by the party's representative.
Consistent with FINRA's temporary amendment to FINRA Rules 9261 and
9830, the Exchange proposes to temporarily grant the Chief or Deputy
Chief Hearing Officer temporary authority to order, upon consideration
of the current COVID-19-related public health risks presented by an in-
person hearing, that a hearing under those rules be conducted by video
conference. The proposed rule change will permit OHO to make an
assessment, based on critical COVID-19 data and criteria and the
guidance of health and security consultants, whether an in-person
hearing would compromise the health and safety of the hearing
participants such that the hearing should proceed by video conference.
As noted, FINRA has adopted a detailed and thorough protocol to ensure
that hearings conducted by video conference will maintain fair process
for the parties.\11\ The Exchange believes that this is a reasonable
procedure to follow in hearings under Rules 10.9261 and 10.9830 chaired
by a FINRA employee.\12\
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\11\ See FINRA Filing, 85 FR at 55713.
\12\ The Exchange notes, as did FINRA, that SEC's Rules of
Practice pertaining to temporary cease-and-desist orders provide
that parties and witnesses may participate by telephone or, in the
Commission's discretion, through the use of alternative technologies
that allow remote access, such as a video link. See SEC Rule of
Practice 511(d)(3); Comment (d); see FINRA Filing, 85 FR at 55714,
n. 21.
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To effectuate these changes, the Exchange proposes to add the
following sentence to Rule 10.9261(b):
Upon consideration of the current public health risks presented
by an in-person hearing, the Chief Hearing Officer or Deputy Chief
Hearing Officer may, on a temporary basis, determine that the
hearing shall be conducted, in whole or in part, by video
conference.
The proposed text is identical to the language adopted by
FINRA.\13\
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\13\ See FINRA Filing, 85 FR at 55712.
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Similarly, the Exchange proposes to add the following text to Rule
10.9830(a):
Upon consideration of the current public health risks presented
by an in-person hearing, the Chief Hearing Officer or Deputy Chief
Hearing Officer may, on a temporary basis, determine that the
hearing shall be conducted, in whole or in part, by video
conference.
Once again, the proposed language is identical to the language
adopted by FINRA.\14\
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\14\ Id.
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[[Page 64188]]
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\15\ in general, and furthers the objectives of Section
6(b)(5),\16\ in particular, because it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, 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. Additionally, the Exchange believes
the proposed rule change is designed to provide a fair procedure for
the disciplining of members and persons associated with members,
consistent with Sections 6(b)(7) and 6(d) of the Act.\17\
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
\17\ 15 U.S.C. 78f(b)(7) and 78f(d).
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The Exchange believes that the proposed rule change supports the
objectives of the Act by providing greater harmonization between
Exchange rules and FINRA rules of similar purpose, resulting in less
burdensome and more efficient regulatory compliance. As previously
noted, the text of Rule 10.9261 and Rule 10.9830 are substantially the
same as FINRA's rule. As such, the proposed rule change will foster
cooperation and coordination with persons engaged in facilitating
transactions in securities and will remove impediments to and perfect
the mechanism of a free and open market and a national market system.
The Exchange believes that the proposed temporary rule change will
permit the Exchange to effectively conduct hearings during the COVID-19
pandemic in situations where in-person hearings present likely public
health risks. The ability to conduct hearings by video conference will
thereby permit the adjudicatory functions of the Exchange's
disciplinary rules to continue unabated, thereby avoiding protracted
delays. The Exchange believes that this is especially important in
matters where temporary and permanent cease and desist orders are
sought because the proposed rule change would enable those hearings to
proceed without delay, thereby enabling the Exchange to take immediate
action to stop significant, ongoing customer harm, to the benefit of
the investing public.
Conducting hearings via video conference will give the parties and
adjudicators simultaneous visual and oral communication without the
risks inherent in physical proximity during a pandemic. Temporarily
permitting hearings for disciplinary matters to proceed by video
conference maintains fair process by providing respondents a timely
opportunity to address and potentially resolve any allegations of
misconduct.
As noted, FINRA will use a high quality, secure video conferencing
technology with features that will allow the parties to reasonably
approximate those tasks that are typically performed at an in-person
hearing, such as sharing documents, marking documents, and utilizing
breakout rooms. FINRA will also provide training for participants on
how to use the video conferencing platform and detailed guidance on the
procedures that will govern such hearings. Moreover, the Chief or
Deputy Chief Hearing Officer may take into consideration, among other
things, a hearing participant's access to connectivity and technology
in scheduling a video conference hearing and can also, at their
discretion, allow a party or witness to participate by telephone, if
necessary, to address such access issues.\18\
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\18\ See text accompanying notes 9-10, supra.
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For the same reasons, the Exchange believes that the proposed rule
change is designed to provide a fair procedure for the disciplining of
members and persons associated with members, consistent with Sections
6(b)(7) and 6(d) of the Act.\19\ The Exchange believes that the
temporary proposed rule change strikes an appropriate balance between
providing fair process and enabling the Exchange to fulfill its
statutory obligations to protect investors and maintain fair and
orderly markets while accounting for the significant health and safety
risks of in-person hearings stemming from the outbreak of COVID-19.
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\19\ 15 U.S.C. 78f(b)(7) and 78f(d).
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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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not intended to address competitive issues but is rather intended
solely to provide temporary relief given the impacts of the COVID-19
pandemic. In its filing, FINRA provides an abbreviated economic impact
assessment maintaining that the changes are necessary to temporarily
rebalance the attendant benefits and costs of the obligations under
FINRA Rules 1015, 9261, 9524 and 9830 in response to the impacts of the
COVID-19 pandemic that is equally applicable to the changes the
Exchange proposes.\20\ The Exchange accordingly incorporates FINRA's
abbreviated economic impact assessment by reference.
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\20\ FINRA Filing, 85 FR at 55716.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \21\ and Rule 19b-4(f)(6) thereunder.\22\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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\21\ 15 U.S.C. 78s(b)(3)(A)(iii).
\22\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \23\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\23\ 15 U.S.C. 78s(b)(2)(B).
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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:
[[Page 64189]]
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEARCA-2020-85 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-NYSEARCA-2020-85. 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 (https://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, on business days between the
hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE,
Washington, DC 20549. Copies of such 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 redact or 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-NYSEARCA-2020-85 and should
be submitted on or before October 30, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22376 Filed 10-8-20; 8:45 am]
BILLING CODE 8011-01-P
