Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Temporary Interpretation and Policy .10 Under NYSE Chicago Article 6, Rule 13, 64556-64559 [2020-22633]
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Federal Register / Vol. 85, No. 198 / Tuesday, October 13, 2020 / Notices
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 LCH SA and on LCH SA’s
website at: https://www.lch.com/
resources/rules-and-regulations/
proposed-rule-changes-0. 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–LCH SA–2020–005 and
should be submitted on or before
November 3, 2020.
CONTACT PERSON FOR MORE INFORMATION:
For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
J. Matthew DeLesDernier,
Assistant Secretary.
Dated: October 7, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020–22474 Filed 10–9–20; 8:45 am]
[FR Doc. 2020–22617 Filed 10–8–20; 11:15 am]
BILLING CODE 8011–01–P
BILLING CODE 8011–01–P
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COMMISSION
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COMMISSION
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more of the exemptions set forth in 5
TIME AND DATE:
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[Release No. 34–90114; File No. SR–
NYSECHX–2020–28]
Self-Regulatory Organizations; NYSE
Chicago, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Adopt Temporary
Interpretation and Policy .10 Under
NYSE Chicago Article 6, Rule 13
October 7, 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 25, 2020, NYSE Chicago, Inc.
(‘‘NYSE Chicago’’ or the ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II 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.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
14 17
CFR 200.30–3(a)(12).
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes a rule change
to adopt temporary Interpretation and
Policy .10 (Temporary Extension of the
Limited Period for Registered Persons to
Function as Principals) under NYSE
Chicago Article 6, Rule 13 (Registration
Requirements) applicable to
Participants. 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 adopt
temporary Interpretation and Policy .10
(Temporary Extension of the Limited
Period for Registered Persons to
Function as Principals) under NYSE
Chicago Article 6, Rule 13 (Registration
Requirements) applicable to
Participants.4 The proposed rule change
would extend the 120-day period that
certain individuals can function as a
principal without having successfully
passed an appropriate qualification
examination through December 31,
2020,5 and would apply only to those
individuals who were designated to
function as a principal prior to
September 3, 2020. This proposed rule
change is based on a filing recently
4 The term ‘‘Participant’’ means any Participant
Firm that holds a valid Trading Permit and any
person associated with a Participant Firm who is
registered with the Exchange. A Participant shall be
considered a ‘‘member’’ of the Exchange for
purposes of the Exchange Act. See Article 1, Rule
1(s).
5 If NYSE Chicago seeks to provide additional
temporary relief from the rule requirements
identified in this proposed rule change beyond
December 31, 2020, NYSE Chicago will submit a
separate rule filing to further extend the temporary
extension of time.
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submitted by the Financial Regulatory
Authority, Inc. (‘‘FINRA’’) 6 and is
intended to harmonize the Exchange’s
registration rules with those of FINRA
so as to promote uniform standards
across the securities industry.
In response to COVID–19, earlier this
year FINRA began providing temporary
relief by way of frequently asked
questions (‘‘FAQs’’) 7 to address
disruptions to the administration of
FINRA qualification examinations
caused by the pandemic that have
significantly limited the ability of
individuals to sit for examinations due
to Prometric test center capacity issues.8
FINRA published the first FAQ on
March 20, 2020, providing that
individuals who were designated to
function as principals under FINRA
Rule 1210.04 9 prior to February 2, 2020,
would be given until May 31, 2020, to
pass the appropriate principal
qualification examination.10 On May 19,
2020, FINRA extended the relief to pass
the appropriate examination until June
30, 2020. Most recently, on June 29,
2020, FINRA again extended the
temporary relief providing that
individuals who were designated to
function as principals under FINRA
Rule 1210.04 prior to May 4, 2020,
would be given until August 31, 2020,
to pass the appropriate principal
qualification examination.
One of the impacts of COVID–19
continues to be serious interruptions in
the administration of FINRA
qualification examinations at Prometric
test centers and the limited ability of
6 See Securities Exchange Act Release No. 89732
(September 1, 2020), 85 FR 55535 (September 8,
2020) (SR–FINRA–2020–026) (the ‘‘FINRA Filing’’).
The Exchange notes that the FINRA Filing also
provides temporary relief to individuals registered
with FINRA as Operations Professionals under
FINRA Rule 1220. The Exchange does not have a
registration category for Operations Professionals
and therefore, the Exchange is not proposing to
adopt that aspect of the FINRA Filing.
7 See https://www.finra.org/rules-guidance/keytopics/covid-19/faq#qe.
8 At the outset of the COVID–19 pandemic, all
FINRA qualification examinations were
administered at test centers operated by Prometric.
Based on the health and welfare concerns resulting
from COVID–19, in March Prometric closed all of
its test centers in the United States and Canada and
began to slowly reopen some of them at limited
capacity in May. At this time, not all of these
Prometric test centers have reopened at full
capacity.
9 Interpretation and Policy .03 under NYSE
Chicago Article 6, Rule 13 is the corresponding rule
to FINRA Rule 1210.04.
10 FINRA Rule 1210.04 (Requirements for
Registered Persons Functioning as Principals for a
Limited Period) allows a member firm to designate
certain individuals to function in a principal
capacity for 120 calendar days before having to pass
an appropriate principal qualification examination.
Interpretation and Policy .03 under NYSE Chicago
Article 6, Rule 13 provides the same allowance to
Participants.
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individuals to sit for the examinations.11
Although Prometric has begun
reopening test centers, Prometric’s
safety practices mean that currently not
all test centers are open, some of the
open test centers are at limited capacity,
and some open test centers are
delivering only certain examinations
that have been deemed essential by the
local government.12 Furthermore,
Prometric has had to close some
reopened test centers due to incidents of
COVID–19 cases. The initial nationwide
closure in March along with the
inability to fully reopen all Prometric
test centers due to COVID–19 have led
to a significant backlog of individuals
who are waiting to sit for FINRA
examinations.13
In addition, firms are continuing to
experience operational challenges with
much of their personnel working from
home due to shelter-in-place orders,
restrictions on businesses and social
activity imposed in various states, and
adherence to other social distancing
guidelines consistent with the
recommendations of public health
officials.14 As a result, firms continue to
face potentially significant disruptions
to their normal business operations that
may include a limitation of in-person
activities and staff absenteeism as a
result of the health and welfare
concerns stemming from COVID–19.
Such potential disruptions may be
further exacerbated and may even affect
client services if firms cannot continue
to keep principal positions filled as they
may have difficulty finding other
qualified individuals to transition into
these roles or may need to reallocate
employee time and resources away from
other critical responsibilities at the firm.
These ongoing, extenuating
circumstances make it impracticable for
Participants to ensure that the
individuals whom they have designated
to function in a principal capacity, as
set forth in Interpretation and Policy .03
under Article 6, Rule 13, are able to
successfully sit for and pass an
appropriate qualification examination
within the 120-calendar day period
11 Information about the continued impact of
COVID–19 on FINRA-administered examinations is
available at https://www.finra.org/rules-guidance/
keytopics/covid-19/exams.
12 Information from Prometric about its safety
practices and the impact of COVID–19 on its
operations is available at https://
www.prometric.com/corona-virus-update. See also
supra note 11.
13 Although an online test delivery service has
been launched to help address the backlog, the
General Securities Principal Examination (Series
24) is not available online. See supra note 11.
14 See, e.g., Centers for Disease Control and
Prevention, How to Protect Yourself & Others,
https://www.cdc.gov/coronavirus/2019-ncov/
prevent-gettingsick/prevention.html.
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64557
required under the rule, or to find other
qualified staff to fill this position. The
ongoing circumstances also require
individuals to be exposed to the health
risks associated with taking an inperson examination, because the
General Securities Principal
examination is not available online.
Therefore, NYSE Chicago is proposing
to continue the temporary relief
provided through the FINRA FAQs by
adopting Interpretation and Policy .10
under Article 6, Rule 13 to extend the
120-day period during which an
individual can function as a principal
before having to pass an applicable
qualification examination until
December 31, 2020.15 The proposed rule
change would apply only to those
individuals who were designated to
function as a principal prior to
September 3, 2020. Any individuals
designated to function as a principal on
or after September 3, 2020, would need
to successfully pass an appropriate
qualification examination within 120
days.
NYSE Chicago believes that this
proposed continued extension of time is
tailored to address the needs and
constraints on a Participant’s operations
during the COVID–19 pandemic,
without significantly compromising
critical investor protection. The
proposed extension of time will help to
minimize the impact of COVID–19 on
Participants by providing continued
flexibility so that Participants can
ensure that principal positions remain
filled. The potential risks from the
proposed extension of the 120-day
period are mitigated by the Participant’s
continued requirement to supervise the
activities of these designated
individuals and ensure compliance with
federal securities laws and regulations,
as well as NYSE Chicago rules.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the
Act,16 in general, and furthers the
objectives of Section 6(b)(5),17 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
15 See
supra note 5.
U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
16 15
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general, to protect investors and the
public interest.
The proposed rule change is intended
to minimize the impact of COVID–19 on
Participant operations by extending the
120-day period certain individuals may
function as a principal without having
successfully passed an appropriate
qualification examination pursuant to
Interpretation and Policy .03 under
Article 6, Rule 13 until December 31,
2020. The proposed rule change does
not relieve Participants from
maintaining, under the circumstances, a
reasonably designed system to supervise
the activities of their associated persons
to achieve compliance with applicable
securities laws and regulations, and
with applicable NYSE Chicago rules
that directly serve investor protection.
In a time when faced with unique
challenges resulting from the COVID–19
pandemic, NYSE Chicago believes that
the proposed rule change is a sensible
accommodation that will continue to
afford Participants the ability to ensure
that critical positions are filled and
client services maintained, while
continuing to serve and promote the
protection of investors and the public
interest in this unique environment.
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 intended to
provide temporary relief given the
impacts of the COVID–19 pandemic
crisis and to also maintain consistency
with the rules of other self-regulatory
organizations (‘‘SROs’’) with respect to
the registration requirements applicable
to Participants and their registered
personnel. In that regard, the Exchange
believes that any burden on competition
would be clearly outweighed by
providing Participants with temporary
relief in this unique environment while
also ensuring clear and consistent
requirements applicable across SROs
and mitigating any risk of SROs
implementing different standards in
these important areas. 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 Rule 1210 in
response to the impacts of the COVID–
19 pandemic that is equally applicable
to the changes the Exchange proposes.18
The Exchange accordingly incorporates
18 FINRA
Filing, 85 FR at 55537.
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FINRA’s abbreviated economic impact
assessment by reference.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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 for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 19 and Rule 19b–
4(f)(6) 20 thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days after the
date of filing. However, pursuant to
Rule 19b–4(f)(6)(iii), the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest.
NYSE Chicago has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule change may become operative
immediately upon filing. As noted
above, NYSE Chicago stated that the
temporary proposed rule change is
based on a recent rule change by FINRA
and is intended to harmonize NYSE
Chicago’s registration rules with those
of FINRA to promote uniform standards
across the securities industry.21 NYSE
Chicago states that it will also help
minimize the impact of the COVID–19
outbreak on NYSE Chicago Participants’
operations by allowing them to keep
principal positions filled and
minimizing disruptions to client
services and other critical
responsibilities. The ongoing
extenuating circumstances of the
COVID–19 pandemic make it
impractical to ensure that individuals
designated to act in principal capacities
are able to take and pass the appropriate
qualification examination during the
120-calendar day period required under
19 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. NYSE Chicago
has satisfied this requirement.
21 See supra note 6.
20 17
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the rules. Shelter-in-place orders,
quarantining, restrictions on business
and social activity and adherence to
other social distancing guidelines
consistent with the recommendation of
public officials remain in place in
various states.22 Further, NYSE Chicago
states that Prometric test centers have
experienced serious interruptions in the
administration of FINRA qualification
examinations, resulting in a backlog of
individuals waiting to take these
examinations. Following a nationwide
closure of all test centers earlier in the
year, some test centers have re-opened,
but are operating at limited capacity or
are only delivering certain examinations
that have been deemed essential by the
local government.23 FINRA has
launched an online test delivery service
to help address this backlog. However,
the General Securities Principal (Series
24) Examination is not available online.
NYSE Chicago states that the temporary
proposed rule change will provide
needed flexibility to ensure that these
positions remain filled and is tailored to
address the constraints on Participants’
operations during the COVID–19
pandemic without significantly
compromising critical investor
protection.24
The Commission also notes that the
proposal provides only temporary relief
from the requirement to pass certain
qualification examinations within the
120-day period in the rules. As
proposed, this relief would extend the
120-day period that certain individuals
can function as principals through
December 31, 2020. NYSE Chicago has
also stated that if it requires temporary
relief from the rule requirements
identified in this proposal beyond
December 31, 2020, it may submit a
separate rule filing to extend the
effectiveness of the temporary relief
under these rules.25 For these reasons,
the Commission believes that waiver of
the 30-day operative delay is consistent
with the protection of investors and the
public interest.26 Accordingly, the
Commission hereby waives the 30-day
22 See
supra note 14.
supra notes 11 and 12. NYSE Chicago
states that Prometric has also had to close some
reopened test centers due to incidents of COVID–
19 cases.
24 NYSE Chicago states that Participants remain
subject to the continued requirement to supervise
the activities of these designated individuals and
ensure compliance with federal securities laws and
regulations, as well as NYSE Chicago rules.
25 See supra note 5.
26 As noted above by the Exchange, this proposed
temporary change is based on a recent filing by
FINRA that the Commission approved with a
waiver of the 30-day operative delay. See supra
note 6, 85 FR at 55538.
23 See
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operative delay and designates the
proposal operative upon filing.27
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. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
Washington, DC 20549. Copies of such
filing also will be available for
inspection and copying at the principal
office of NYSE Chicago. 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–NYSECHX–2020–28 and
should be submitted on or before
November 3, 2020.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
J. Matthew DeLesDernier,
Assistant Secretary.
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–
NYSECHX–2020–28 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
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–NYSECHX–2020–28. 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,
27 For
purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule change’s impact on efficiency,
competition, and capital formation. See 15 U.S.C.
78c(f).
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[FR Doc. 2020–22633 Filed 10–9–20; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–90102; File No. SR–
PEARL–2020–17]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Adopt the MIAX
PEARL Equities Fee Schedule
October 6, 2020.
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
September 24, 2020, MIAX PEARL, LLC
(‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) a
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
The Exchange is filing a proposal to
adopt a fee schedule setting forth
transaction fees and rebates for MIAX
PEARL Equities, an equities trading
facility of the Exchange (the ‘‘Fee
Schedule’’).3 The proposed fees are
28 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Exchange Rule 1901. The Exchange notes
that it submitted a separate filing with the
Commission pursuant to Section 19(b)(3)(A) of the
Act to adopt non-transaction fees. See SR–PEARL–
2020–18 (filed September 24, 2020).
64559
scheduled to become operative
September 25, 2020.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal
office, 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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On August 14, 2020, the Commission
approved MIAX PEARL’s proposal to
adopt rules governing the trading of
equity securities on MIAX PEARL
Equities.4
The purpose of the proposed rule
change is to adopt the Fee Schedule,
which would set forth fees and rebates
for use of MIAX PEARL Equities. The
Fee Schedule will apply equally to all
market participants trading equity
securities on and/or using services
provided by MIAX PEARL Equities. The
proposed fees are scheduled to become
operative September 25, 2020.
The Exchange will operate in a highly
competitive market in which market
participants can readily direct order
flow to competing venues if they deem
fee levels at a particular venue to be
excessive or rebates/incentives to be
insufficient. More specifically, the
Exchange will be only one of several
equities venues (including both
registered exchanges and various
alternative trading systems) to which
market participants may direct their
order flow and execute their trades.
Indeed, equity trading is currently
1 15
PO 00000
Frm 00119
Fmt 4703
Sfmt 4703
4 See Securities Exchange Act Release No. 89563
(August 14, 2020), 85 FR 51510 (August 20, 2020)
(SR–PEARL–2020–03) (Order Approving a
Proposed Rule Change, as Modified by Amendment
No. 1, To Establish Rules Governing the Trading of
Equity Securities) (‘‘Approval Order’’).
E:\FR\FM\13OCN1.SGM
13OCN1
]]>Agencies
[Federal Register Volume 85, Number 198 (Tuesday, October 13, 2020)]
[Notices]
[Pages 64556-64559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22633]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90114; File No. SR-NYSECHX-2020-28]
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt
Temporary Interpretation and Policy .10 Under NYSE Chicago Article 6,
Rule 13
October 7, 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 25, 2020, NYSE Chicago, Inc. (``NYSE Chicago''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II 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 a rule change to adopt temporary
Interpretation and Policy .10 (Temporary Extension of the Limited
Period for Registered Persons to Function as Principals) under NYSE
Chicago Article 6, Rule 13 (Registration Requirements) applicable to
Participants. 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 adopt temporary Interpretation and Policy
.10 (Temporary Extension of the Limited Period for Registered Persons
to Function as Principals) under NYSE Chicago Article 6, Rule 13
(Registration Requirements) applicable to Participants.\4\ The proposed
rule change would extend the 120-day period that certain individuals
can function as a principal without having successfully passed an
appropriate qualification examination through December 31, 2020,\5\ and
would apply only to those individuals who were designated to function
as a principal prior to September 3, 2020. This proposed rule change is
based on a filing recently
[[Page 64557]]
submitted by the Financial Regulatory Authority, Inc. (``FINRA'') \6\
and is intended to harmonize the Exchange's registration rules with
those of FINRA so as to promote uniform standards across the securities
industry.
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\4\ The term ``Participant'' means any Participant Firm that
holds a valid Trading Permit and any person associated with a
Participant Firm who is registered with the Exchange. A Participant
shall be considered a ``member'' of the Exchange for purposes of the
Exchange Act. See Article 1, Rule 1(s).
\5\ If NYSE Chicago seeks to provide additional temporary relief
from the rule requirements identified in this proposed rule change
beyond December 31, 2020, NYSE Chicago will submit a separate rule
filing to further extend the temporary extension of time.
\6\ See Securities Exchange Act Release No. 89732 (September 1,
2020), 85 FR 55535 (September 8, 2020) (SR-FINRA-2020-026) (the
``FINRA Filing''). The Exchange notes that the FINRA Filing also
provides temporary relief to individuals registered with FINRA as
Operations Professionals under FINRA Rule 1220. The Exchange does
not have a registration category for Operations Professionals and
therefore, the Exchange is not proposing to adopt that aspect of the
FINRA Filing.
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In response to COVID-19, earlier this year FINRA began providing
temporary relief by way of frequently asked questions (``FAQs'') \7\ to
address disruptions to the administration of FINRA qualification
examinations caused by the pandemic that have significantly limited the
ability of individuals to sit for examinations due to Prometric test
center capacity issues.\8\
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\7\ See https://www.finra.org/rules-guidance/key-topics/covid-19/faq#qe.
\8\ At the outset of the COVID-19 pandemic, all FINRA
qualification examinations were administered at test centers
operated by Prometric. Based on the health and welfare concerns
resulting from COVID-19, in March Prometric closed all of its test
centers in the United States and Canada and began to slowly reopen
some of them at limited capacity in May. At this time, not all of
these Prometric test centers have reopened at full capacity.
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FINRA published the first FAQ on March 20, 2020, providing that
individuals who were designated to function as principals under FINRA
Rule 1210.04 \9\ prior to February 2, 2020, would be given until May
31, 2020, to pass the appropriate principal qualification
examination.\10\ On May 19, 2020, FINRA extended the relief to pass the
appropriate examination until June 30, 2020. Most recently, on June 29,
2020, FINRA again extended the temporary relief providing that
individuals who were designated to function as principals under FINRA
Rule 1210.04 prior to May 4, 2020, would be given until August 31,
2020, to pass the appropriate principal qualification examination.
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\9\ Interpretation and Policy .03 under NYSE Chicago Article 6,
Rule 13 is the corresponding rule to FINRA Rule 1210.04.
\10\ FINRA Rule 1210.04 (Requirements for Registered Persons
Functioning as Principals for a Limited Period) allows a member firm
to designate certain individuals to function in a principal capacity
for 120 calendar days before having to pass an appropriate principal
qualification examination. Interpretation and Policy .03 under NYSE
Chicago Article 6, Rule 13 provides the same allowance to
Participants.
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One of the impacts of COVID-19 continues to be serious
interruptions in the administration of FINRA qualification examinations
at Prometric test centers and the limited ability of individuals to sit
for the examinations.\11\ Although Prometric has begun reopening test
centers, Prometric's safety practices mean that currently not all test
centers are open, some of the open test centers are at limited
capacity, and some open test centers are delivering only certain
examinations that have been deemed essential by the local
government.\12\ Furthermore, Prometric has had to close some reopened
test centers due to incidents of COVID-19 cases. The initial nationwide
closure in March along with the inability to fully reopen all Prometric
test centers due to COVID-19 have led to a significant backlog of
individuals who are waiting to sit for FINRA examinations.\13\
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\11\ Information about the continued impact of COVID-19 on
FINRA-administered examinations is available at https://www.finra.org/rules-guidance/keytopics/covid-19/exams.
\12\ Information from Prometric about its safety practices and
the impact of COVID-19 on its operations is available at https://www.prometric.com/corona-virus-update. See also supra note 11.
\13\ Although an online test delivery service has been launched
to help address the backlog, the General Securities Principal
Examination (Series 24) is not available online. See supra note 11.
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In addition, firms are continuing to experience operational
challenges with much of their personnel working from home due to
shelter-in-place orders, restrictions on businesses and social activity
imposed in various states, and adherence to other social distancing
guidelines consistent with the recommendations of public health
officials.\14\ As a result, firms continue to face potentially
significant disruptions to their normal business operations that may
include a limitation of in-person activities and staff absenteeism as a
result of the health and welfare concerns stemming from COVID-19. Such
potential disruptions may be further exacerbated and may even affect
client services if firms cannot continue to keep principal positions
filled as they may have difficulty finding other qualified individuals
to transition into these roles or may need to reallocate employee time
and resources away from other critical responsibilities at the firm.
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\14\ See, e.g., Centers for Disease Control and Prevention, How
to Protect Yourself & Others, https://www.cdc.gov/coronavirus/2019-ncov/prevent-gettingsick/prevention.html.
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These ongoing, extenuating circumstances make it impracticable for
Participants to ensure that the individuals whom they have designated
to function in a principal capacity, as set forth in Interpretation and
Policy .03 under Article 6, Rule 13, are able to successfully sit for
and pass an appropriate qualification examination within the 120-
calendar day period required under the rule, or to find other qualified
staff to fill this position. The ongoing circumstances also require
individuals to be exposed to the health risks associated with taking an
in-person examination, because the General Securities Principal
examination is not available online. Therefore, NYSE Chicago is
proposing to continue the temporary relief provided through the FINRA
FAQs by adopting Interpretation and Policy .10 under Article 6, Rule 13
to extend the 120-day period during which an individual can function as
a principal before having to pass an applicable qualification
examination until December 31, 2020.\15\ The proposed rule change would
apply only to those individuals who were designated to function as a
principal prior to September 3, 2020. Any individuals designated to
function as a principal on or after September 3, 2020, would need to
successfully pass an appropriate qualification examination within 120
days.
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\15\ See supra note 5.
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NYSE Chicago believes that this proposed continued extension of
time is tailored to address the needs and constraints on a
Participant's operations during the COVID-19 pandemic, without
significantly compromising critical investor protection. The proposed
extension of time will help to minimize the impact of COVID-19 on
Participants by providing continued flexibility so that Participants
can ensure that principal positions remain filled. The potential risks
from the proposed extension of the 120-day period are mitigated by the
Participant's continued requirement to supervise the activities of
these designated individuals and ensure compliance with federal
securities laws and regulations, as well as NYSE Chicago rules.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\16\ in general, and furthers the objectives of Section
6(b)(5),\17\ 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
[[Page 64558]]
general, to protect investors and the public interest.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
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The proposed rule change is intended to minimize the impact of
COVID-19 on Participant operations by extending the 120-day period
certain individuals may function as a principal without having
successfully passed an appropriate qualification examination pursuant
to Interpretation and Policy .03 under Article 6, Rule 13 until
December 31, 2020. The proposed rule change does not relieve
Participants from maintaining, under the circumstances, a reasonably
designed system to supervise the activities of their associated persons
to achieve compliance with applicable securities laws and regulations,
and with applicable NYSE Chicago rules that directly serve investor
protection. In a time when faced with unique challenges resulting from
the COVID-19 pandemic, NYSE Chicago believes that the proposed rule
change is a sensible accommodation that will continue to afford
Participants the ability to ensure that critical positions are filled
and client services maintained, while continuing to serve and promote
the protection of investors and the public interest in this unique
environment.
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
intended to provide temporary relief given the impacts of the COVID-19
pandemic crisis and to also maintain consistency with the rules of
other self-regulatory organizations (``SROs'') with respect to the
registration requirements applicable to Participants and their
registered personnel. In that regard, the Exchange believes that any
burden on competition would be clearly outweighed by providing
Participants with temporary relief in this unique environment while
also ensuring clear and consistent requirements applicable across SROs
and mitigating any risk of SROs implementing different standards in
these important areas. 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 Rule 1210 in response to the impacts of the
COVID-19 pandemic that is equally applicable to the changes the
Exchange proposes.\18\ The Exchange accordingly incorporates FINRA's
abbreviated economic impact assessment by reference.
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\18\ FINRA Filing, 85 FR at 55537.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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 for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-
4(f)(6) \20\ thereunder.
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
NYSE Chicago has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a
shorter time if such action is consistent with the protection of
investors and the public interest. NYSE Chicago has asked the
Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing. As noted
above, NYSE Chicago stated that the temporary proposed rule change is
based on a recent rule change by FINRA and is intended to harmonize
NYSE Chicago's registration rules with those of FINRA to promote
uniform standards across the securities industry.\21\ NYSE Chicago
states that it will also help minimize the impact of the COVID-19
outbreak on NYSE Chicago Participants' operations by allowing them to
keep principal positions filled and minimizing disruptions to client
services and other critical responsibilities. The ongoing extenuating
circumstances of the COVID-19 pandemic make it impractical to ensure
that individuals designated to act in principal capacities are able to
take and pass the appropriate qualification examination during the 120-
calendar day period required under the rules. Shelter-in-place orders,
quarantining, restrictions on business and social activity and
adherence to other social distancing guidelines consistent with the
recommendation of public officials remain in place in various
states.\22\ Further, NYSE Chicago states that Prometric test centers
have experienced serious interruptions in the administration of FINRA
qualification examinations, resulting in a backlog of individuals
waiting to take these examinations. Following a nationwide closure of
all test centers earlier in the year, some test centers have re-opened,
but are operating at limited capacity or are only delivering certain
examinations that have been deemed essential by the local
government.\23\ FINRA has launched an online test delivery service to
help address this backlog. However, the General Securities Principal
(Series 24) Examination is not available online. NYSE Chicago states
that the temporary proposed rule change will provide needed flexibility
to ensure that these positions remain filled and is tailored to address
the constraints on Participants' operations during the COVID-19
pandemic without significantly compromising critical investor
protection.\24\
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\21\ See supra note 6.
\22\ See supra note 14.
\23\ See supra notes 11 and 12. NYSE Chicago states that
Prometric has also had to close some reopened test centers due to
incidents of COVID-19 cases.
\24\ NYSE Chicago states that Participants remain subject to the
continued requirement to supervise the activities of these
designated individuals and ensure compliance with federal securities
laws and regulations, as well as NYSE Chicago rules.
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The Commission also notes that the proposal provides only temporary
relief from the requirement to pass certain qualification examinations
within the 120-day period in the rules. As proposed, this relief would
extend the 120-day period that certain individuals can function as
principals through December 31, 2020. NYSE Chicago has also stated that
if it requires temporary relief from the rule requirements identified
in this proposal beyond December 31, 2020, it may submit a separate
rule filing to extend the effectiveness of the temporary relief under
these rules.\25\ For these reasons, the Commission believes that waiver
of the 30-day operative delay is consistent with the protection of
investors and the public interest.\26\ Accordingly, the Commission
hereby waives the 30-day
[[Page 64559]]
operative delay and designates the proposal operative upon filing.\27\
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\25\ See supra note 5.
\26\ As noted above by the Exchange, this proposed temporary
change is based on a recent filing by FINRA that the Commission
approved with a waiver of the 30-day operative delay. See supra note
6, 85 FR at 55538.
\27\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule 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:
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-NYSECHX-2020-28 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-NYSECHX-2020-28. 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 NYSE Chicago. 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-NYSECHX-2020-28 and
should be submitted on or before November 3, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22633 Filed 10-9-20; 8:45 am]
BILLING CODE 8011-01-P
