Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Temporary Commentary .10 Under NYSE Rule 1210, 65090-65093 [2020-22631]
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65090
Federal Register / Vol. 85, No. 199 / Wednesday, October 14, 2020 / Notices
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) 22 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:
jbell on DSKJLSW7X2PROD with 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–
NYSENAT–2020–31 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–NYSENAT–2020–31. 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
22 15
U.S.C. 78s(b)(2)(B).
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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–NYSENAT–2020–31 and
should be submitted on or before
November 4, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–22718 Filed 10–13–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90111; File No. SR–NYSE–
2020–80]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Adopt
Temporary Commentary .10 Under
NYSE Rule 1210
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, New York Stock
Exchange LLC (‘‘NYSE’’ 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.
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 Commentary .10
(Temporary Extension of the Limited
Period for Registered Persons to
Function as Principals) under NYSE
Rule 1210 (Registration Requirements)
applicable to member organizations.
The proposed rule change is available
on the Exchange’s website at
23 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
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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 Commentary .10 (Temporary
Extension of the Limited Period for
Registered Persons to Function as
Principals) under NYSE Rule 1210
(Registration Requirements) applicable
to member organizations.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 submitted by the
Financial Regulatory Authority, Inc.
(‘‘FINRA’’) 6 and is intended to
4 The term ‘‘member organization’’ means a
registered broker or dealer (unless exempt pursuant
to the Securities Exchange Act of 1934) (the ‘‘Act’’),
including sole proprietors, partnerships, limited
liability partnerships, corporations, and limited
liability corporations, approved by the Exchange
pursuant to Rule 311. A registered broker or dealer
must also be approved by the Exchange and
authorized to designate an associated natural
person to effect transactions on the floor of the
Exchange or any facility thereof. See Rule 2(b)(i).
The term ‘‘member organization’’ also includes any
registered broker or dealer which does not own a
trading license and agrees to be regulated by the
Exchange as a member organization and which the
Exchange has agreed to regulate. See Rule 2(b)(ii).
5 If NYSE seeks to provide additional temporary
relief from the rule requirements identified in this
proposed rule change beyond December 31, 2020,
NYSE 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
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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
individuals to sit for the examinations.11
Although Prometric has begun
reopening test centers, Prometric’s
safety practices mean that currently not
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 NYSE Rule 1210.03 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.
NYSE Rule 1210.03 provides the same allowance to
member organizations.
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.
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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
member organizations to ensure that the
individuals whom they have designated
to function in a principal capacity, as
set forth in NYSE Rule 1210.03, 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 inperson examination, because the
General Securities Principal
examination is not available online.
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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Therefore, NYSE is proposing to
continue the temporary relief provided
through the FINRA FAQs by adopting
Rule 1210.10 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 believes that this proposed
continued extension of time is tailored
to address the needs and constraints on
a member organization’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
member organizations by providing
continued flexibility so that member
organizations can ensure that principal
positions remain filled. The potential
risks from the proposed extension of the
120-day period are mitigated by the
member organization’s continued
requirement to supervise the activities
of these designated individuals and
ensure compliance with federal
securities laws and regulations, as well
as NYSE 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
general, to protect investors and the
public interest.
The proposed rule change is intended
to minimize the impact of COVID–19 on
member organization operations by
extending the 120-day period certain
individuals may function as a principal
without having successfully passed an
appropriate qualification examination
under NYSE Rule 1210.03 until
December 31, 2020. The proposed rule
15 See
supra note 5.
U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
16 15
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change does not relieve member
organizations 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 rules that directly
serve investor protection. In a time
when faced with unique challenges
resulting from the COVID–19 pandemic,
NYSE believes that the proposed rule
change is a sensible accommodation
that will continue to afford member
organizations 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
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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 member organizations and their
registered personnel. In that regard, the
Exchange believes that any burden on
competition would be clearly
outweighed by providing member
organizations 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.
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.
18 FINRA
Filing, 85 FR at 55537.
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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 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 stated that the
temporary proposed rule change is
based on a recent rule change by FINRA
and is intended to harmonize NYSE’s
registration rules with those of FINRA to
promote uniform standards across the
securities industry.21 NYSE states that it
will also help minimize the impact of
the COVID–19 outbreak on NYSE
member organizations’ 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 states
that Prometric test centers have
experienced serious interruptions in the
administration of FINRA qualification
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 has
satisfied this requirement.
21 See supra note 6.
22 See supra note 14.
20 17
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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 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 member
organizations’ 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 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 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
23 See supra notes 11 and 12. NYSE states that
Prometric has also had to close some reopened test
centers due to incidents of COVID–19 cases.
24 NYSE states that member organizations 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 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.
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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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:
be submitted on or before November 4,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–22631 Filed 10–13–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90122; File No. SR–
CboeBYX–2020–029]
jbell on DSKJLSW7X2PROD with 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–
NYSE–2020–80 on the subject line.
Self-Regulatory Organizations; Cboe
BYX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Increase
Maker Transaction Fees
Paper Comments
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 October
6, 2020, Cboe BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) 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.
• 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–NYSE–2020–80. 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. 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–NYSE–2020–80 and should
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October 8, 2020.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
Cboe BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) is filing with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
to amend the fee schedule. 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://markets.cboe.com/us/
equities/regulation/rule_filings/byx/), 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
28 17
CFR 200.30–3(a)(12).
15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1
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65093
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
The Exchange proposes to amend its
fee schedule. 3
The Exchange first notes that it
operates 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
incentives to be insufficient. More
specifically, the Exchange is only one of
16 registered equities exchanges, as well
as a number of alternative trading
systems and other off-exchange venues
that do not have similar self-regulatory
responsibilities under the Exchange Act,
to which market participants may direct
their order flow. Based on publicly
available information,4 no single
registered equities exchange has more
than 19% of the market share. Thus, in
such a low-concentrated and highly
competitive market, no single equities
exchange possesses significant pricing
power in the execution of order flow.
The Exchange in particular operates a
‘‘Taker-Maker’’ model whereby it pays
credits to members that remove
liquidity and assesses fees to those that
add liquidity. The Exchange’s Fees
Schedule sets forth the standard rebates
and rates applied per share for orders
that provide and remove liquidity,
respectively. Particularly, for securities
at or above $1.00, the Exchange
provides a standard rebate of $0.0005
per share for orders that remove
liquidity and assesses a fee of $0.0019
per share for orders that add liquidity.
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can shift order flow or discontinue to
reduce use of certain categories of
products, in response to fee changes.
Accordingly, competitive forces
3 The Exchange initially filed the proposed fee
changes on October 1, 2020 (SR–CboeBYX–2020–
026). On October 5, 2020, the Exchange withdrew
that filing and submitted SR–CboeBYX–2020–027.
On October 6, 2020 the Exchange withdrew that
filing and submitted this filing.
4 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (September 28,
2020), available at https://markets.cboe.com/us/
equities/market_statistics/.
E:\FR\FM\14OCN1.SGM
14OCN1
Agencies
[Federal Register Volume 85, Number 199 (Wednesday, October 14, 2020)]
[Notices]
[Pages 65090-65093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22631]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90111; File No. SR-NYSE-2020-80]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Adopt Temporary Commentary .10 Under NYSE Rule 1210
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, New York Stock Exchange LLC (``NYSE''
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 Commentary
.10 (Temporary Extension of the Limited Period for Registered Persons
to Function as Principals) under NYSE Rule 1210 (Registration
Requirements) applicable to member organizations. 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 Commentary .10 (Temporary
Extension of the Limited Period for Registered Persons to Function as
Principals) under NYSE Rule 1210 (Registration Requirements) applicable
to member organizations.\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 submitted by the Financial Regulatory Authority, Inc.
(``FINRA'') \6\ and is intended to
[[Page 65091]]
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 ``member organization'' means a registered broker
or dealer (unless exempt pursuant to the Securities Exchange Act of
1934) (the ``Act''), including sole proprietors, partnerships,
limited liability partnerships, corporations, and limited liability
corporations, approved by the Exchange pursuant to Rule 311. A
registered broker or dealer must also be approved by the Exchange
and authorized to designate an associated natural person to effect
transactions on the floor of the Exchange or any facility thereof.
See Rule 2(b)(i). The term ``member organization'' also includes any
registered broker or dealer which does not own a trading license and
agrees to be regulated by the Exchange as a member organization and
which the Exchange has agreed to regulate. See Rule 2(b)(ii).
\5\ If NYSE seeks to provide additional temporary relief from
the rule requirements identified in this proposed rule change beyond
December 31, 2020, NYSE 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\ NYSE Rule 1210.03 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. NYSE Rule 1210.03 provides the same
allowance to member organizations.
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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
member organizations to ensure that the individuals whom they have
designated to function in a principal capacity, as set forth in NYSE
Rule 1210.03, 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 is proposing to continue the temporary relief provided
through the FINRA FAQs by adopting Rule 1210.10 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 believes that this proposed continued extension of time is
tailored to address the needs and constraints on a member
organization'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
member organizations by providing continued flexibility so that member
organizations can ensure that principal positions remain filled. The
potential risks from the proposed extension of the 120-day period are
mitigated by the member organization's continued requirement to
supervise the activities of these designated individuals and ensure
compliance with federal securities laws and regulations, as well as
NYSE 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 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 member organization operations by extending the 120-day
period certain individuals may function as a principal without having
successfully passed an appropriate qualification examination under NYSE
Rule 1210.03 until December 31, 2020. The proposed rule
[[Page 65092]]
change does not relieve member organizations 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
rules that directly serve investor protection. In a time when faced
with unique challenges resulting from the COVID-19 pandemic, NYSE
believes that the proposed rule change is a sensible accommodation that
will continue to afford member organizations 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 member organizations and their
registered personnel. In that regard, the Exchange believes that any
burden on competition would be clearly outweighed by providing member
organizations 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 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 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 stated
that the temporary proposed rule change is based on a recent rule
change by FINRA and is intended to harmonize NYSE's registration rules
with those of FINRA to promote uniform standards across the securities
industry.\21\ NYSE states that it will also help minimize the impact of
the COVID-19 outbreak on NYSE member organizations' 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 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 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 member organizations' 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 states that Prometric has
also had to close some reopened test centers due to incidents of
COVID-19 cases.
\24\ NYSE states that member organizations 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 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 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 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
[[Page 65093]]
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-NYSE-2020-80 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-NYSE-2020-80. 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. 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-NYSE-2020-80 and
should be submitted on or before November 4, 2020.
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\28\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22631 Filed 10-13-20; 8:45 am]
BILLING CODE 8011-01-P