Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Extending the Expiration Date of the Temporary Amendments to Rules 9261 and 9830 as Set Forth in SR-NYSEAMER-2020-69 From December 31, 2020, to April 30, 2021, 650-653 [2020-29214]

Download as PDF 650 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2020–116. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, on business days between the hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE, Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEArca–2020–116 and should be submitted on or before February 22, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–29211 Filed 1–5–21; 8:45 am] jbell on DSKJLSW7X2PROD with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION of the most significant parts of such statements. [Release No. 34–90823; File No. SR– NYSEAMER–2020–88] A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Extending the Expiration Date of the Temporary Amendments to Rules 9261 and 9830 as Set Forth in SR–NYSEAMER–2020–69 From December 31, 2020, to April 30, 2021 December 30, 2020. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on December 22, 2020, NYSE American LLC (‘‘NYSE American’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II 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 proposes extending the expiration date of the temporary amendments to Rules 9261 and 9830 as set forth in SR–NYSEAMER–2020–69 from December 31, 2020, to April 30, 2021, in conformity with recent changes by the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’). The proposed rule change would not make any changes to the text of NYSE American Rules 9261 and 9830. 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, 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 26 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 1. Purpose The Exchange proposes extending the expiration date of the temporary amendments as set forth in SR– NYSEAMER–2020–69 4 to Rules 9261 (Evidence and Procedure in Hearing) and 9830 (Hearing) from December 31, 2020, to April 30, 2021 to harmonize with recent changes by FINRA to extend the expiration date of the temporary amendments to its Rules 9261 and 9830. SR–NYSEAMER–2020–69 temporarily granted to the Chief or Deputy Chief Hearing Officer the authority to order that hearings be conducted by video conference if warranted by public health risks posed by in-person hearings during the ongoing COVID–19 pandemic. The proposed rule change would not make any changes to the text of Exchange Rules 9261 and 9830.5 Background In 2016, NYSE American (then known as NYSE MKT LLC) adopted disciplinary rules that are, with certain exceptions, substantially the same as the Rule 8000 Series and Rule 9000 Series of FINRA and its affiliate the New York Stock Exchange LLC (‘‘NYSE’’), and which set forth rules for conducting investigations and enforcement actions.6 The NYSE American disciplinary rules were implemented on April 15, 2016.7 In adopting disciplinary rules modeled on FINRA’s rules, NYSE American adopted the hearing and evidentiary processes set forth in Rule 9261 and in Rule 9830 for hearings in matters involving temporary and permanent cease and desist orders under the Rule 9800 Series. As adopted, the text of Rule 9261 and Rule 9830 are substantially the same as the FINRA rules with certain modifications.8 4 See Securities Exchange Act Release No. 90085 (October 2, 2020), 85 FR 63603 (October 8, 2020) (SR–NYSEAMER–2020–69) (‘‘SR–NYSEAMER– 2020–69’’). 5 The Exchange may submit a separate rule filing to extend the expiration date of the proposed extension beyond April 30, 2021 if the Exchange requires additional temporary relief from the rule requirements identified in SR–NYSEAMER–2020– 69. The amended NYSE American rules will revert back to their original state at the conclusion of the temporary relief period and any extension thereof. 6 See Securities Exchange Act Release Nos. 77241 (February 26, 2016), 81 FR 11311 (March 3, 2016) (SR–NYSEMKT–2016–30) (‘‘2016 Notice’’). 7 See NYSE MKT Information Memorandum 16– 02 (March 14, 2016). 8 See 2016 Notice, 81 FR at 11327 & 11332. E:\FR\FM\06JAN1.SGM 06JAN1 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices In response to the spread of COVID– 19, on August 31, 2020, FINRA filed with the Commission a proposed rule change for immediate effectiveness, SR– FINRA–2020–027, to temporarily grant FINRA’s Office of Hearing Officers (‘‘OHO’’) and the National Adjudicatory Council (‘‘NAC’’) the authority to conduct certain hearings by video conference, if warranted by the current COVID–19-related public health risks posed by in-person hearings. Among the rules FINRA amended were Rules 9261 and 9830.9 Given that FINRA and OHO administers disciplinary hearings on the Exchange’s behalf, and that the public health concerns addressed by FINRA’s amendments apply equally to Exchange disciplinary hearings, on September 15, 2020, the Exchange filed to temporarily amend Rule 9261 and Rule 9830 to permit FINRA to conduct virtual hearings on its behalf.10 The temporary amendments to Rule 9261 and Rule 9830, as originally proposed, will expire on December 31, 2020, absent another proposed rule change filing by the Exchange. The COVID–19 conditions necessitating these temporary amendments persist, with cases rapidly escalating nationwide. Based on its assessment of current COVID–19 conditions and the lack of certainty as to when COVID–19-related health concerns will subside, on December 1, 2020, FINRA filed to extend the expiration date of the temporary rule amendments to, among other rules, FINRA Rule 9261 and 9830 from December 31, 2020, to April 30, 2021.11 jbell on DSKJLSW7X2PROD with NOTICES Proposed Rule Change Consistent with FINRA’s recent proposal, the Exchange proposes to extend the expiration date of the temporary rule amendments to NYSE American Rules 9261 and 9830 as set forth in SR–NYSEAMER–2020–69 from December 31, 2020, to April 30, 2021. As set forth in SR–FINRA–2020–042, based on its assessment of current COVID–19 conditions, including the recent escalation in COVID–19 cases nationwide, FINRA does not believe that the COVID–19-related health concerns necessitating this relief will subside by December 31, 2020, and has determined that there will be a 9 See Securities Exchange Act Release No. 83289 (September 2, 2020), 85 FR 55712 (September 9, 2020) (SR–FINRA–2020–027) (the ‘‘August 31 FINRA Filing’’). 10 See supra note 4. 11 See Securities Exchange Act Release No. 90619 (December 9, 2020), 85 FR 81250 (December 15, 2020) (SR–FINRA–2020–042) (‘‘SR–FINRA–2020– 042’’). VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 continued need for this temporary relief for several months beyond December 31, 2020.12 FINRA accordingly proposed to extend the expiration date of the temporary rule amendments in the August 31 FINRA Filing from December 31, 2020, to April 30, 2021. The Exchange proposes to similarly extend the expiration date of the temporary rule amendments to NYSE American Rules 9261 and 9830 as set forth in SR–NYSEAMER–2020–69 from December 31, 2020, to April 30, 2021. With COVID–19 cases surging nationwide, the Exchange agrees with FINRA that the COVID–19-related public health risks necessitating this temporary relief have not yet abated and are unlikely to abate by December 31, 2020. The proposed change will permit OHO to continue to assess, based on critical COVID–19 data and criteria and the guidance of health and security consultants, whether an in-person hearing would compromise the health and safety of the hearing participants such that the hearing should proceed by video conference. FINRA has adopted a detailed and thorough protocol to ensure that hearings conducted by video conference will maintain fair process for the parties.13 The Exchange believes that this is a reasonable procedure to continue to follow for hearings under Rules 9261 and 9830 chaired by a FINRA employee. As noted below, the Exchange has filed the proposed rule change for immediate effectiveness and has requested that the SEC waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing, so the Exchange can implement the proposed rule change immediately. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act,14 in general, and furthers the objectives of Section 6(b)(5),15 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, to protect investors and the public interest. Additionally, the 12 See id. SR–FINRA–2020–042, 85 FR at 81251–52; August 31 FINRA Filing, 85 FR at 55713. 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(5). 13 See PO 00000 Frm 00152 Fmt 4703 Sfmt 4703 651 Exchange believes the proposed rule change is designed to provide a fair procedure for the disciplining of members and persons associated with members, consistent with Sections 6(b)(7) and 6(d) of the Act.16 The Exchange believes that the proposed rule change supports the objectives of the Act by providing greater harmonization between Exchange rules and FINRA rules of similar purpose, resulting in less burdensome and more efficient regulatory compliance. As such, the proposed rule change will foster cooperation and coordination with persons engaged in facilitating transactions in securities and will remove impediments to and perfect the mechanism of a free and open market and a national market system. The proposed rule change, which extends the expiration date of the temporary amendments to Exchange rules consistent with FINRA’s extension to its Rules 9261 and 9830 for four months as set forth in SR–FINRA–2020– 042, will permit the Exchange to continue to effectively conduct hearings during the COVID–19 pandemic in situations where in-person hearings present likely public health risks. The ability to conduct hearings by video conference will permit the adjudicatory functions of the Exchange’s disciplinary rules to continue unabated, thereby avoiding protracted delays. The Exchange believes that this is especially important in matters where temporary and permanent cease and desist orders are sought because the proposed rule change would enable those hearings to continue to proceed without delay, thereby enabling the Exchange to continue to take immediate action to stop significant, ongoing customer harm, to the benefit of the investing public. As set forth in detail in SR– NYSEAMER–2020–69, the temporary relief to permit hearings to be conducted via video conference maintains fair process and will continue to provide fair process consistent with Sections 6(b)(7) and 6(d) of the Act 17 while striking an appropriate balance between providing fair process and enabling the Exchange to fulfill its statutory obligations to protect investors and maintain fair and orderly markets while accounting for the significant health and safety risks of in-person hearings stemming from the outbreak of COVID– 19. The Exchange notes that this proposal, like SR–NYSEAMER–2020– 69, provides only temporary relief. As 16 15 17 15 E:\FR\FM\06JAN1.SGM U.S.C. 78f(b)(7) and 78f(d). U.S.C. 78f(b)(7) and 78f(d). 06JAN1 652 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices proposed, the changes would be in place through April 30, 2021. As noted in SR–NYSEAMER–2020–69 and above, the amended rules will revert back to their original state at the conclusion of the temporary relief period and, if applicable, any extension thereof. Accordingly, the proposed rule change extending this temporary relief is in the public interest and consistent with the Act’s purpose. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed temporary rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not intended to address competitive issues but is rather intended solely to provide continued temporary relief given the impacts of the COVID–19 pandemic and the related health and safety risks of conducting in-person activities. The Exchange believes that the proposed rule change will prevent unnecessary disruptions that would otherwise result if the temporary amendments were to expire on December 31, 2020. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action 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) 18 of the Act and Rule 19b– 4(f)(6) thereunder.19 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 jbell on DSKJLSW7X2PROD with NOTICES 18 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. The Exchange has satisfied this requirement. 19 17 VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay so that the proposed rule change may become operative immediately upon filing. As noted above, the Exchange states that the COVID-related health and safety risks of conducting inperson activities, which necessitated these temporary amendments, persist and that cases are escalating nationwide. Based on FINRA’s assessment of the current COVID–19 conditions and FINRA’s determination that there is a continued need for this temporary relief for several months beyond December 31, 2020, the Exchange states that it agrees with FINRA that the COVID–19-related public health risks necessitating this temporary relief have not yet abated and are unlikely to abate by December 31, 2020.20 Moreover, the Exchange states that FINRA has adopted a detailed and thorough protocol to ensure that hearings conducted by video conference will provide a fair process for all parties and enable the Exchange to fulfill its statutory obligations to protect investors and maintain fair and orderly markets.21 The Exchange believes that this is a reasonable procedure to continue to follow for hearings under Rules 9261 and 9830 chaired by a FINRA employee. Accordingly, the Exchange states that waiver of the operative delay would prevent unnecessary disruptions that would otherwise result if the temporary amendments were to expire on December 31, 2020. The Exchange also indicates that this filing is eligible to become operative immediately because the proposal would continue to provide greater harmonization between the Exchange rules and FINRA rules that serve a similar purpose, resulting in less burdensome and more efficient regulatory compliance. This proposal would serve to extend the expiration date of the temporary amendments to the Exchange rules set forth in SR– NYSEAMER–2020–69, which is consistent with FINRA’s extension to its comparable rules, where FINRA requested and the Commission granted a waiver of the 30-day operative delay.22 The Exchange also indicates that this temporary relief is necessary in order for the continued performance of its SR–FINRA–2020–042. id. 22 See supra note 11 (referencing FINRA’s proposal to extend the expiration date of temporary rule amendments allowing hearings to be conducted on a temporary basis by video conference if warranted by COVID–19 related health risks). adjudicatory functions necessary to meet its statutory obligations in light of COVID–19 related health and safety risks associated with in-person hearings and will only be temporary relief, with the rules reverting back to their original state at the conclusion of the relief period and any extension thereof.23 The Commission observes that this proposal, like SR–NYSEAMER–2020–69 and FINRA’s comparable filing,24 provides only temporary relief during the period in which the Exchange’s operations are impacted by COVID–19. As proposed, the changes would be in place through April 30, 2021. 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. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.25 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 rule-comments@ sec.gov. Please include File Number SR– NYSEAMER–2020–88 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. 20 See 23 See 21 See 24 See PO 00000 Frm 00153 Fmt 4703 Sfmt 4703 supra note 5 and accompanying text. supra notes 9 and 11 and accompanying text. 25 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). E:\FR\FM\06JAN1.SGM 06JAN1 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices All submissions should refer to File Number SR–NYSEAMER–2020–88. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, on business days between the hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE, Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEAMER–2020–88 and should be submitted on or before February 22, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–29214 Filed 1–5–21; 8:45 am] jbell on DSKJLSW7X2PROD with NOTICES CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:08 Jan 05, 2021 [Release No. 34–90824; File No. SR–FINRA– 2020–031] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Adopt Proposed Rule 6439 (Requirements for Member Inter-Dealer Quotation Systems) and Rescind the Rules Related to the OTC Bulletin Board Service December 30, 2020. I. Introduction On September 24, 2020, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to rescind the rules related to the OTC Bulletin Board Service and cease its operation and to adopt new requirements for member inter-dealer quotation systems that disseminate quotations in equity securities traded over-the-counter (‘‘OTC’’). The proposed rule change was published for comment in the Federal Register on October 7, 2020.3 On November 4, 2020, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 On December 21, 2020, FINRA filed Amendment No. 1 to the proposed rule change.6 The U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Exchange Act Release No. 90067 (October 1, 2020), 85 FR 63314 (‘‘Notice’’). Comments on the proposed rule change can be found at: https:// www.sec.gov/comments/sr-finra-2020-031/ srfinra2020031.htm. 4 15 U.S.C. 78s(b)(2). 5 See Exchange Act Release No. 90335 (November 4, 2020). The Commission designated January 5, 2021 as the date by which the Commission shall approve or disapprove, or institute proceedings to determine whether to approve or disapprove, the proposed rule change. 6 Amendment No. 1 is a partial amendment in which FINRA included a representation that it will not cease operation of the OTCBB until the enhanced regulatory requirements under Rule 6439 (except for certain provisions related to order-level information reports that also relate to information required for the Consolidated Audit Trail) become effective. See infra note 41. Amendment No. 1 may be found at: https://www.sec.gov/comments/srfinra-2020-031/srfinra2020031.htm. Jkt 253001 Commission is publishing this notice and order to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons and to institute proceedings pursuant to Section 19(b)(2)(B) of the Act 7 to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1. II. Summary of the Proposal, as Modified by Amendment No. 1 As further described below, FINRA proposes to (i) rescind FINRA’s rules governing the OTC Bulletin Board Service (‘‘OTCBB’’) and cease its operation; and (ii) adopt new Rule 6439 (Requirements for Member Inter-Dealer Quotation Systems) to expand the obligations of member interdealer quotation systems (‘‘IDQSs’’) 8 that disseminate quotation updates on a realtime basis in OTC Equity Securities.9 A. Rescission of Rules Governing the OTCBB The OTCBB is a FINRA-operated IDQS available for use by broker-dealers to publish quotations in eligible OTC Equity Securities.10 FINRA has operated the OTCBB since 1990.11 FINRA states that, due to technological advancements since 1990 and the increase in alternative electronic venues with more extensive functionality than the OTCBB, the level of quotation activity occurring on the OTCBB has continued to decline over the past several years and is now nonexistent.12 FINRA represents that, as of the date that it filed the proposed rule change, the OTCBB does not display or widely disseminate quotation information on any OTC Equity Security.13 FINRA states that it does not believe that continued operation of the OTCBB serves any benefit to investors or the marketplace and that ceasing operation of the OTCBB would eliminate potential 1 15 2 17 BILLING CODE 8011–01–P 26 17 SECURITIES AND EXCHANGE COMMISSION 653 PO 00000 Frm 00154 Fmt 4703 Sfmt 4703 7 15 U.S.C. 78s(b)(2)(B). Rule 6420(c) defines ‘‘inter-dealer quotation system’’ as ‘‘any system of general circulation to brokers or dealers which regularly disseminates quotations of identified brokers or dealers.’’ This definition tracks the Commission’s definition of the same term in Exchange Act Rule 15c2–11, 17 CFR 240.15c2–11. 9 The term ‘‘OTC Equity Security’’ is defined in FINRA Rule 6420(f) as any equity security that is not an ‘‘NMS stock’’ as that term is defined in Rule 600(b)(47) of Regulation NMS; provided, however, that the term ‘‘OTC Equity Security’’ shall not include any Restricted Equity Security. The term ‘‘Restricted Equity Security’’ is further defined in FINRA Rule 6420(k) to mean any equity security that meets the definition of ‘‘restricted security’’ as contained in Rule 144(a)(3) under the Securities Act of 1933. 10 See Notice, supra note 3, at 63315. 11 See id. 12 See id. 13 See id. 8 FINRA E:\FR\FM\06JAN1.SGM 06JAN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 3 (Wednesday, January 6, 2021)]
[Notices]
[Pages 650-653]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29214]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90823; File No. SR-NYSEAMER-2020-88]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Extending 
the Expiration Date of the Temporary Amendments to Rules 9261 and 9830 
as Set Forth in SR-NYSEAMER-2020-69 From December 31, 2020, to April 
30, 2021

December 30, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'' or ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ 
notice is hereby given that on December 22, 2020, NYSE American LLC 
(``NYSE American'' or the ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II 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.
---------------------------------------------------------------------------

    \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 extending the expiration date of the 
temporary amendments to Rules 9261 and 9830 as set forth in SR-
NYSEAMER-2020-69 from December 31, 2020, to April 30, 2021, in 
conformity with recent changes by the Financial Industry Regulatory 
Authority, Inc. (``FINRA''). The proposed rule change would not make 
any changes to the text of NYSE American Rules 9261 and 9830. 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 extending the expiration date of the 
temporary amendments as set forth in SR-NYSEAMER-2020-69 \4\ to Rules 
9261 (Evidence and Procedure in Hearing) and 9830 (Hearing) from 
December 31, 2020, to April 30, 2021 to harmonize with recent changes 
by FINRA to extend the expiration date of the temporary amendments to 
its Rules 9261 and 9830. SR-NYSEAMER-2020-69 temporarily granted to the 
Chief or Deputy Chief Hearing Officer the authority to order that 
hearings be conducted by video conference if warranted by public health 
risks posed by in-person hearings during the ongoing COVID-19 pandemic. 
The proposed rule change would not make any changes to the text of 
Exchange Rules 9261 and 9830.\5\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 90085 (October 2, 
2020), 85 FR 63603 (October 8, 2020) (SR-NYSEAMER-2020-69) (``SR-
NYSEAMER-2020-69'').
    \5\ The Exchange may submit a separate rule filing to extend the 
expiration date of the proposed extension beyond April 30, 2021 if 
the Exchange requires additional temporary relief from the rule 
requirements identified in SR-NYSEAMER-2020-69. The amended NYSE 
American rules will revert back to their original state at the 
conclusion of the temporary relief period and any extension thereof.
---------------------------------------------------------------------------

Background
    In 2016, NYSE American (then known as NYSE MKT LLC) adopted 
disciplinary rules that are, with certain exceptions, substantially the 
same as the Rule 8000 Series and Rule 9000 Series of FINRA and its 
affiliate the New York Stock Exchange LLC (``NYSE''), and which set 
forth rules for conducting investigations and enforcement actions.\6\ 
The NYSE American disciplinary rules were implemented on April 15, 
2016.\7\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release Nos. 77241 (February 26, 
2016), 81 FR 11311 (March 3, 2016) (SR-NYSEMKT-2016-30) (``2016 
Notice'').
    \7\ See NYSE MKT Information Memorandum 16-02 (March 14, 2016).
---------------------------------------------------------------------------

    In adopting disciplinary rules modeled on FINRA's rules, NYSE 
American adopted the hearing and evidentiary processes set forth in 
Rule 9261 and in Rule 9830 for hearings in matters involving temporary 
and permanent cease and desist orders under the Rule 9800 Series. As 
adopted, the text of Rule 9261 and Rule 9830 are substantially the same 
as the FINRA rules with certain modifications.\8\
---------------------------------------------------------------------------

    \8\ See 2016 Notice, 81 FR at 11327 & 11332.

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[[Page 651]]

    In response to the spread of COVID-19, on August 31, 2020, FINRA 
filed with the Commission a proposed rule change for immediate 
effectiveness, SR-FINRA-2020-027, to temporarily grant FINRA's Office 
of Hearing Officers (``OHO'') and the National Adjudicatory Council 
(``NAC'') the authority to conduct certain hearings by video 
conference, if warranted by the current COVID-19-related public health 
risks posed by in-person hearings. Among the rules FINRA amended were 
Rules 9261 and 9830.\9\
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    \9\ See Securities Exchange Act Release No. 83289 (September 2, 
2020), 85 FR 55712 (September 9, 2020) (SR-FINRA-2020-027) (the 
``August 31 FINRA Filing'').
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    Given that FINRA and OHO administers disciplinary hearings on the 
Exchange's behalf, and that the public health concerns addressed by 
FINRA's amendments apply equally to Exchange disciplinary hearings, on 
September 15, 2020, the Exchange filed to temporarily amend Rule 9261 
and Rule 9830 to permit FINRA to conduct virtual hearings on its 
behalf.\10\ The temporary amendments to Rule 9261 and Rule 9830, as 
originally proposed, will expire on December 31, 2020, absent another 
proposed rule change filing by the Exchange.
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    \10\ See supra note 4.
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    The COVID-19 conditions necessitating these temporary amendments 
persist, with cases rapidly escalating nationwide. Based on its 
assessment of current COVID-19 conditions and the lack of certainty as 
to when COVID-19-related health concerns will subside, on December 1, 
2020, FINRA filed to extend the expiration date of the temporary rule 
amendments to, among other rules, FINRA Rule 9261 and 9830 from 
December 31, 2020, to April 30, 2021.\11\
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    \11\ See Securities Exchange Act Release No. 90619 (December 9, 
2020), 85 FR 81250 (December 15, 2020) (SR-FINRA-2020-042) (``SR-
FINRA-2020-042'').
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Proposed Rule Change
    Consistent with FINRA's recent proposal, the Exchange proposes to 
extend the expiration date of the temporary rule amendments to NYSE 
American Rules 9261 and 9830 as set forth in SR-NYSEAMER-2020-69 from 
December 31, 2020, to April 30, 2021.
    As set forth in SR-FINRA-2020-042, based on its assessment of 
current COVID-19 conditions, including the recent escalation in COVID-
19 cases nationwide, FINRA does not believe that the COVID-19-related 
health concerns necessitating this relief will subside by December 31, 
2020, and has determined that there will be a continued need for this 
temporary relief for several months beyond December 31, 2020.\12\ FINRA 
accordingly proposed to extend the expiration date of the temporary 
rule amendments in the August 31 FINRA Filing from December 31, 2020, 
to April 30, 2021.
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    \12\ See id.
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    The Exchange proposes to similarly extend the expiration date of 
the temporary rule amendments to NYSE American Rules 9261 and 9830 as 
set forth in SR-NYSEAMER-2020-69 from December 31, 2020, to April 30, 
2021. With COVID-19 cases surging nationwide, the Exchange agrees with 
FINRA that the COVID-19-related public health risks necessitating this 
temporary relief have not yet abated and are unlikely to abate by 
December 31, 2020. The proposed change will permit OHO to continue to 
assess, based on critical COVID-19 data and criteria and the guidance 
of health and security consultants, whether an in-person hearing would 
compromise the health and safety of the hearing participants such that 
the hearing should proceed by video conference. FINRA has adopted a 
detailed and thorough protocol to ensure that hearings conducted by 
video conference will maintain fair process for the parties.\13\ The 
Exchange believes that this is a reasonable procedure to continue to 
follow for hearings under Rules 9261 and 9830 chaired by a FINRA 
employee.
---------------------------------------------------------------------------

    \13\ See SR-FINRA-2020-042, 85 FR at 81251-52; August 31 FINRA 
Filing, 85 FR at 55713.
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    As noted below, the Exchange has filed the proposed rule change for 
immediate effectiveness and has requested that the SEC waive the 
requirement that the proposed rule change not become operative for 30 
days after the date of the filing, so the Exchange can implement the 
proposed rule change immediately.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\14\ in general, and furthers the objectives of Section 
6(b)(5),\15\ in particular, because it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, to 
remove impediments to, and perfect the mechanism of, a free and open 
market and a national market system and, in general, to protect 
investors and the public interest. Additionally, the Exchange believes 
the proposed rule change is designed to provide a fair procedure for 
the disciplining of members and persons associated with members, 
consistent with Sections 6(b)(7) and 6(d) of the Act.\16\
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ 15 U.S.C. 78f(b)(7) and 78f(d).
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    The Exchange believes that the proposed rule change supports the 
objectives of the Act by providing greater harmonization between 
Exchange rules and FINRA rules of similar purpose, resulting in less 
burdensome and more efficient regulatory compliance. As such, the 
proposed rule change will foster cooperation and coordination with 
persons engaged in facilitating transactions in securities and will 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
    The proposed rule change, which extends the expiration date of the 
temporary amendments to Exchange rules consistent with FINRA's 
extension to its Rules 9261 and 9830 for four months as set forth in 
SR-FINRA-2020-042, will permit the Exchange to continue to effectively 
conduct hearings during the COVID-19 pandemic in situations where in-
person hearings present likely public health risks. The ability to 
conduct hearings by video conference will permit the adjudicatory 
functions of the Exchange's disciplinary rules to continue unabated, 
thereby avoiding protracted delays. The Exchange believes that this is 
especially important in matters where temporary and permanent cease and 
desist orders are sought because the proposed rule change would enable 
those hearings to continue to proceed without delay, thereby enabling 
the Exchange to continue to take immediate action to stop significant, 
ongoing customer harm, to the benefit of the investing public.
    As set forth in detail in SR-NYSEAMER-2020-69, the temporary relief 
to permit hearings to be conducted via video conference maintains fair 
process and will continue to provide fair process consistent with 
Sections 6(b)(7) and 6(d) of the Act \17\ while striking an appropriate 
balance between providing fair process and enabling the Exchange to 
fulfill its statutory obligations to protect investors and maintain 
fair and orderly markets while accounting for the significant health 
and safety risks of in-person hearings stemming from the outbreak of 
COVID-19. The Exchange notes that this proposal, like SR-NYSEAMER-2020-
69, provides only temporary relief. As

[[Page 652]]

proposed, the changes would be in place through April 30, 2021. As 
noted in SR-NYSEAMER-2020-69 and above, the amended rules will revert 
back to their original state at the conclusion of the temporary relief 
period and, if applicable, any extension thereof. Accordingly, the 
proposed rule change extending this temporary relief is in the public 
interest and consistent with the Act's purpose.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b)(7) and 78f(d).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed temporary rule 
change will impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
rule change is not intended to address competitive issues but is rather 
intended solely to provide continued temporary relief given the impacts 
of the COVID-19 pandemic and the related health and safety risks of 
conducting in-person activities. The Exchange believes that the 
proposed rule change will prevent unnecessary disruptions that would 
otherwise result if the temporary amendments were to expire on December 
31, 2020.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    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) \18\ of the Act and Rule 19b-
4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 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. 
The Exchange 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. The Exchange has requested that the 
Commission waive the 30-day operative delay so that the proposed rule 
change may become operative immediately upon filing. As noted above, 
the Exchange states that the COVID-related health and safety risks of 
conducting in-person activities, which necessitated these temporary 
amendments, persist and that cases are escalating nationwide. Based on 
FINRA's assessment of the current COVID-19 conditions and FINRA's 
determination that there is a continued need for this temporary relief 
for several months beyond December 31, 2020, the Exchange states that 
it agrees with FINRA that the COVID-19-related public health risks 
necessitating this temporary relief have not yet abated and are 
unlikely to abate by December 31, 2020.\20\ Moreover, the Exchange 
states that FINRA has adopted a detailed and thorough protocol to 
ensure that hearings conducted by video conference will provide a fair 
process for all parties and enable the Exchange to fulfill its 
statutory obligations to protect investors and maintain fair and 
orderly markets.\21\ The Exchange believes that this is a reasonable 
procedure to continue to follow for hearings under Rules 9261 and 9830 
chaired by a FINRA employee. Accordingly, the Exchange states that 
waiver of the operative delay would prevent unnecessary disruptions 
that would otherwise result if the temporary amendments were to expire 
on December 31, 2020.
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    \20\ See SR-FINRA-2020-042.
    \21\ See id.
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    The Exchange also indicates that this filing is eligible to become 
operative immediately because the proposal would continue to provide 
greater harmonization between the Exchange rules and FINRA rules that 
serve a similar purpose, resulting in less burdensome and more 
efficient regulatory compliance. This proposal would serve to extend 
the expiration date of the temporary amendments to the Exchange rules 
set forth in SR-NYSEAMER-2020-69, which is consistent with FINRA's 
extension to its comparable rules, where FINRA requested and the 
Commission granted a waiver of the 30-day operative delay.\22\ The 
Exchange also indicates that this temporary relief is necessary in 
order for the continued performance of its adjudicatory functions 
necessary to meet its statutory obligations in light of COVID-19 
related health and safety risks associated with in-person hearings and 
will only be temporary relief, with the rules reverting back to their 
original state at the conclusion of the relief period and any extension 
thereof.\23\
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    \22\ See supra note 11 (referencing FINRA's proposal to extend 
the expiration date of temporary rule amendments allowing hearings 
to be conducted on a temporary basis by video conference if 
warranted by COVID-19 related health risks).
    \23\ See supra note 5 and accompanying text.
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    The Commission observes that this proposal, like SR-NYSEAMER-2020-
69 and FINRA's comparable filing,\24\ provides only temporary relief 
during the period in which the Exchange's operations are impacted by 
COVID-19. As proposed, the changes would be in place through April 30, 
2021. 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. Accordingly, the Commission hereby waives the 30-
day operative delay and designates the proposal operative upon 
filing.\25\
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    \24\ See supra notes 9 and 11 and accompanying text.
    \25\ 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-NYSEAMER-2020-88 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.


[[Page 653]]


All submissions should refer to File Number SR-NYSEAMER-2020-88. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, on business days between the 
hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE, 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEAMER-2020-88 and should 
be submitted on or before February 22, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-29214 Filed 1-5-21; 8:45 am]
BILLING CODE 8011-01-P

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