Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 1900, Registration Requirements, To Adopt Temporary Interpretation and Policy .13 (Temporary Extension of the Limited Period for Registered Persons To Function as Principals), 624-627 [2020-29219]

Download as PDF 624 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices SCI,’’ https://www.sec.gov/spotlight/ regulation-sci.shtml. 29. Shah, Syed Salman, and Ben Dyson, ‘‘Cyber insurance-linked securities have arrived, but market still in its infancy,’’ S&P Global Market Intelligence, https:// www.spglobal.com/marketintelligence/ en/news-insights/latest-news-headlines/ cyber-insurance-linked-securities-havearrived-but-market-still-in-infancy46915334. 30. SIFMA website, About. https:// www.sifma.org/about/. 31. Stephen Entin, ‘‘Labor Bears Much of the Cost of the Corporate Tax,’’ Tax Foundation Special Report No. 238, October 2017. https:// files.taxfoundation.org/20181107145034 /Tax-Foundation-SR2382.pdf. 32. Steven Shavell, ‘‘Liability for Accidents,’’ Chapter 2 in Handbook of Law and Economics, Vol. 1, Mitchell Polinsky and Steven Shavell, eds., Elsevier, 2007. 33. Steven Shavell, ‘‘Liability for Harm Versus Regulation of Safety,’’ The Journal of Legal Studies, Vol. 13, No. 2 (June 1984). 34. Steven Shavell, ‘‘The Judgement Proof Problem,’’ International Review of Law and Economics Vol. 6, No. 1 (June 1 1986). 35. U.S. Court of Appeals, 2nd Circuit, Standard Investment Chartered, Inc. v. National Association of Securities Dealers, et al., https:// caselaw.findlaw.com/us-2nd-circuit/ 1556297.html. 36. William M. Gentry, ‘‘A Review of the Evidence on the Incidence of the Corporate Income Tax,’’ U.S. Department of the Treasury OTA Paper 101, December 2007, https:// www.treasury.gov/resource-center/taxpolicy/tax-analysis/Documents/WP101.pdf. [FR Doc. 2020–29216 Filed 1–5–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90830; File No. SR–MIAX– 2020–42] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 1900, Registration Requirements, To Adopt Temporary Interpretation and Policy .13 (Temporary Extension of the Limited Period for Registered Persons To Function as Principals) jbell on DSKJLSW7X2PROD with NOTICES December 30, 2020. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 on December 28, 2020, the Miami International Securities Exchange, LLC (‘‘MIAX Options’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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 is filing a proposal to amend Exchange Rule 1900, Registration Requirements, to adopt temporary Interpretation and Policy .13 (Temporary Extension of the Limited Period for Registered Persons to Function as Principals). The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rulefilings/, at MIAX Options’ principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of 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 Interpretation and Policy .13 (Temporary Extension of the Limited Period for Registered Persons to Function as Principals) to Exchange Rule 1900, Registration Requirements. The proposed rule change would extend the 120-day period that certain individuals can function as principals without having successfully passed an appropriate qualification examination through April 30, 2021,3 and would 3 See Exchange Act Release No. 90617 (December 9, 2020), 85 FR 81258 (December 15, 2020) (SR– FINRA–2020–043) (‘‘FINRA Filing’’). The Exchange notes that the FINRA Filing also provides PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 apply only to those individuals who were designated to function as principals prior to January 1, 2021. This proposed rule change is based on a filing recently submitted by the Financial Regulatory Authority, Inc. (‘‘FINRA’’) 4 and is intended to harmonize the Exchange’s registration rules with those of FINRA so as to promote uniform standards across the securities industry. In response to COVID–19, earlier this year FINRA began providing temporary relief by way of frequently asked questions (‘‘FAQs’’) 5 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.6 FINRA published the first FAQ on March 20, 2020, providing that individuals who were designated to function as principals under FINRA Rule 1210.04 7 prior to February 2, 2020, would be given until May 31, 2020, to pass the appropriate principal qualification examination.8 On May 19, 2020, FINRA extended the relief to pass the appropriate examination until June 30, 2020. On June 29, 2020, FINRA 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 temporarily 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. If the Exchange seeks to provide additional temporary relief from the rule requirement identified in this proposal beyond April 30, 2021, it will submit a separate rule filing to further extend the temporary extension of time. 4 See id. 5 See https://www.finra.org/rules-guidance/keytopics/covid-19/faq#qe. 6 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. 7 Exchange Rule 1900, Interpretation and Policy .04, is the corresponding rule to FINRA Rule 1210.04. 8 FINRA Rule 1210.04 (Requirements for Registered Persons Functioning as Principals for a Limited Period) allows a FINRA-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. Exchange Rule 1900, Interpretation and Policy .04, provides the same allowance to Exchange Members. E:\FR\FM\06JAN1.SGM 06JAN1 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices jbell on DSKJLSW7X2PROD with NOTICES qualification examination. On August 28, 2020, FINRA filed with the Commission a proposed rule change for immediate effectiveness to extend the temporary relief provided via the two FAQs by adopting: (1) Temporary Supplementary Material .12 (Temporary Extension of the Limited Period for Registered Persons to Function as Principals) under FINRA Rule 1210 (Registration Requirements), and (2) temporary Supplementary Material .07 (Temporary Extension of the Limited Period for Persons to Function as Operations Professionals) under FINRA Rule 1220 (Registration Categories).9 Pursuant to this rule filing, individuals who were designated prior to September 3, 2020, to function as a principal under FINRA Rule 1210.04 would have until December 31, 2020, to pass the appropriate qualification examination. Thereafter, on December 9, 2020, FINRA filed with the Commission a proposed rule change for immediate effectiveness to extend the limited period for registered persons to function as a principal through April 30, 2021.10 Pursuant to this rule filing, individuals who were designated prior to January 1, 2021 to function as a principal would have until April 30, 2021 to pass the appropriate qualifying examination. The Exchange continues to closely monitor the impact of the COVID–19 pandemic on Members,11 investors, and other stakeholders. The COVID–19 conditions necessitating the extension of relief provided in the FINRA’s FAQs and rule amendments persist and, in fact, appear to be worsening.12 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.13 Although Prometric has begun reopening test centers, Prometric’s safety practices mean that currently not all test centers 9 See Exchange Act Release No. 89732 (September 1, 2020), 85 FR 55535 (September 8, 2020) (Notice of Filing and Immediate Effectiveness of File No. SR–FINRA–2020–026). 10 See supra note 3. 11 The term ‘‘Member’’ means an individual or organization approved to exercise the trading rights associated with a Trading Permit. Members are deemed ‘‘members’’ under the Exchange Act. See Exchange Rule 100. 12 See, e.g., Meryl Kornfield, Jacqueline Dupree, Marisa Iati, Paulina Villegas, Siobhan O’Grady and Hamza Shaban, New daily coronavirus cases in U.S. rise to 145,000, latest all-time high, Wash. Post, November 11, 2020, https:// www.washingtonpost.com/nation/2020/11/11/ coronavirus-covid-live-updates-us/. 13 Information about the continued impact of COVID–19 on FINRA-administered examinations is available at https://www.finra.org/rules-guidance/ key-topics/covid-19/exams. VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 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.14 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.15 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.16 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 Members to ensure that the individuals whom they have designated to function in a principal capacity, as set forth in Exchange Rule 1900, Interpretation and Policy .04, 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. 14 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. 15 Although an online test delivery service has been launched to help address the backlog, the General Securities Principal Exam (Series 24) is not available online. See supra note 13. FINRA is considering making additional qualifications examinations available remotely on a limited basis. 16 See, e.g., Centers for Disease Control and Prevention, How to Protect Yourself & Others, https://www.cdc.gov/coronavirus/2019-ncov/ prevent-getting-sick/prevention.html. PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 625 Therefore, the Exchange is proposing to provide the temporary relief provided through the FINRA FAQs by adopting Interpretation and Policy .13 to Exchange Rule 1900 to extend the 120day period during which an individual can function as a principal before having to pass an applicable qualification examination until April 30, 2021.17 The proposed rule change would apply only to those individuals who were designated to function as a principal prior to January 1, 2021. Any individuals designated to function as a principal on or after January 1, 2021, would need to successfully pass an appropriate qualification examination within 120 days. The Exchange believes that this proposed extension of time is tailored to address the needs and constraints on a Member’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 Members by providing flexibility so that Members can ensure that principal positions remain filled. The potential risks from the proposed extension of the 120-day period are mitigated by the Member’s requirement to supervise the activities of these designated individuals and ensure compliance with federal securities laws and regulations, as well as Exchange rules. 2. Statutory Basis The Exchange believes that its proposed rule change is consistent with Section 6(b) of the Exchange Act 18 in general, and furthers the objectives of Section 6(b)(5) of the Act 19 in particular, in that 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 mechanisms 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 operations by extending the 120-day period certain individuals may function as a principal without having successfully passed an appropriate qualification examination under Exchange Rule 1900, Interpretation and Policy .04, until April 30, 2021. The 17 See supra note 3. U.S.C. 78f(b). 19 15 U.S.C. 78f(b)(5). 18 15 E:\FR\FM\06JAN1.SGM 06JAN1 626 Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices proposed rule change does not relieve Members 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 Exchange rules that directly serve investor protection. In a time when faced with unique challenges resulting from the COVID–19 pandemic, the Exchange believes that the proposed rule change is a sensible accommodation that will continue to afford Members 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 jbell on DSKJLSW7X2PROD with NOTICES 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 Exchange 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 Members and their registered personnel. In that regard, the Exchange believes that any burden on competition would be clearly outweighed by providing Members 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.20 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. 20 See supra notes 3 and 9. VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 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 21 and Rule 19b– 4(f)(6) thereunder.22 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 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, the Exchange stated that the proposed extension of time will help minimize the impact of the COVID–19 outbreak on Members’ operations by allowing them to keep principal positions filled and minimizing disruptions to client services and other critical responsibilities. The Exchange further stated that the ongoing extenuating circumstances of the COVID–19 pandemic make it impractical to ensure that individuals designated to act in these capacities are able to take and pass the appropriate qualification examination during the 120-calendar day period required under the rules. The Exchange also explained that shelter-in-place orders, quarantining, restrictions on business and social activity and adherence to social distancing guidelines consistent with the recommendations of public officials remain in place in various states.23 In addition, the Exchange observed that, 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 21 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. 23 See supra note 16. 22 17 PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 local government.24 Although, as the Exchange noted, FINRA has launched an online test delivery service to help address this backlog, the General Securities Principal (Series 24) Examination is not available online.25 Nevertheless, the Exchange explained that the proposed rule change will provide needed flexibility to ensure that these positions remain filled and is tailored to address the constraints on Members’ operations during the COVID–19 pandemic without significantly compromising critical investor protection.26 The Commission observed that the Exchange’s proposal, like FINRA’s analogous filing, 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 April 30, 2021. If a further extension of temporary relief from the rule requirements identified in this proposal beyond April 30, 2021 is required, the Exchange noted that it may submit a separate rule filing to extend the effectiveness of the temporary relief under these rules.27 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.28 Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.29 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 24 See supra notes 13 and 14. The Exchange states that Prometric has also had to close some reopened test centers due to incidents of COVID–19 cases. 25 See supra note 15. FINRA is considering making additional qualification examinations available remotely on a limited basis. 26 The Exchange states that Members 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 MIAX Options rules. 27 See supra note 3. 28 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 3, FINRA Filing at 81260. 29 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 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: 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– MIAX–2020–42 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–MIAX–2020–42. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of MIAX Options. 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–MIAX–2020–42 and should be submitted on or before January 27, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.30 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–29219 Filed 1–5–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90822; File No. SR– NYSENAT–2020–39] Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Extending the Expiration Date of the Temporary Amendments to Rules 10.9261 and 10.9830 as Set Forth in SR–NYSENAT–2020–31 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 National, Inc. (‘‘NYSE National’’ or ‘‘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 10.9261 and 10.9830 as set forth in SR–NYSENAT– 2020–31 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 National Rules 10.9261 and 10.9830. 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 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 30 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:08 Jan 05, 2021 Jkt 253001 PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 627 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– NYSENAT–2020–31 4 to Rules 10.9261 (Evidence and Procedure in Hearing) and 10.9830 (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–NYSENAT–2020–31 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 10.9261 and 10.9830.5 Background In 2018, NYSE National adopted disciplinary rules that are, with certain exceptions, substantially the same as the disciplinary rules of its affiliate NYSE American LLC, which are in turn substantially similar to the FINRA Rule 8000 Series and Rule 9000 Series, and which set forth rules for conducting investigations and enforcement actions.6 In adopting disciplinary rules modeled on FINRA’s rules, NYSE National adopted the hearing and evidentiary processes set forth in Rule 10.9261 and in Rule 10.9830 for hearings in matters involving temporary and permanent cease and desist orders 4 See Securities Exchange Act Release No. 90137 (October 8, 2020), 85 FR 65087 (October 14, 2020) (SR–NYSENAT–2020–31) (‘‘SR–NYSENAT–2020– 31’’). 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–NYSENAT–2020–31. The amended NYSE National 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 No. 83289 (May 17, 2018), 83 FR 23968, 23976 (May 23, 2018) (SR–NYSENAT–2018–02) (‘‘2018 Approval Order’’). E:\FR\FM\06JAN1.SGM 06JAN1

Agencies

[Federal Register Volume 86, Number 3 (Wednesday, January 6, 2021)]
[Notices]
[Pages 624-627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29219]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90830; File No. SR-MIAX-2020-42]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Exchange Rule 1900, Registration 
Requirements, To Adopt Temporary Interpretation and Policy .13 
(Temporary Extension of the Limited Period for Registered Persons To 
Function as Principals)

December 30, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on December 28, 2020, the Miami International 
Securities Exchange, LLC (``MIAX Options'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``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\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend Exchange Rule 1900, 
Registration Requirements, to adopt temporary Interpretation and Policy 
.13 (Temporary Extension of the Limited Period for Registered Persons 
to Function as Principals).
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxoptions.com/rule-filings/, at MIAX Options' 
principal office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of 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 Interpretation and Policy .13 
(Temporary Extension of the Limited Period for Registered Persons to 
Function as Principals) to Exchange Rule 1900, Registration 
Requirements. The proposed rule change would extend the 120-day period 
that certain individuals can function as principals without having 
successfully passed an appropriate qualification examination through 
April 30, 2021,\3\ and would apply only to those individuals who were 
designated to function as principals prior to January 1, 2021. This 
proposed rule change is based on a filing recently submitted by the 
Financial Regulatory Authority, Inc. (``FINRA'') \4\ and is intended to 
harmonize the Exchange's registration rules with those of FINRA so as 
to promote uniform standards across the securities industry.
---------------------------------------------------------------------------

    \3\ See Exchange Act Release No. 90617 (December 9, 2020), 85 FR 
81258 (December 15, 2020) (SR-FINRA-2020-043) (``FINRA Filing''). 
The Exchange notes that the FINRA Filing also provides temporarily 
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. If the Exchange seeks to provide additional temporary relief 
from the rule requirement identified in this proposal beyond April 
30, 2021, it will submit a separate rule filing to further extend 
the temporary extension of time.
    \4\ See id.
---------------------------------------------------------------------------

    In response to COVID-19, earlier this year FINRA began providing 
temporary relief by way of frequently asked questions (``FAQs'') \5\ 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.\6\
---------------------------------------------------------------------------

    \5\ See https://www.finra.org/rules-guidance/key-topics/covid-19/faq#qe.
    \6\ 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.
---------------------------------------------------------------------------

    FINRA published the first FAQ on March 20, 2020, providing that 
individuals who were designated to function as principals under FINRA 
Rule 1210.04 \7\ prior to February 2, 2020, would be given until May 
31, 2020, to pass the appropriate principal qualification 
examination.\8\ On May 19, 2020, FINRA extended the relief to pass the 
appropriate examination until June 30, 2020. On June 29, 2020, FINRA 
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

[[Page 625]]

qualification examination. On August 28, 2020, FINRA filed with the 
Commission a proposed rule change for immediate effectiveness to extend 
the temporary relief provided via the two FAQs by adopting: (1) 
Temporary Supplementary Material .12 (Temporary Extension of the 
Limited Period for Registered Persons to Function as Principals) under 
FINRA Rule 1210 (Registration Requirements), and (2) temporary 
Supplementary Material .07 (Temporary Extension of the Limited Period 
for Persons to Function as Operations Professionals) under FINRA Rule 
1220 (Registration Categories).\9\ Pursuant to this rule filing, 
individuals who were designated prior to September 3, 2020, to function 
as a principal under FINRA Rule 1210.04 would have until December 31, 
2020, to pass the appropriate qualification examination.
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    \7\ Exchange Rule 1900, Interpretation and Policy .04, is the 
corresponding rule to FINRA Rule 1210.04.
    \8\ FINRA Rule 1210.04 (Requirements for Registered Persons 
Functioning as Principals for a Limited Period) allows a FINRA-
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. Exchange Rule 1900, 
Interpretation and Policy .04, provides the same allowance to 
Exchange Members.
    \9\ See Exchange Act Release No. 89732 (September 1, 2020), 85 
FR 55535 (September 8, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2020-026).
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    Thereafter, on December 9, 2020, FINRA filed with the Commission a 
proposed rule change for immediate effectiveness to extend the limited 
period for registered persons to function as a principal through April 
30, 2021.\10\ Pursuant to this rule filing, individuals who were 
designated prior to January 1, 2021 to function as a principal would 
have until April 30, 2021 to pass the appropriate qualifying 
examination.
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    \10\ See supra note 3.
---------------------------------------------------------------------------

    The Exchange continues to closely monitor the impact of the COVID-
19 pandemic on Members,\11\ investors, and other stakeholders. The 
COVID-19 conditions necessitating the extension of relief provided in 
the FINRA's FAQs and rule amendments persist and, in fact, appear to be 
worsening.\12\ 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.\13\ 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.\14\ 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.\15\
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    \11\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \12\ See, e.g., Meryl Kornfield, Jacqueline Dupree, Marisa Iati, 
Paulina Villegas, Siobhan O'Grady and Hamza Shaban, New daily 
coronavirus cases in U.S. rise to 145,000, latest all-time high, 
Wash. Post, November 11, 2020, https://www.washingtonpost.com/nation/2020/11/11/coronavirus-covid-live-updates-us/.
    \13\ Information about the continued impact of COVID-19 on 
FINRA-administered examinations is available at https://www.finra.org/rules-guidance/key-topics/covid-19/exams.
    \14\ 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.
    \15\ Although an online test delivery service has been launched 
to help address the backlog, the General Securities Principal Exam 
(Series 24) is not available online. See supra note 13. FINRA is 
considering making additional qualifications examinations available 
remotely on a limited basis.
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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.\16\ 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.
---------------------------------------------------------------------------

    \16\ See, e.g., Centers for Disease Control and Prevention, How 
to Protect Yourself & Others, https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/prevention.html.
---------------------------------------------------------------------------

    These ongoing, extenuating circumstances make it impracticable for 
Members to ensure that the individuals whom they have designated to 
function in a principal capacity, as set forth in Exchange Rule 1900, 
Interpretation and Policy .04, 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, the Exchange is proposing to provide 
the temporary relief provided through the FINRA FAQs by adopting 
Interpretation and Policy .13 to Exchange Rule 1900 to extend the 120-
day period during which an individual can function as a principal 
before having to pass an applicable qualification examination until 
April 30, 2021.\17\ The proposed rule change would apply only to those 
individuals who were designated to function as a principal prior to 
January 1, 2021. Any individuals designated to function as a principal 
on or after January 1, 2021, would need to successfully pass an 
appropriate qualification examination within 120 days.
---------------------------------------------------------------------------

    \17\ See supra note 3.
---------------------------------------------------------------------------

    The Exchange believes that this proposed extension of time is 
tailored to address the needs and constraints on a Member'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 Members by providing flexibility 
so that Members can ensure that principal positions remain filled. The 
potential risks from the proposed extension of the 120-day period are 
mitigated by the Member's requirement to supervise the activities of 
these designated individuals and ensure compliance with federal 
securities laws and regulations, as well as Exchange rules.
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Exchange Act \18\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \19\ in particular, in that 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 
mechanisms of a free and open market and a national market system and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change is intended to minimize the impact of 
COVID-19 on Member operations by extending the 120-day period certain 
individuals may function as a principal without having successfully 
passed an appropriate qualification examination under Exchange Rule 
1900, Interpretation and Policy .04, until April 30, 2021. The

[[Page 626]]

proposed rule change does not relieve Members 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 
Exchange rules that directly serve investor protection. In a time when 
faced with unique challenges resulting from the COVID-19 pandemic, the 
Exchange believes that the proposed rule change is a sensible 
accommodation that will continue to afford Members 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 Exchange 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 Members and their 
registered personnel. In that regard, the Exchange believes that any 
burden on competition would be clearly outweighed by providing Members 
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.\20\ 
The Exchange accordingly incorporates FINRA's abbreviated economic 
impact assessment by reference.
---------------------------------------------------------------------------

    \20\ See supra notes 3 and 9.
---------------------------------------------------------------------------

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 \21\ and Rule 19b-
4(f)(6) thereunder.\22\
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 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.
---------------------------------------------------------------------------

    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 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, the Exchange stated that the proposed extension of time will 
help minimize the impact of the COVID-19 outbreak on Members' 
operations by allowing them to keep principal positions filled and 
minimizing disruptions to client services and other critical 
responsibilities. The Exchange further stated that the ongoing 
extenuating circumstances of the COVID-19 pandemic make it impractical 
to ensure that individuals designated to act in these capacities are 
able to take and pass the appropriate qualification examination during 
the 120-calendar day period required under the rules. The Exchange also 
explained that shelter-in-place orders, quarantining, restrictions on 
business and social activity and adherence to social distancing 
guidelines consistent with the recommendations of public officials 
remain in place in various states.\23\ In addition, the Exchange 
observed that, 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.\24\ Although, as the Exchange noted, FINRA has launched an 
online test delivery service to help address this backlog, the General 
Securities Principal (Series 24) Examination is not available 
online.\25\ Nevertheless, the Exchange explained that the proposed rule 
change will provide needed flexibility to ensure that these positions 
remain filled and is tailored to address the constraints on Members' 
operations during the COVID-19 pandemic without significantly 
compromising critical investor protection.\26\
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    \23\ See supra note 16.
    \24\ See supra notes 13 and 14. The Exchange states that 
Prometric has also had to close some reopened test centers due to 
incidents of COVID-19 cases.
    \25\ See supra note 15. FINRA is considering making additional 
qualification examinations available remotely on a limited basis.
    \26\ The Exchange states that Members 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 MIAX Options rules.
---------------------------------------------------------------------------

    The Commission observed that the Exchange's proposal, like FINRA's 
analogous filing, 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 April 30, 
2021. If a further extension of temporary relief from the rule 
requirements identified in this proposal beyond April 30, 2021 is 
required, the Exchange noted that it may submit a separate rule filing 
to extend the effectiveness of the temporary relief under these 
rules.\27\ 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.\28\ Accordingly, the Commission 
hereby waives the 30-day operative delay and designates the proposal 
operative upon filing.\29\
---------------------------------------------------------------------------

    \27\ See supra note 3.
    \28\ 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 
3, FINRA Filing at 81260.
    \29\ 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).
---------------------------------------------------------------------------

    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

[[Page 627]]

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-MIAX-2020-42 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-MIAX-2020-42. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of MIAX Options. 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-MIAX-2020-42 and should be submitted on 
or before January 27, 2021.
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    \30\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-29219 Filed 1-5-21; 8:45 am]
BILLING CODE 8011-01-P
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