Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 3100, Registration Requirements, To Adopt Temporary Interpretation and Policy .13 (Temporary Extension of the Limited Period for Registered Persons To Function as Principals), 633-636 [2020-29220]
Download as PDF
Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices
description of a proposed rule change,
its purpose and operation, its effect, and
a legal analysis of its consistency with
applicable requirements must all be
sufficiently detailed and specific to
support an affirmative Commission
finding,26 and any failure of an SRO to
provide this information may result in
the Commission not having a sufficient
basis to make an affirmative finding that
a proposed rule change is consistent
with the Act and the applicable rules
and regulations.27 The Commission
notes that the Exchange has provided no
data or analysis to support the
determination that, in the absence of
significant market or regulatory
experience, its proposal to permit the
listing and trading of Managed Portfolio
Shares pursuant to a generic listing
standards raises no new or novel
concerns.
Accordingly, the Commission is
instituting proceedings to allow for
additional consideration and comment
on the issues raised herein, including
whether the proposal is consistent with
the Act.
IV. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Section
6(b)(5) 28 of the Act or any other
provision of the Act, or the rules and
regulations thereunder. Although there
do not appear to be any issues relevant
to approval or disapproval that would
be facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4 under the Act,29 any request
for an opportunity to make an oral
presentation.30
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
26 See
id.
id.
28 15 U.S.C. 78f(b)(5).
29 17 CFR 240.19b–4.
30 Section 19(b)(2) of the Act, as amended by the
Securities Act Amendments of 1975, Public Law
94–29 (June 4, 1975), grants the Commission
flexibility to determine what type of proceeding—
either oral or notice and opportunity for written
comments—is appropriate for consideration of a
particular proposal by a self-regulatory
organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban
Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30
(1975).
jbell on DSKJLSW7X2PROD with NOTICES
27 See
VerDate Sep<11>2014
19:08 Jan 05, 2021
Jkt 253001
proposal should be approved or
disapproved by January 27, 2021. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by February 10, 2021. The
Commission asks that commenters
address the sufficiency of the
Exchange’s statements in support of the
proposal, which are set forth in the
Notice,31 in addition to any other
comments they may wish to submit
about the proposed rule change.
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–
NYSEArca–2020–84 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2020–84. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of 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–2020–84 and
should be submitted by January 27,
2021. Rebuttal comments should be
submitted by February 10, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–29283 Filed 1–5–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90831; File No. SR–
PEARL–2020–36]
Self-Regulatory Organizations; MIAX
PEARL, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Exchange
Rule 3100, 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, MIAX PEARL,
LLC (‘‘MIAX PEARL’’ 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 3100,
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/pearl, at MIAX PEARL’s
principal office, and at the
Commission’s Public Reference Room.
32 17
CFR 200.30–3(a)(57).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
31 See
PO 00000
Notice, supra note 3.
Frm 00134
Fmt 4703
Sfmt 4703
633
E:\FR\FM\06JAN1.SGM
06JAN1
634
Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices
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
jbell on DSKJLSW7X2PROD with NOTICES
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 3100, 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.
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
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.
5 See https://www.finra.org/rules-guidance/keytopics/covid-19/faq#qe.
VerDate Sep<11>2014
19:08 Jan 05, 2021
Jkt 253001
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
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
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 3100, 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 3100,
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).
PO 00000
Frm 00135
Fmt 4703
Sfmt 4703
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
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
10 See
supra note 3.
term ‘‘Member’’ means an individual or
organization that is registered with the Exchange
pursuant to Chapter II of these Rules for purposes
of trading on the Exchange as an ‘‘Electronic
Exchange Member ’’ or ‘‘Market Maker. 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.
11 The
E:\FR\FM\06JAN1.SGM
06JAN1
jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices
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 3100, 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 3100 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
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.
17 See supra note 3.
VerDate Sep<11>2014
19:08 Jan 05, 2021
Jkt 253001
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 3100, Interpretation and
Policy. 04, until April 30, 2021. The
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.
18 15
19 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00136
Fmt 4703
Sfmt 4703
635
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.
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
20 See
supra notes 3 and 9.
U.S.C. 78s(b)(3)(A).
22 17 CFR 240.19b–4(f)(6). In addition, Rule 19–
b4(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.
21 15
E:\FR\FM\06JAN1.SGM
06JAN1
636
Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices
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
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
jbell on DSKJLSW7X2PROD with NOTICES
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 PEARL rules.
VerDate Sep<11>2014
19:08 Jan 05, 2021
Jkt 253001
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
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–
PEARL–2020–36 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–PEARL–2020–36. 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
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).
PO 00000
Frm 00137
Fmt 4703
Sfmt 4703
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 PEARL. 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–PEARL–2020–36 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. 2020–29220 Filed 1–5–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90829; File No. SR–
EMERALD–2020–21]
Self-Regulatory Organizations; MIAX
Emerald, 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, MIAX Emerald,
LLC (‘‘MIAX Emerald’’ or the
30 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\06JAN1.SGM
06JAN1
Agencies
[Federal Register Volume 86, Number 3 (Wednesday, January 6, 2021)]
[Notices]
[Pages 633-636]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29220]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90831; File No. SR-PEARL-2020-36]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 3100, 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, MIAX PEARL, LLC (``MIAX
PEARL'' 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 3100,
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/pearl, at MIAX
PEARL's principal office, and at the Commission's Public Reference
Room.
[[Page 634]]
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 3100, 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 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.
---------------------------------------------------------------------------
\7\ Exchange Rule 3100, 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 3100,
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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\11\ The term ``Member'' means an individual or organization
that is registered with the Exchange pursuant to Chapter II of these
Rules for purposes of trading on the Exchange as an ``Electronic
Exchange Member '' or ``Market Maker. 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.
---------------------------------------------------------------------------
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
[[Page 635]]
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 3100,
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 3100 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
3100, Interpretation and Policy. 04, until April 30, 2021. The 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\
---------------------------------------------------------------------------
\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19-b4(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
[[Page 636]]
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\
---------------------------------------------------------------------------
\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 PEARL 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 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-PEARL-2020-36 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-PEARL-2020-36. 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 PEARL. 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-PEARL-2020-36 and
should be submitted on or before January 27, 2021.
---------------------------------------------------------------------------
\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. 2020-29220 Filed 1-5-21; 8:45 am]
BILLING CODE 8011-01-P