Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make Technical and Other Non-Substantive Changes Within FINRA Rules, 38395-38397 [2021-15338]
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38395
Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 18 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
khammond on DSKJM1Z7X2PROD with NOTICES
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSENAT–2021–14 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSENAT–2021–14. 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
18 15
U.S.C. 78s(b)(2)(B).
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17:00 Jul 19, 2021
Jkt 253001
to make available publicly. All
submissions should refer to File
Number SR–NYSENAT–2021–14, and
should be submitted on or before
August 10, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–15336 Filed 7–19–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92403; File No. SR–FINRA–
2021–018]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Make Technical and
Other Non-Substantive Changes
Within FINRA Rules
July 14, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 6,
2021, the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
constituting a ‘‘non-controversial’’ rule
change under paragraph (f)(6) of Rule
19b–4 under the Act,3 which renders
the proposal effective upon receipt of
this filing by the Commission. 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
FINRA is proposing to make technical
and other non-substantive changes
within FINRA rules.
The text of the proposed rule change
is available on FINRA’s website at
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6). 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. FINRA has satisfied
this requirement.
PO 00000
19 17
1 15
Frm 00132
Fmt 4703
Sfmt 4703
https://www.finra.org, at the principal
office of FINRA and at the
Commission’s Public Reference Room.
Below is the text of the proposed rule
change. Proposed new language is in
italics; proposed deletions are in
brackets.
*
*
*
*
*
Schedule A to the By-Laws of the
Corporation
*
*
*
*
*
IM–Section 4(b)(1) and (e) Exemption
From Certain Registration and
Membership Application Fees for
Certain NYSE and NYSE [Alternext
US]American LLC Member
Organizations
NYSE and NYSE [Alternext
US]American LLC member
organizations that become members of
FINRA pursuant to IM–1013–1 and IM–
1013–2, respectively, shall not be
assessed the fee set forth in Section
4(b)(1) to Schedule A of the FINRA ByLaws for the initial Form U4 filed by
firms for the registration of any
representative or principal associated
with the member organization at the
time a firm submits its application for
FINRA membership. Such firms also
shall not be assessed the membership
application fee set forth in Section 4(e)
to Schedule A of the FINRA By-Laws.
However, those firms will otherwise
remain subject to FINRA’s By-Laws and
Schedules to By-Laws, including
Schedule A.
*
*
*
*
*
FINRA Rules
*
*
*
*
*
1000. Member Application and
Associated Person Registration
*
*
*
*
*
IM–1011–1. Safe Harbor for Business
Expansions
This interpretive material concerns
the types of business expansions that
will not require a member to submit a
Rule 1017 application to obtain FINRA’s
approval of the expansion. This safe
harbor applies to: (1) Firms that do not
have a membership agreement, and (2)
firms that have a membership agreement
that does not contain a restriction on the
factors listed below.
*
*
*
*
*
The safe harbor is not available to any
member that has disciplinary history.
For purposes of this Interpretation,
‘‘disciplinary history’’ means a finding
of a violation by the member or a
principal of the member in the past five
years by the SEC, a self-regulatory
organization, or a foreign financial
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38396
Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
regulatory authority of one or more of
the following provisions (or a
comparable foreign provision) or rules
or regulations thereunder: Violations of
the types enumerated in Section
15(b)(4)(E) and Section 15(c) of the
Exchange Act; Section 17(a) of the
Securities Act; SEA Rules 10b–5 and
15g–1 through 15g–9; FINRA Rules 2010
(only if the finding of a violation is for
unauthorized trading, churning,
conversion, material misrepresentations
or omissions to a customer,
frontrunning, trading ahead of research
reports or excessive markups), 2020,
2111, 2121, 2150, 4330, 3110 (failure to
supervise only), 5210, and 5230; and
MSRB Rules G–19, G–30, and G–37(b)
and (c), and all predecessor NASD rules
to such FINRA rules.
*
*
*
*
*
1017. Application for Approval of
Change in Ownership, Control, or
Business Operations
(a) through (k) No Change.
(l) Removal or Modification of
Restriction on Department’s Initiative
The Department shall modify or
remove a restriction on its own
initiative if the Department determines
such action is appropriate in light of the
considerations set forth in paragraph
([h]i)(1). The Department shall notify
the member in writing of the
Department’s determination and inform
the member that it may apply for further
modification or removal of a restriction
by filing an application under paragraph
(a).
(m) No Change.
*
*
*
*
*
khammond on DSKJM1Z7X2PROD with 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,
FINRA included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On March 26, 2020, the Commission
approved amendments to Rule 1017,
among other rules, as part of FINRA’s
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17:00 Jul 19, 2021
Jkt 253001
efforts to help further address the issue
of customer recovery of unpaid
arbitration awards.4 Before the
amendments to Rule 1017, paragraph
(h)(1) related to FINRA’s decision on an
application for continuing FINRA
membership, and specified some factors
that create a presumption to deny an
application. File No. SR–FINRA–2019–
030 renumbered that paragraph to
paragraph (i)(1). Currently, Rule 1017(l)
cross-references to paragraph (h)(1),
which, as a result of SR–FINRA–2019–
030, requires an applicant for
continuing FINRA membership to
promptly provide FINRA written
notification of any arbitration claim
involving the applicant or its associated
persons that is filed, awarded or
becomes unpaid before a decision
constituting final action of FINRA is
served on the applicant. In File No. SR–
FINRA–2019–030, FINRA did not
propose a change to Rule 1017(l) to
reflect the rule cross-reference change
from paragraph (h)(1) to paragraph (i)(1).
With this proposed rule change, FINRA
is proposing to make this corrective
non-substantive, technical change to
Rule 1017(l).5
On April 10, 2019, the Commission
announced the immediate effectiveness
of the adoption of the remaining legacy
NASD rules as FINRA rules in the
consolidated FINRA rulebook and the
remaining Incorporated NYSE Rules and
Incorporated NYSE Rule Interpretations
in the consolidated FINRA rulebook as
a separate Temporary Dual FINRA–
NYSE Member Rules Series.6 Among
these legacy NASD rules was then
NASD Interpretative Material (‘‘IM’’)–
1011–1 (Safe Harbor for Business
Expansions). In general, this rule
created a safe harbor for specified
categories of business expansions,
subject to certain thresholds and
conditions, that a member may undergo
without filing an application for
continuing membership with FINRA,
but this safe harbor was unavailable to
a member with a defined ‘‘disciplinary
history.’’ Under NASD IM–1011–1, the
term ‘‘disciplinary history’’ meant a
4 See Securities Exchange Act Release No. 88482
(March 26, 2020), 85 FR 18299 (April 1, 2020)
(Order Approving File No. SR–FINRA–2019–030, as
Modified by Amendment No. 1). FINRA announced
September 14, 2020 as the effective date of the rule
change in Regulatory Notice 20–15 (May 2020).
5 FINRA notes that the proposed rule change
would impact all members, including members that
have elected to be treated as capital acquisition
brokers (‘‘CABs’’) and are subject to CAB rules. CAB
Rule 116 (Application for Approval of Change in
Ownership, Control, or Business Operations)
incorporates by reference Rule 1017.
6 See Securities Exchange Act Release No. 85589
(April 10, 2019), 84 FR 15646 (April 16, 2019)
(Notice of Filing and Immediate Effectiveness of
File No. SR–FINRA–2019–009).
PO 00000
Frm 00133
Fmt 4703
Sfmt 4703
finding of a violation by the member or
a principal of the member in the past
five years by the SEC, a self-regulatory
organization, or a foreign financial
regulatory authority of one or more
specified provisions that included
NASD Rule 2440 (Fair Prices and
Commissions), the predecessor rule to
FINRA Rule 2121 (Fair Prices and
Commissions).7 Through File No. SR–
FINRA–2019–009, FINRA adopted
NASD IM–1011–1 as FINRA IM–1011–
1 with the intention of replacing therein
all references to an NASD rule with its
corresponding FINRA rule. The
reference to NASD Rule 2440, or ‘‘2440’’
as written in NASD IM–1011–1, was
inadvertently omitted from the rule text
presented in Exhibit 4 and Exhibit 5 to
File No. SR–FINRA–2019–009 and as a
result, the list of rules for ‘‘disciplinary
history’’ as they currently appear in
FINRA IM–1011–1 omits the reference
to FINRA Rule 2121. With this proposed
rule change, FINRA is proposing to
correct this technical error by including
a reference to ‘‘2121’’ to the sequence of
FINRA rules defining ‘‘disciplinary
history’’ under FINRA IM–1011–1.
Finally, the proposed rule change
would change the references to ‘‘NYSE
Alternext US’’ in IM-Section 4(b)(1) and
(e) of Schedule A to the FINRA By-Laws
to ‘‘NYSE American.’’ 8
FINRA has filed the proposed rule
change for immediate effectiveness and
has requested that the SEC waive the
requirement that the proposed rule
change not become operative for 30 days
after the date of the filing so FINRA can
implement the proposed rule change
immediately.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,9 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest. The proposed rule
change will make corrective nonsubstantive, technical updates that
7 In 2014, FINRA adopted NASD Rule 2440 and
its IMs, without material change, as FINRA Rule
2121. See Securities Exchange Act Release No.
72208 (May 21, 2014), 79 FR 30675 (May 28, 2014)
(Notice of filing and Immediate Effectiveness of File
No. SR–FINRA–2014–023).
8 NYSE Alternext US LLC is a predecessor entity
to NYSE American LLC. See Securities Exchange
Act Release No. 80283 (March 21, 2017), 82 FR
15244 (March 27, 2017) (Notice of Filing and
Immediate Effectiveness of File No. SR–NYSEMKT–
2017–14).
9 15 U.S.C. 78o–3(b)(6).
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Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
Paper Comments
FINRA believes will provide greater
clarity to FINRA rules.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change brings clarity and
consistency to FINRA rules without
adding any burden on firms.
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 10 and Rule 19b–
4(f)(6) thereunder.11
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:
• 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–FINRA–2021–018. 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 FINRA. 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–FINRA–
2021–018 and should be submitted on
or before August 10, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–15338 Filed 7–19–21; 8:45 am]
BILLING CODE 8011–01–P
khammond on DSKJM1Z7X2PROD 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–
FINRA–2021–018 on the subject line.
10 15
11 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
VerDate Sep<11>2014
17:00 Jul 19, 2021
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92407; File No. SR–
CboeBYX–2021–016]
Self-Regulatory Organizations; Cboe
BYX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
July 14, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 1,
2021, Cboe BYX Exchange, Inc.
(‘‘Exchange’’ or ‘‘BYX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) proposes to
amend its Fee Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/byx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
12 17
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38397
2 17
E:\FR\FM\20JYN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
20JYN1
]]>Agencies
[Federal Register Volume 86, Number 136 (Tuesday, July 20, 2021)]
[Notices]
[Pages 38395-38397]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15338]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92403; File No. SR-FINRA-2021-018]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Make Technical and Other Non-Substantive
Changes Within FINRA Rules
July 14, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 6, 2021, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under
the Act,\3\ which renders the proposal effective upon receipt of this
filing by the Commission. 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.
\3\ 17 CFR 240.19b-4(f)(6). 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. FINRA
has satisfied this requirement.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to make technical and other non-substantive
changes within FINRA rules.
The text of the proposed rule change is available on FINRA's
website at https://www.finra.org, at the principal office of FINRA and
at the Commission's Public Reference Room.
Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *
Schedule A to the By-Laws of the Corporation
* * * * *
IM-Section 4(b)(1) and (e) Exemption From Certain Registration and
Membership Application Fees for Certain NYSE and NYSE [Alternext
US]American LLC Member Organizations
NYSE and NYSE [Alternext US]American LLC member organizations that
become members of FINRA pursuant to IM-1013-1 and IM-1013-2,
respectively, shall not be assessed the fee set forth in Section
4(b)(1) to Schedule A of the FINRA By-Laws for the initial Form U4
filed by firms for the registration of any representative or principal
associated with the member organization at the time a firm submits its
application for FINRA membership. Such firms also shall not be assessed
the membership application fee set forth in Section 4(e) to Schedule A
of the FINRA By-Laws. However, those firms will otherwise remain
subject to FINRA's By-Laws and Schedules to By-Laws, including Schedule
A.
* * * * *
FINRA Rules
* * * * *
1000. Member Application and Associated Person Registration
* * * * *
IM-1011-1. Safe Harbor for Business Expansions
This interpretive material concerns the types of business
expansions that will not require a member to submit a Rule 1017
application to obtain FINRA's approval of the expansion. This safe
harbor applies to: (1) Firms that do not have a membership agreement,
and (2) firms that have a membership agreement that does not contain a
restriction on the factors listed below.
* * * * *
The safe harbor is not available to any member that has
disciplinary history. For purposes of this Interpretation,
``disciplinary history'' means a finding of a violation by the member
or a principal of the member in the past five years by the SEC, a self-
regulatory organization, or a foreign financial
[[Page 38396]]
regulatory authority of one or more of the following provisions (or a
comparable foreign provision) or rules or regulations thereunder:
Violations of the types enumerated in Section 15(b)(4)(E) and Section
15(c) of the Exchange Act; Section 17(a) of the Securities Act; SEA
Rules 10b-5 and 15g-1 through 15g-9; FINRA Rules 2010 (only if the
finding of a violation is for unauthorized trading, churning,
conversion, material misrepresentations or omissions to a customer,
frontrunning, trading ahead of research reports or excessive markups),
2020, 2111, 2121, 2150, 4330, 3110 (failure to supervise only), 5210,
and 5230; and MSRB Rules G-19, G-30, and G-37(b) and (c), and all
predecessor NASD rules to such FINRA rules.
* * * * *
1017. Application for Approval of Change in Ownership, Control, or
Business Operations
(a) through (k) No Change.
(l) Removal or Modification of Restriction on Department's Initiative
The Department shall modify or remove a restriction on its own
initiative if the Department determines such action is appropriate in
light of the considerations set forth in paragraph ([h]i)(1). The
Department shall notify the member in writing of the Department's
determination and inform the member that it may apply for further
modification or removal of a restriction by filing an application under
paragraph (a).
(m) No Change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On March 26, 2020, the Commission approved amendments to Rule 1017,
among other rules, as part of FINRA's efforts to help further address
the issue of customer recovery of unpaid arbitration awards.\4\ Before
the amendments to Rule 1017, paragraph (h)(1) related to FINRA's
decision on an application for continuing FINRA membership, and
specified some factors that create a presumption to deny an
application. File No. SR-FINRA-2019-030 renumbered that paragraph to
paragraph (i)(1). Currently, Rule 1017(l) cross-references to paragraph
(h)(1), which, as a result of SR-FINRA-2019-030, requires an applicant
for continuing FINRA membership to promptly provide FINRA written
notification of any arbitration claim involving the applicant or its
associated persons that is filed, awarded or becomes unpaid before a
decision constituting final action of FINRA is served on the applicant.
In File No. SR-FINRA-2019-030, FINRA did not propose a change to Rule
1017(l) to reflect the rule cross-reference change from paragraph
(h)(1) to paragraph (i)(1). With this proposed rule change, FINRA is
proposing to make this corrective non-substantive, technical change to
Rule 1017(l).\5\
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\4\ See Securities Exchange Act Release No. 88482 (March 26,
2020), 85 FR 18299 (April 1, 2020) (Order Approving File No. SR-
FINRA-2019-030, as Modified by Amendment No. 1). FINRA announced
September 14, 2020 as the effective date of the rule change in
Regulatory Notice 20-15 (May 2020).
\5\ FINRA notes that the proposed rule change would impact all
members, including members that have elected to be treated as
capital acquisition brokers (``CABs'') and are subject to CAB rules.
CAB Rule 116 (Application for Approval of Change in Ownership,
Control, or Business Operations) incorporates by reference Rule
1017.
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On April 10, 2019, the Commission announced the immediate
effectiveness of the adoption of the remaining legacy NASD rules as
FINRA rules in the consolidated FINRA rulebook and the remaining
Incorporated NYSE Rules and Incorporated NYSE Rule Interpretations in
the consolidated FINRA rulebook as a separate Temporary Dual FINRA-NYSE
Member Rules Series.\6\ Among these legacy NASD rules was then NASD
Interpretative Material (``IM'')-1011-1 (Safe Harbor for Business
Expansions). In general, this rule created a safe harbor for specified
categories of business expansions, subject to certain thresholds and
conditions, that a member may undergo without filing an application for
continuing membership with FINRA, but this safe harbor was unavailable
to a member with a defined ``disciplinary history.'' Under NASD IM-
1011-1, the term ``disciplinary history'' meant a finding of a
violation by the member or a principal of the member in the past five
years by the SEC, a self-regulatory organization, or a foreign
financial regulatory authority of one or more specified provisions that
included NASD Rule 2440 (Fair Prices and Commissions), the predecessor
rule to FINRA Rule 2121 (Fair Prices and Commissions).\7\ Through File
No. SR-FINRA-2019-009, FINRA adopted NASD IM-1011-1 as FINRA IM-1011-1
with the intention of replacing therein all references to an NASD rule
with its corresponding FINRA rule. The reference to NASD Rule 2440, or
``2440'' as written in NASD IM-1011-1, was inadvertently omitted from
the rule text presented in Exhibit 4 and Exhibit 5 to File No. SR-
FINRA-2019-009 and as a result, the list of rules for ``disciplinary
history'' as they currently appear in FINRA IM-1011-1 omits the
reference to FINRA Rule 2121. With this proposed rule change, FINRA is
proposing to correct this technical error by including a reference to
``2121'' to the sequence of FINRA rules defining ``disciplinary
history'' under FINRA IM-1011-1.
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\6\ See Securities Exchange Act Release No. 85589 (April 10,
2019), 84 FR 15646 (April 16, 2019) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2019-009).
\7\ In 2014, FINRA adopted NASD Rule 2440 and its IMs, without
material change, as FINRA Rule 2121. See Securities Exchange Act
Release No. 72208 (May 21, 2014), 79 FR 30675 (May 28, 2014) (Notice
of filing and Immediate Effectiveness of File No. SR-FINRA-2014-
023).
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Finally, the proposed rule change would change the references to
``NYSE Alternext US'' in IM-Section 4(b)(1) and (e) of Schedule A to
the FINRA By-Laws to ``NYSE American.'' \8\
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\8\ NYSE Alternext US LLC is a predecessor entity to NYSE
American LLC. See Securities Exchange Act Release No. 80283 (March
21, 2017), 82 FR 15244 (March 27, 2017) (Notice of Filing and
Immediate Effectiveness of File No. SR-NYSEMKT-2017-14).
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FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days after the
date of the filing so FINRA can implement the proposed rule change
immediately.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\9\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. The proposed rule change will make corrective non-
substantive, technical updates that
[[Page 38397]]
FINRA believes will provide greater clarity to FINRA rules.
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\9\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change brings
clarity and consistency to FINRA rules without adding any burden on
firms.
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 \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-FINRA-2021-018 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-FINRA-2021-018. 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 FINRA. 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-FINRA-2021-018 and should be submitted
on or before August 10, 2021.
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\12\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15338 Filed 7-19-21; 8:45 am]
BILLING CODE 8011-01-P
