Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Supplementary Material .15 of IEX Rule 5.110 (Supervision), 2140-2142 [2023-00424]
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Federal Register / Vol. 88, No. 8 / Thursday, January 12, 2023 / Notices
‘‘Finding of no significant impact,’’ a
Finding of No Significant Impact
(FONSI) is appropriate. The
Environmental Assessment and FONSI
was finalized on December 8, 2022
(ML22341A195) and published in the
Federal Register on December 28, 2022
(87 FR 79910).
IV. Conclusions
Accordingly, the Commission has
determined that, pursuant to 10 CFR
72.7, the exemption is authorized by
law, will not endanger life or property
or the common defense and security and
is otherwise in the public interest.
Therefore, effective immediately, the
Commission hereby grants SCE an
exemption from 10 CFR 72.106(b) to
reduce the SONGS ISFSI CAB in areas
as identified in its application to less
than 100 meters.
Dated this 5th day of January 2023.
For the Nuclear Regulatory Commission.
Jane E. Marshall,
Director, Division of Decommissioning,
Uranium Recovery, and Waste Programs
Office of Nuclear Material Safety and
Safeguards.
[FR Doc. 2023–00428 Filed 1–11–23; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96606; File No. SR–IEX–
2022–14]
Self-Regulatory Organizations:
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Supplementary Material .15 of IEX Rule
5.110 (Supervision)
khammond on DSKJM1Z7X2PROD with NOTICES
January 6, 2023.
Pursuant to section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
23, 2022, the Investors Exchange LLC
(‘‘IEX’’ or ‘‘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 IEX. IEX has designated the
proposed rule change as constituting a
‘‘non-controversial’’ rule change under
section 19(b)(3)(A) 4 of the Act and Rule
19b–4(f)(6) 5 thereunder, which renders
the proposed rule change 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
Pursuant to the provisions of section
19(b)(1) under the Act,6 and Rule 19b–
4 thereunder,7 IEX is filing with the
Commission a proposed rule change to
amend Supplementary Material .15 of
IEX Rule 5.110 (Supervision) to extend
the temporary remote inspection relief
to IEX Members through the earlier of
the effective date of the FINRA pilot
program on remote inspections (the
‘‘FINRA Pilot Program’’) 8, if approved,
or December 31, 2023. The proposed
extension would alleviate the ongoing
operational challenges resulting from
the COVID–19 pandemic that many
member firms may continue to face in
planning for and timely conducting
required on-site inspections at locations
requiring inspection in calendar year
2023.
The text of the proposed rule change
is available at the Exchange’s website at
www.iextrading.com, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statement may be examined at
the places specified in Item IV below.
The self-regulatory organization 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The COVID–19 pandemic has caused
a host of operational disruptions to the
securities industry and impacted IEX
Members,9 regulators, investors, and
other stakeholders. In response to the
pandemic, IEX adopted Supplementary
6 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
8 See Securities Exchange Act Release No. 95452
(Aug. 9, 2022), 87 FR 50144 (Aug. 15, 2022) (File
No. SR–FINRA–2022–21).
9 See IEX Rule 1.160(s).
1 15
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 15 U.S.C. 78s(b)(3)(A).
5 17 CFR 240.19b–4(f)(6).
VerDate Sep<11>2014
17:36 Jan 11, 2023
7 17
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Material .15 of IEX Rule 5.110 to
provide Members the temporary option
of satisfying their inspection obligations
for offices of supervisory jurisdiction,
branch offices, or non-branch locations
under IEX Rule 5.110 (Supervision)
remotely for calendar years 2021 and
2022, subject to specified conditions,10
due to the logistical challenges of going
on-site while public health and safety
concerns related to COVID–19 persisted.
While there are several signs that the
pandemic has receded, much
uncertainty still remains. The
emergence of new variants, dissimilar
vaccination rates throughout the U.S.,
and varying levels of transmissions of
the virus all indicate that COVID–19
remains an active and real public health
concern. Against this setting, IEX
understands the complexity Members
face in assessing when and how to
effectively and safely recall their
employees back into offices alongside
fashioning permanent telework
arrangements or a hybrid workforce
model in which some employees may
work on-site in a commercial office
space and other employees may work
off-site in an alternative location (e.g., a
personal residence).11 Accordingly, due
to the continued logistical challenges of
going on-site to branch offices or
locations while these public health and
safety concerns related to COVID–19
persist coupled with several Members
delaying their return-to-office plans, IEX
believes that extending the temporary
remote inspection relief to Members is
warranted.
FINRA has filed with the Commission
File No. SR–FINRA–2022–021, a
proposed rule change to adopt a
voluntary, remote inspections pilot
program that is currently pending
Commission review. The FINRA Pilot
Program would provide for a voluntary,
three-year remote inspection pilot
program to allow broker-dealers to elect
to fulfill their obligation under FINRA
Rule 3110(c) (Internal Inspections) by
conducting inspections of some or all
branch offices and non-branch locations
remotely without an on-site visit to such
office or location, subject to specified
10 See Securities Exchange Act Release No. 92222
(June 22, 2021), 86 FR 34069 (June 28, 2021) (SR–
IEX–2021–09) (providing remote inspection relief to
Members for calendar year 2021), and Securities
Exchange Act Release No. 96460 (December 7,
2022), 87 FR 76222 (December 13, 2022) (SR–IEX–
2022–12) (providing remote inspection relief to
Members for calendar year 2022).
11 For example, IEX understands that both the
Commission and FINRA do not currently require
employees to return to the office. See SEC Fiscal
Year 2022 Agency Financial Report, available at
https://www.sec.gov/files/sec-2022-agencyfinancial-report.pdf and https://www.finra.org/
rules-guidance/key-topics/covid-19.
E:\FR\FM\12JAN1.SGM
12JAN1
khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 88, No. 8 / Thursday, January 12, 2023 / Notices
terms. FINRA has stated that the review
period for its rule filing may extend well
into 2023. Given the potential length of
that review period, and the pilot
program’s significant planning
requirements and varying limitations
applicable to specific firms and office
locations, FINRA believes that firms that
intend to participate in the pilot
program, if approved, would need a
significant number of months to prepare
appropriately for the pilot program.
Moreover, further FINRA guidance
might be needed to guide
implementation in various
circumstances.
To provide regulatory certainty while
the pilot program filing is pending, and
to avoid overlapping provisions if it is
approved, IEX is proposing to amend
Supplementary Material .15 of Rule
5.110 so that the temporary relief would
expire on the earlier of the effective date
of the FINRA Pilot Program or December
31, 2023. In the event the FINRA Pilot
Program is not approved by December
31, 2023, the proposed rule change will
automatically sunset on December 31,
2023. IEX will submit a separate rule
filing if it seeks to extend the duration
of the temporary proposed rule beyond
December 31, 2023. In the event the
FINRA Pilot Program is approved prior
to December 31, 2023, IEX will file a
conforming rule change with the
Commission.
The proposed rule change will
conform IEX’s rules with those of
FINRA, which has extended the same
temporary remote inspection relief to all
FINRA member firms.12 This proposed
extension would provide further clarity
to Members on regulatory requirements
and account for time needed for many
Members to carefully assess when and
how to have their employees safely
return to their offices considering
vaccination coverage in the U.S. and
transmission levels of the virus,
including any emergent variants
throughout the country.
The proposed amendment would
provide that Members have the option
to conduct remotely those inspections
described in Supplementary Material
.15 to IEX Rule 5.110 through the earlier
of the effective date of the FINRA Pilot
program, if approved, or December 31,
2023. IEX is not proposing to amend the
other conditions of the temporary relief
in Supplementary Material .15 of IEX
Rule 5.110. The current conditions of
Supplementary Material .15 of IEX Rule
5.110 for Members that elect to conduct
12 See Securities Exchange Act Release No. 94018
(January 20, 2022), 87 FR 4072 (January 26, 2022)
(SR–FINRA–2022–001) and Securities Exchange
Act Release No. 96241 (November 4, 2022) 87 FR
67969 (November 10, 2022) (SR–FINRA–2022–030).
VerDate Sep<11>2014
17:36 Jan 11, 2023
Jkt 259001
remote inspections would remain
unchanged: such firms must still amend
or supplement their written supervisory
procedures for remote inspections, use
remote inspections as part of an
effective supervisory system, and
maintain the required documentation.
The additional period of time would
also allow IEX to further monitor the
effectiveness of remote inspections and
their impacts—positive or negative—on
Members’ overall supervisory systems
in the evolving workplace.
IEX continues to believe this
temporary remote inspection option is a
reasonable alternative to provide to
Members to fulfill their IEX Rule 5.110
obligations during the ongoing
pandemic, and is designed to achieve
the investor protection objectives of the
inspection requirements under these
unique circumstances. Members should
consider whether, under their particular
operating conditions, reliance on remote
inspections would be reasonable under
the circumstances. For example,
Members with offices that are open to
the public or that are otherwise doing
business as usual should consider
whether some form of in-person
inspections would be feasible and
appropriately contribute to a
supervisory system that is reasonably
designed to achieve compliance with
applicable securities laws and
regulations, and with applicable IEX
rules.
IEX 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 IEX can
implement the proposed rule change
immediately.
2. Statutory Basis
IEX believes that the proposed rule
change is consistent with the provisions
of Section 6(b) 13 of the Act in general,
and furthers the objectives of Section
6(b)(5) of the Act 14 in particular, in that
it is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest. The
Exchange’s rule proposal is intended to
harmonize IEX’s supervision rules,
specifically with respect to the
requirements for inspections of
Members’ branch offices and other
locations, with those of FINRA, on
13 15
14 15
PO 00000
U.S.C. 78f.
U.S.C. 78f(b)(5).
Frm 00080
Fmt 4703
Sfmt 4703
2141
which they are based. Consequently, the
proposed change will conform the
Exchange’s rules to changes made to
corresponding FINRA rules, thus
promoting application of consistent
regulatory standards with respect to
rules that FINRA enforces pursuant to
its regulatory services agreement with
the Exchange. The proposed rule change
would also avoid a potential lapse in the
temporary relief while challenges from
COVID–19 persist, provide firms
regulatory continuity in meeting their
inspection obligations during the
remaining Commission review period of
the Pilot Proposal, and allow firms time
to adapt to the pilot program, if
approved, and prepare for conducting
on-site inspections, as applicable.
In recognition of the impact of
COVID–19 on performing on-site
inspections, the proposed rule change is
intended to provide firms a temporary
regulatory option to conduct inspections
of offices and locations remotely for
calendar year 2023 inspections (or until
the effective date of the FINRA pilot
program). This proposed supplementary
material does not relieve firms from
meeting the core regulatory obligation to
establish and maintain a system to
supervise the activities of each
associated person that is reasonably
designed to achieve compliance with
applicable securities laws and
regulations, and with applicable IEX
rules that directly serve investor
protection. In a time when faced with
unique challenges resulting from the
COVID–19 pandemic, IEX believes that
the proposed rule change provides
sensibly tailored relief that will afford
firms the ability to observe the
recommendations of public health
officials to provide for the health and
safety of their personnel, while
continuing to serve and promote the
protection of investors and the public
interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
IEX 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 is not designed to
address any competitive issue but to
align the Exchange’s rules with those of
FINRA, which will assist FINRA in its
oversight work done pursuant to a
regulatory services agreement with IEX.
The proposed rule change will also
provide for consistent application of the
Exchange’s supervision rules with those
of FINRA, on which they are based.
Consequently, the Exchange does not
E:\FR\FM\12JAN1.SGM
12JAN1
2142
Federal Register / Vol. 88, No. 8 / Thursday, January 12, 2023 / Notices
believe that the proposed change
implicates competition at all.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments on the proposed
rule change were neither solicited nor
received.
khammond on DSKJM1Z7X2PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has designated this rule
filing as non-controversial under section
19(b)(3)(A) 15 of the Act and Rule 19b–
4(f)(6) 16 thereunder. Because the
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 and Rule 19b–
4(f)(6) thereunder. In addition, the
Exchange provided the Commission
with 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.17
A proposed rule change filed under
Rule 19b–4(f)(6) 18 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),19 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay to permit the Exchange
to harmonize its rules with FINRA, as
described herein, upon effectiveness of
the proposed rule filing.
IEX has indicated that extending the
relief provided in SR–IEX–2022–12
would provide assurances to its member
firms that they can plan their 2023
inspection program and conduct remote
inspections for any inspections to be
conducted through the earlier of the
effective date of the FINRA Pilot
Program, if approved, or December 31,
2023. Importantly, extending the relief
immediately upon filing and without a
30-day operative delay would allow
IEX’s member firms to continue
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
17 17 CFR 240.19b–4(f)(6)(iii).
18 17 CFR 240.19b–4(f)(6).
19 17 CFR 240.19b–4(f)(6)(iii).
16 17
17:36 Jan 11, 2023
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:
Jkt 259001
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 will also be available for
inspection and copying at IEX’s
principal office and on its internet
website at www.iextrading.com. 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–IEX–2022–14 and
should be submitted on or before
February 2, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–00424 Filed 1–11–23; 8:45 am]
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–
IEX–2022–14 on the subject line.
BILLING CODE 8011–01–P
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–IEX–2022–14. This file
number should be included in the
subject line if email is used. To help the
Proposed Collection; Comment
Request; Extension: Rule 17d–1
20 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).
21 15 U.S.C. 78s(b)(2)(B).
15 15
VerDate Sep<11>2014
performing their supervisory
obligations, while addressing the
ongoing impacts of the COVID–19
pandemic. Moreover, like SR–IEX–
2022–12, the proposed extension would
provide only temporary relief during the
period in which IEX’s member firms’
operations remain impacted by COVID–
19. Thus, the amended rules will revert
back to their original state at the
conclusion of the temporary relief
period and, if applicable, any extension
thereof. For these reasons, the
Commission believes that waiver of the
30-day operative delay for this proposed
rule change is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
hereby waives the 30-day operative
delay and designates the proposed rule
change operative upon filing.20
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
under Section 19(b)(2)(B) 21 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–505, OMB Control No.
3235–0562]
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collections of information
22 17
E:\FR\FM\12JAN1.SGM
CFR 200.30–3(a)(12).
12JAN1
]]>Agencies
[Federal Register Volume 88, Number 8 (Thursday, January 12, 2023)]
[Notices]
[Pages 2140-2142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-00424]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96606; File No. SR-IEX-2022-14]
Self-Regulatory Organizations: Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Supplementary Material .15 of IEX Rule 5.110 (Supervision)
January 6, 2023.
Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on December 23, 2022, the Investors Exchange LLC (``IEX''
or ``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 IEX. IEX has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under section 19(b)(3)(A) \4\ of the Act
and Rule 19b-4(f)(6) \5\ thereunder, which renders the proposed rule
change 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of section 19(b)(1) under the Act,\6\
and Rule 19b-4 thereunder,\7\ IEX is filing with the Commission a
proposed rule change to amend Supplementary Material .15 of IEX Rule
5.110 (Supervision) to extend the temporary remote inspection relief to
IEX Members through the earlier of the effective date of the FINRA
pilot program on remote inspections (the ``FINRA Pilot Program'') \8\,
if approved, or December 31, 2023. The proposed extension would
alleviate the ongoing operational challenges resulting from the COVID-
19 pandemic that many member firms may continue to face in planning for
and timely conducting required on-site inspections at locations
requiring inspection in calendar year 2023.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78s(b)(1).
\7\ 17 CFR 240.19b-4.
\8\ See Securities Exchange Act Release No. 95452 (Aug. 9,
2022), 87 FR 50144 (Aug. 15, 2022) (File No. SR-FINRA-2022-21).
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Exchange's
website at www.iextrading.com, at the principal office of the Exchange,
and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statement may be examined at
the places specified in Item IV below. The self-regulatory organization
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The COVID-19 pandemic has caused a host of operational disruptions
to the securities industry and impacted IEX Members,\9\ regulators,
investors, and other stakeholders. In response to the pandemic, IEX
adopted Supplementary Material .15 of IEX Rule 5.110 to provide Members
the temporary option of satisfying their inspection obligations for
offices of supervisory jurisdiction, branch offices, or non-branch
locations under IEX Rule 5.110 (Supervision) remotely for calendar
years 2021 and 2022, subject to specified conditions,\10\ due to the
logistical challenges of going on-site while public health and safety
concerns related to COVID-19 persisted. While there are several signs
that the pandemic has receded, much uncertainty still remains. The
emergence of new variants, dissimilar vaccination rates throughout the
U.S., and varying levels of transmissions of the virus all indicate
that COVID-19 remains an active and real public health concern. Against
this setting, IEX understands the complexity Members face in assessing
when and how to effectively and safely recall their employees back into
offices alongside fashioning permanent telework arrangements or a
hybrid workforce model in which some employees may work on-site in a
commercial office space and other employees may work off-site in an
alternative location (e.g., a personal residence).\11\ Accordingly, due
to the continued logistical challenges of going on-site to branch
offices or locations while these public health and safety concerns
related to COVID-19 persist coupled with several Members delaying their
return-to-office plans, IEX believes that extending the temporary
remote inspection relief to Members is warranted.
---------------------------------------------------------------------------
\9\ See IEX Rule 1.160(s).
\10\ See Securities Exchange Act Release No. 92222 (June 22,
2021), 86 FR 34069 (June 28, 2021) (SR-IEX-2021-09) (providing
remote inspection relief to Members for calendar year 2021), and
Securities Exchange Act Release No. 96460 (December 7, 2022), 87 FR
76222 (December 13, 2022) (SR-IEX-2022-12) (providing remote
inspection relief to Members for calendar year 2022).
\11\ For example, IEX understands that both the Commission and
FINRA do not currently require employees to return to the office.
See SEC Fiscal Year 2022 Agency Financial Report, available at
https://www.sec.gov/files/sec-2022-agency-financial-report.pdf and
https://www.finra.org/rules-guidance/key-topics/covid-19.
---------------------------------------------------------------------------
FINRA has filed with the Commission File No. SR-FINRA-2022-021, a
proposed rule change to adopt a voluntary, remote inspections pilot
program that is currently pending Commission review. The FINRA Pilot
Program would provide for a voluntary, three-year remote inspection
pilot program to allow broker-dealers to elect to fulfill their
obligation under FINRA Rule 3110(c) (Internal Inspections) by
conducting inspections of some or all branch offices and non-branch
locations remotely without an on-site visit to such office or location,
subject to specified
[[Page 2141]]
terms. FINRA has stated that the review period for its rule filing may
extend well into 2023. Given the potential length of that review
period, and the pilot program's significant planning requirements and
varying limitations applicable to specific firms and office locations,
FINRA believes that firms that intend to participate in the pilot
program, if approved, would need a significant number of months to
prepare appropriately for the pilot program. Moreover, further FINRA
guidance might be needed to guide implementation in various
circumstances.
To provide regulatory certainty while the pilot program filing is
pending, and to avoid overlapping provisions if it is approved, IEX is
proposing to amend Supplementary Material .15 of Rule 5.110 so that the
temporary relief would expire on the earlier of the effective date of
the FINRA Pilot Program or December 31, 2023. In the event the FINRA
Pilot Program is not approved by December 31, 2023, the proposed rule
change will automatically sunset on December 31, 2023. IEX will submit
a separate rule filing if it seeks to extend the duration of the
temporary proposed rule beyond December 31, 2023. In the event the
FINRA Pilot Program is approved prior to December 31, 2023, IEX will
file a conforming rule change with the Commission.
The proposed rule change will conform IEX's rules with those of
FINRA, which has extended the same temporary remote inspection relief
to all FINRA member firms.\12\ This proposed extension would provide
further clarity to Members on regulatory requirements and account for
time needed for many Members to carefully assess when and how to have
their employees safely return to their offices considering vaccination
coverage in the U.S. and transmission levels of the virus, including
any emergent variants throughout the country.
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\12\ See Securities Exchange Act Release No. 94018 (January 20,
2022), 87 FR 4072 (January 26, 2022) (SR-FINRA-2022-001) and
Securities Exchange Act Release No. 96241 (November 4, 2022) 87 FR
67969 (November 10, 2022) (SR-FINRA-2022-030).
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The proposed amendment would provide that Members have the option
to conduct remotely those inspections described in Supplementary
Material .15 to IEX Rule 5.110 through the earlier of the effective
date of the FINRA Pilot program, if approved, or December 31, 2023. IEX
is not proposing to amend the other conditions of the temporary relief
in Supplementary Material .15 of IEX Rule 5.110. The current conditions
of Supplementary Material .15 of IEX Rule 5.110 for Members that elect
to conduct remote inspections would remain unchanged: such firms must
still amend or supplement their written supervisory procedures for
remote inspections, use remote inspections as part of an effective
supervisory system, and maintain the required documentation. The
additional period of time would also allow IEX to further monitor the
effectiveness of remote inspections and their impacts--positive or
negative--on Members' overall supervisory systems in the evolving
workplace.
IEX continues to believe this temporary remote inspection option is
a reasonable alternative to provide to Members to fulfill their IEX
Rule 5.110 obligations during the ongoing pandemic, and is designed to
achieve the investor protection objectives of the inspection
requirements under these unique circumstances. Members should consider
whether, under their particular operating conditions, reliance on
remote inspections would be reasonable under the circumstances. For
example, Members with offices that are open to the public or that are
otherwise doing business as usual should consider whether some form of
in-person inspections would be feasible and appropriately contribute to
a supervisory system that is reasonably designed to achieve compliance
with applicable securities laws and regulations, and with applicable
IEX rules.
IEX 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 IEX can implement the proposed rule change immediately.
2. Statutory Basis
IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \13\ of the Act in general, and furthers the
objectives of Section 6(b)(5) of the Act \14\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest. The Exchange's rule proposal is intended to harmonize
IEX's supervision rules, specifically with respect to the requirements
for inspections of Members' branch offices and other locations, with
those of FINRA, on which they are based. Consequently, the proposed
change will conform the Exchange's rules to changes made to
corresponding FINRA rules, thus promoting application of consistent
regulatory standards with respect to rules that FINRA enforces pursuant
to its regulatory services agreement with the Exchange. The proposed
rule change would also avoid a potential lapse in the temporary relief
while challenges from COVID-19 persist, provide firms regulatory
continuity in meeting their inspection obligations during the remaining
Commission review period of the Pilot Proposal, and allow firms time to
adapt to the pilot program, if approved, and prepare for conducting on-
site inspections, as applicable.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(5).
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In recognition of the impact of COVID-19 on performing on-site
inspections, the proposed rule change is intended to provide firms a
temporary regulatory option to conduct inspections of offices and
locations remotely for calendar year 2023 inspections (or until the
effective date of the FINRA pilot program). This proposed supplementary
material does not relieve firms from meeting the core regulatory
obligation to establish and maintain a system to supervise the
activities of each associated person that is reasonably designed to
achieve compliance with applicable securities laws and regulations, and
with applicable IEX rules that directly serve investor protection. In a
time when faced with unique challenges resulting from the COVID-19
pandemic, IEX believes that the proposed rule change provides sensibly
tailored relief that will afford firms the ability to observe the
recommendations of public health officials to provide for the health
and safety of their personnel, while continuing to serve and promote
the protection of investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
IEX 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 is not
designed to address any competitive issue but to align the Exchange's
rules with those of FINRA, which will assist FINRA in its oversight
work done pursuant to a regulatory services agreement with IEX. The
proposed rule change will also provide for consistent application of
the Exchange's supervision rules with those of FINRA, on which they are
based. Consequently, the Exchange does not
[[Page 2142]]
believe that the proposed change implicates competition at all.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments on the proposed rule change were neither solicited
nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has designated this rule filing as non-controversial
under section 19(b)(3)(A) \15\ of the Act and Rule 19b-4(f)(6) \16\
thereunder. Because the 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 and Rule 19b-
4(f)(6) thereunder. In addition, the Exchange provided the Commission
with 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.\17\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
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A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay to permit the
Exchange to harmonize its rules with FINRA, as described herein, upon
effectiveness of the proposed rule filing.
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\18\ 17 CFR 240.19b-4(f)(6).
\19\ 17 CFR 240.19b-4(f)(6)(iii).
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IEX has indicated that extending the relief provided in SR-IEX-
2022-12 would provide assurances to its member firms that they can plan
their 2023 inspection program and conduct remote inspections for any
inspections to be conducted through the earlier of the effective date
of the FINRA Pilot Program, if approved, or December 31, 2023.
Importantly, extending the relief immediately upon filing and without a
30-day operative delay would allow IEX's member firms to continue
performing their supervisory obligations, while addressing the ongoing
impacts of the COVID-19 pandemic. Moreover, like SR-IEX-2022-12, the
proposed extension would provide only temporary relief during the
period in which IEX's member firms' operations remain impacted by
COVID-19. Thus, the amended rules will revert back to their original
state at the conclusion of the temporary relief period and, if
applicable, any extension thereof. For these reasons, the Commission
believes that waiver of the 30-day operative delay for this proposed
rule change is consistent with the protection of investors and the
public interest. Accordingly, the Commission hereby waives the 30-day
operative delay and designates the proposed rule change operative upon
filing.\20\
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\20\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 15 U.S.C. 78s(b)(2)(B).
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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-IEX-2022-14 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-IEX-2022-14. This file
number should be included in 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 will also be available for inspection
and copying at IEX's principal office and on its internet website at
www.iextrading.com. 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-IEX-2022-14
and should be submitted on or before February 2, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-00424 Filed 1-11-23; 8:45 am]
BILLING CODE 8011-01-P
