Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Several IEX Rules To Permit, and in Some Instances Require, Electronic Service and Filing of Documents in Disciplinary and Other Proceedings, 21219-21223 [2023-07415]
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Federal Register / Vol. 88, No. 68 / Monday, April 10, 2023 / 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–
FICC–2023–005 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
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All submissions should refer to File
Number SR–FICC–2023–005. 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 FICC and on DTCC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). 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–FICC–
2023–005 and should be submitted on
or before May 1, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–07411 Filed 4–7–23; 8:45 am]
BILLING CODE 8011–01–P
10 17
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97252; File No. SR–IEX–
2023–04]
Self-Regulatory Organizations;
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Several IEX Rules To Permit, and in
Some Instances Require, Electronic
Service and Filing of Documents in
Disciplinary and Other Proceedings
April 4, 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 April 3,
2023, the Investors Exchange LLC
(‘‘IEX’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. 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) of Act,4 the Exchange is filing
with the Commission a proposed rule
change to amend IEX Rules 9.132, 9.133,
9.135, 9.146, 9.321, 9.341, 9.349, 9.351,
9.522, 9.524, 9.525, 9.559 and 9.630 to
permit, and in some instances require,
electronic service and filing of
documents in disciplinary and other
proceedings and appeals in conformity
with recent changes by the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’).
The Exchange has designated this
proposed rule change as ‘‘noncontroversial’’ under Section 19(b)(3)(A)
of the Act 5 and provided the
Commission with the notice required by
Rule 19b–4(f)(6) thereunder.6
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.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
4 15 U.S.C. 78s(b)(1).
5 15 U.S.C. 78s(b)(3)(A).
6 17 CFR 240.19b–4.
2 15
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21219
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The 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 Exchange proposes to amend IEX
Rules 9.132, 9.133, 9.135, 9.146, 9.321,
9.341, 9.349, 9.351, 9.522, 9.524, 9.525,
9.559 and 9.630 to permit, and in some
instances require, electronic service and
filing of documents in disciplinary and
other proceedings and appeals in
conformity with recent changes by
FINRA.7
Background
In 2020, following the outbreak of the
Coronavirus Disease (‘‘COVID–19’’),
FINRA temporarily amended certain of
its rules, including rules related to the
method of service and filing in
disciplinary proceedings before the
Office of Hearing Officers (‘‘OHO’’) and
appeals before the National
Adjudicatory Council, among other
types of administrative proceedings (the
‘‘temporary amendments’’).8 The
temporary amendments allowed, and in
some instances required, FINRA to serve
certain documents on parties by
electronic mail (‘‘email’’) and required
parties to file or serve documents by
7 See Securities Exchange Act Release Nos. 94654
(April 8, 2022), 87 FR 22264 (April 14, 2022) (SR–
FINRA–2022–009) (‘‘Electronic Service
Amendments Filing’’).
8 See Securities Exchange Act Release No. 88917
(May 20, 2020), 85 FR 31832 (May 27, 2020) (SR–
FINRA–2020–015) (Notice and immediate
effectiveness of filing to temporarily amend certain
timing, method of service and other procedural
requirements in FINRA Rules during the outbreak
of COVID–19). FINRA extended the temporary
amendments several times before filing to make
certain of the aforementioned amendments
permanent. The temporary amendments included
rule changes to permit the conduct of virtual
hearings (i.e., FINRA Rules 9261 and 9830), which
rule changes are not being included in this
proposal. Rather, the Exchange is solely copying a
subset of rules covered by the temporary
amendments as discussed herein.
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email, unless the parties agreed to an
alternative method of service.9
In support of its Electronic Service
Amendments Filing, FINRA noted that
advances in technology and its
availability made filing and service
permitted by the temporary
amendments more efficient than under
FINRA’s ‘‘original’’ (non-amended)
rules.10 Moreover, FINRA determined
that electronic service and filing is
beneficial for parties, panelists and
FINRA staff.11 FINRA also noted that
the Commission likewise amended its
rules in November 2020 to require
electronic filing and service of
documents in its administrative
proceedings.12 For these reasons, FINRA
determined that making permanent the
temporary amendments would similarly
improve and modernize FINRA’s
operations.13 In 2022, the Commission
approved FINRA’s Electronic Service
Amendments Filing, thereby making
permanent the temporary amendments
to FINRA’s rules regarding electronic
service and filing, with some
modifications.14
Proposal
To likewise improve and modernize
its rules, the Exchange proposes to
modify certain of the rules in Chapter 9
of the IEX Rule Book to allow for
electronic service and filing of
documents in disciplinary and other
proceedings in conformity with the
Electronic Service Amendments.15 IEX
and FINRA are parties to a regulatory
service agreement pursuant to which
FINRA provides various regulatory
9 See
Id.
Electronic Service Amendments Filing,
supra note 7, 87 FR 22267.
11 See Id.
12 See Amendments to the Commission’s Rules of
Practice, Securities Exchange Act Release No. 90442
(November 17, 2020), 85 FR 86464 (File No. S7–18–
15) (December 30, 2020) (codified at 17 CFR 201
(2020)).
13 See Electronic Service Amendments Filing,
supra note 7, 87 FR 22266–67.
14 See Securities Exchange Act Release Nos.
95147 (June 23, 2022), 87 FR 38803 (June 29, 2022)
(SR–FINRA–2022–009) (order approving change to
certain FINRA rules to permit, and in some
instances require, electronic service and filing of
documents in disciplinary and other proceedings
and appeals) (‘‘Electronic Service Amendments
Approval Order’’). The Electronic Service
Amendments Approval Order related to FINRA
Rules 1012, 1015, 6490, 9132, 9133, 9135, 9146,
9321, 9341, 9349, 9351, 9522, 9524, 9559 and 9630
(collectively, ‘‘the Electronic Service
Amendments’’).
15 Consistent with the Electronic Service
Amendments Approval Order, the Exchange is not
proposing to permit electronic service of an initial
complaint on a respondent due to heightened fair
process concerns. As is the case today, the only
permissible methods of serving the initial
complaint are by hand, mail or courier. See IEX
Rule 9.131(b) (requiring that service be pursuant to
IEX Rule 9.134).
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10 See
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services to and on behalf of IEX
(‘‘RSA’’).16 Among the services that
FINRA provides are disciplinary and
dispute resolution services involving
IEX Members,17 including adjudicating
matters on IEX’s behalf through FINRA’s
OHO.
Consistent with the Electronic Service
Amendments, the Exchange proposes to
amend certain of its disciplinary rules
related to filing, service and other
procedural requirements and appeals.
The proposed rule change includes
provisions to allow, and in some
instances require, FINRA, acting on
behalf of IEX, to serve certain
documents on parties by email and
require parties to file or serve
documents by email, unless another
method of service is ordered by the
Adjudicator.18 In addition, to support
the transition to email service and filing,
the Exchange proposes to require parties
in OHO proceedings to file and serve all
parties with their current email address
and contact information at the time of
their first appearance, and to file and
serve any change in email address or
contact information during the course of
the proceeding.
The proposed rule change would
permit service of documents other than
the initial complaint by email among
various other methods of service, such
as personal service, mail and courier,
and to provide that service by email is
deemed complete upon sending. The
Exchange intends to elect email service
whenever possible. If FINRA, acting on
behalf of IEX, has knowledge that the
address used for service is not current
or not functional (i.e., FINRA receives a
bounce back or other message indicating
that there was a failure to deliver the
email), FINRA will use other
permissible methods of service until it
can verify the party’s email address.19
The Exchange notes that, in most cases,
FINRA and the relevant party, or their
counsel, will have already engaged in
communications prior to the service of
documents or other information.
Accordingly, in most cases, FINRA will
already have information regarding the
relevant party, or their counsel’s,
preferred method of service.
16 See
IEX Rule 9.001.
IEX Rule 1.160(s).
18 To the extent that a party lacks the ability to
use or access technology needed to file, serve or
accept service by email, FINRA, as adjudicator, may
order an alternative method of service upon a
showing of good cause. See Electronic Service
Amendments Filing, supra note 7, 87 FR 22265.
19 As indicated in the proposed rule text, the
Exchange will consider service by email complete
upon sending of the relevant document or other
information. This is consistent with service by mail
under the current rules.
17 See
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FINRA Rule Series 9000 contains
procedural requirements that apply to
FINRA’s own disciplinary and
adjudicatory processes. Chapter 9 (Code
of Procedure) of IEX’s Rule Book
contains filing, service and other
procedural requirements that
intentionally track the requirements in
FINRA’s Rule Series 9000 in order to
facilitate FINRA acting on IEX’s behalf
when called upon to do so under the
RSA. Due to the enactment of the
Electronic Service Amendments, IEX’s
Chapter 9 rules are currently
inconsistent with some of the rules in
FINRA Rule Series 9000, which now
allows, and in some instances requires,
FINRA to serve certain documents on
parties by email and require parties to
file or serve documents by email, unless
another method of service is ordered by
the Adjudicator. IEX is therefore
proposing conforming changes to its
rules to align them with the Electronic
Service Amendments.
The proposed rule changes would
permit IEX (and by extension FINRA,
when acting on behalf of IEX) to serve
documents other than the initial
complaint by email among various other
methods of service, such as personal
service, mail and courier, and to provide
that service by email is deemed
complete upon sending. The proposed
amendments also contain provisions to
ensure that parties who lack the ability
to use or access email can request relief
from the Adjudicator to use an
alternative method of service upon a
showing of good cause.20
Chapter 9 of IEX’s Rule Book, among
other things, sets forth the procedure for
IEX proceedings for disciplining a
member, associated person or formerly
associated person. IEX Rule Series 9.130
is of general applicability to all
proceedings set forth in Chapter 9,
unless a rule specifically provides
otherwise. IEX Rules 9.132(b),21
9.133(b),22 and 9.146(l) 23 provide that
the documents and other information
governed by those rules be served
pursuant to IEX Rule 9.134, which
permits service on the parties using the
following methods: (1) personal service,
(2) mail, or (3) courier.24 IEX Rule 9.134
does not permit service by email. The
proposed rule change would amend IEX
Rule 9.132(b) to allow IEX (or FINRA
20 See
supra note 18.
IEX Rule 9.132(b) (Service of Orders,
Notices, and Decisions by Adjudicator; How
Served).
22 See IEX Rule 9.133(b) (Service of Papers Other
Than Complaints, Orders, Notices or Decisions;
How Served).
23 See IEX Rule 9.146(l) (Motions; General).
24 See IEX Rule 9.134 (Methods of, Procedures for
Service).
21 See
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acting on behalf of IEX) to serve the
relevant documents or information by
email, and amend IEX Rules 9.133(b)
and 9.146(l) to require parties to serve
documents by email, unless an
alternative method of service is ordered
by the Adjudicator.
The proposed rule changes would
also amend IEX Rule 9.135 to add
paragraph (d), which would require
parties in OHO proceedings to file and
serve the parties with their current
email address and contact information
at the time of their first appearance, and
to file and serve any change in email
address or contact information during
the course of the proceeding.25 As noted
above, this will ensure that all parties
have accurate electronic contact
information for all other parties.
IEX Rule Series 9.300 sets forth the
procedures for review of disciplinary
proceedings by the IEX Board 26 and for
applications for SEC review. IEX Rules
9.321, 9.341(c), 9.349(c), and 9.351(e)
require IEX to serve documents in
connection with those proceedings. IEX
proposes to amend IEX Rules 9.321,
9.341(c), 9.349(c), and 9.351(e) to allow
for email as a method of service.27
IEX Rule Series 9.520 sets forth the
procedures for eligibility proceedings
and review of those proceedings by the
IEX Board. IEX Rules 9.522(a)(4),28
9.524(a)(3)(A) and (B),29 9.524(b)(3),30
and 9.525(e) 31 require IEX to serve
documents in connection with those
proceedings, but do not allow for email
as a method of service. The proposed
rule change would amend those rules to
allow for email as a method of service.32
Further, under the proposed change to
IEX Rule 9.524(a)(3)(A) and (B), the
disqualified member or sponsoring
member would be required to serve
documents and the exhibit and witness
lists by email unless an alternative
method of service is ordered by the
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25 See
proposed IEX Rule 9.135 (Filing of Papers
with Adjudicator; Procedure)
26 See IEX Rule 1.160(e).
27 See proposed IEX Rules 9.321 (Transmission of
Record); 9.341(c) (Oral Argument; Notice Regarding
Oral Argument); 9.349(c) (IEX Appeals Committee
Formal Consideration; Decision; Issuance of
Decision after Expiration of Call for Review Period);
9.351(e) (Discretionary Review by IEX Board;
Issuance of Decision After Expiration of Call for
Review Period).
28 See IEX Rule 9.522(a)(4) (Initiation of Eligibility
Proceeding; Member Regulation Consideration;
Service).
29 See IEX Rule 9.524(a)(3)(A) and (B) (IEX
Appeals Committee Consideration; Transmission of
Documents).
30 See IEX Rule 9.524(b)(3) (IEX Appeals
Committee Consideration; Issuance of Decision
After Expiration of Call for Review Period).
31 See IEX Rule 9.525(e) (Discretionary Review by
the IEX Board; Issuance of Decision).
32 See proposed IEX Rules 9.522(a)(4);
9.524(a)(3)(A) and (B); 9.524(b)(3); and 9.525(e).
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Adjudicator.33 Additionally, IEX
proposes to add new paragraph (d) to
IEX Rule 9.524, which states that service
by email shall be deemed complete
upon sending the documents or
decision.34
IEX Rule Series 9.550 sets forth the
procedures for expedited proceedings 35
and the ability of the IEX Board to call
for review a proposed decision prepared
under IEX Rule Series 9.550. IEX Rule
9.559(h) (Transmission of Documents)
sets forth the timing and method of
service requirements for IEX (or FINRA
acting on behalf of IEX) to provide
documents considered in commencing
the expedited proceeding 36 and for the
parties to exchange proposed exhibit
and witness lists 37 in advance of an
expedited proceeding.38 IEX Rule
9.559(h) does not allow for email as a
method of service. IEX proposes to
amend IEX Rules 9.559(h)(1) and (2) to
allow for email service, unless an
alternative method of service is ordered
by the Adjudicator and to remove text
from Rule 9559(h)(2) that requires that
documents served by email must also be
served by overnight courier or personal
service.39 IEX Rule 9.559(q)(2) 40
requires the IEX Board to serve its
decision when it issues one, and IEX
Rule 9.559(q)(5) 41 requires the IEX
Board to serve the decision on the
parties and all members with which the
respondent is associated. IEX Rules
9.559(q)(2) and (5) also do not allow for
email as a method of service. The
proposed rule change would amend
Rule 9.559(q)(2) and (5) to allow for
email as a method of service. Further,
IEX proposes to add new paragraph (s)
to IEX Rule 9.559, which states that
service by email shall be deemed
complete upon sending the documents
or decision.42 Additionally, the
proposed amendment also makes a nonsubstantive change to correct a
33 See
proposed IEX Rule 9.524(a)(3)(A) and (B).
proposed IEX Rule 9.524(c).
35 Expedited proceedings are available in a subset
of disciplinary proceedings set forth in IEX Rules
9.552 through 9.559. Examples include IEX Rule
9.552 (Failure to Provide Information or Keep
Information Current) and IEX Rule 9.555 (Failure to
Meet the Eligibility or Qualification Standards or
Prerequisites for Access to Services).
36 See IEX Rule 9.559(h)(1).
37 See IEX Rule 9.559(h)(2).
38 FINRA also amended its Rule 9559(h) to
eliminate the requirements that, if the specified
documents are served by facsimile or email, they
must also be served by either overnight courier or
personal delivery. IEX’s amendment conforms IEX
Rule 9.559(h)(1) and (2) to match FINRA’s rule.
39 See proposed IEX Rule 9.559(h)(2).
40 See IEX Rule 9.559(q)(2).
41 See IEX Rule 9.559(q)(5).
42 See proposed IEX Rule 9.559(s).
34 See
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21221
typographical error in the rule’s title
(adding a period to ‘‘9550’’).
IEX Rule Series 9.600 sets forth the
procedures for Members to seek
exemptive relief from a variety of IEX
rules, including appealing a decision of
the Chief Regulatory Officer, made
pursuant to IEX Rule 9.620. IEX Rules
9.630(e)(1) and (2) 43 require the IEX
Board to serve its decision pursuant to
IEX Rule 9.134, which does not allow
for email as a method of service. The
proposed rule change would amend IEX
Rule 9.630(e) to allow for email as an
alternative method of service.44
Additionally, IEX proposes to add new
paragraph (f) to IEX Rule 9.630, which
states that service by email shall be
deemed complete upon sending the
documents or decision.45
IEX believes these proposed changes
will modernize its rules and make
service and filing more efficient and
effective because it will align IEX’s
service and filing rules with those of
FINRA. Email technology is widely
available, and use of electronic methods
of service and filing is common practice
in the courts and other regulatory
agencies, including the Commission.46
At the same time, the proposal provides
for alternative methods of service for
parties who lack the ability to use or
access technology needed to send or
receive documents electronically.
As noted below, the Exchange has
filed the proposed rule change for
immediate effectiveness and has
requested that the Commission waive
the requirement that the proposed rule
change not become operative for 30 days
after the date of the filing, so the
Exchange can implement the proposed
rule change immediately.
2. Statutory Basis
IEX believes that the proposed rule
change is consistent with the provisions
of Section 6(b) of the Act,47 in general,
and furthers the objectives of Section
6(b)(5) of the Act,48 in particular,
because it is 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.
Additionally, the Exchange believes the
proposed rule change is designed to
provide a fair procedure for the
disciplining of members and persons
associated with members, consistent
43 See
IEX Rule 9.630(e) (Appeal; Decision).
proposed IEX Rule 9.630(e)(1) and (2).
45 See proposed IEX Rule 9.630(f).
46 See supra note 12.
47 15 U.S.C. 78f(b).
48 15 U.S.C. 78f(b)(5).
44 See
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with Sections 6(b)(7) and 6(d) of the
Act.49
IEX believes that the proposed rule
change protects investors and the public
interest by requiring use of broadly
available technology to make service
and filing processes more efficient and
effective. IEX’s disciplinary and
eligibility proceedings and other review
processes serve a critical role in
providing investor protection and
maintaining fair and orderly markets by,
for example, sanctioning misconduct
and preventing further customer harm
by members and associated persons.
The proposed rule change promotes
efficiency in these processes by aligning
IEX’s rules with FINRA’s rules that
permit electronic service and filing in
most instances. To ensure that
documents are effectively sent and
received, IEX (in line with FINRA’s
requirements) is proposing to require
parties to provide and update their
contact information, including their
email address, during the course of a
proceeding. These amendments reduce
the reliance on paper documents in
favor of more efficient electronic
formats. IEX concurs with the
Commission and FINRA in the belief
that adopting rules on electronic service
and filing is especially important as
hybrid and remote work become more
common.
IEX believes as well that the proposed
rule change includes important
safeguards to ensure fairness. For
example, there are procedures in place
for persons who lack the ability to use
or access technology necessary to send
or receive documents electronically.
Such parties will have the ability to
request relief from the Adjudicator to
file or serve documents by another
method.50 As discussed in the Purpose
section, based on FINRA’s
representations about its experience of
operating under its temporary
amendments, which have permitted
electronic service and filing since mid2020, IEX anticipates that requests to
use non-electronic methods of service
will be rare. In addition, the proposed
rule change balances the interests of
fairness and efficiency. Service of the
initial complaint will continue to occur
by hand, mail or courier, rather than by
electronic means, thus ensuring there is
satisfactory notice and fair process.
Thus, the proposed rule change
represents a significant step toward
modernizing the service and filing
processes in a manner that will protect
investors and the public interest by
promoting efficiency while preserving
fair process.
Additionally, the Exchange believes
that the proposed rule change supports
the objectives of the Act by providing
greater harmonization between
Exchange rules and FINRA rules of
similar purpose, resulting in less
burdensome and more efficient
regulatory compliance. As such, the
proposed rule change will foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities and will
remove impediments to and perfect the
mechanism of a free and open market
and a national market system.
Finally, as discussed in the Purpose
section, this proposed rule change is
based on FINRA rule changes approved
by the Commission in 2022.51
Therefore, IEX believes there is nothing
in this proposal that is new or novel that
has not been previously considered by
the Commission.
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. To the
contrary, IEX believes that proposed
rule change reduces the burden on
competition because it eliminates
inconsistencies between IEX’s Code of
Procedure (Chapter 9 of the IEX Rule
Book) and FINRA’s rules governing the
adjudication of disputes and
disciplinary proceedings. Additionally,
IEX notes that the proposed rule change
is not intended to address competitive
issues but is designed to modernize the
service and filing process in
harmonization with the approved
FINRA Rules.
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
The Exchange has designated this rule
filing as non-controversial under
Section 19(b)(3)(A) 52 of the Act and
Rule 19b–4(f)(6) 53 thereunder. Because
the proposed rule change does not: (i)
significantly affect the protection of
investors or the public interest; (ii)
51 See
supra note 14.
U.S.C. 78s(b)(3)(A).
53 17 CFR 240.19b–4(f)(6).
49 15
U.S.C. 78f(b)(5).
50 See supra note 18.
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52 15
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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.
The Exchange believes that this filing
is non-controversial and eligible to
become effective immediately because
the proposal provides a more uniform
standard for disciplinary rules across
self-regulatory organizations and
thereby enables the Exchange to
modernize the service and filing process
to conduct disciplinary hearings. The
Exchange further believes that the
proposed rule change would not
significantly affect the protection of
investors or the public interest or
impose any significant burden on
competition because the proposed rule
change is based on the approved FINRA
Electronic Service Amendments.54 As
such, the IEX believes the proposal does
not raise any new or novel issues not
previously considered by the
Commission.
A proposed rule change filed under
Rule 19b–4(f)(6) 55 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),56 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
the proposal may become operative
immediately upon filing. Additionally,
the Exchange has given 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 states that this filing is
non-controversial and eligible to
become effective immediately because
the proposal promotes uniformity in
disciplinary rules across self-regulatory
organizations and thereby enables the
Exchange to modernize the service and
filing process to conduct disciplinary
hearings.57 The Exchange further states
that the proposed rule change would not
significantly affect the protection of
investors or the public interest or
impose any significant burden on
competition because the proposed rule
54 See generally Electronic Service Amendments
Approval Order, supra note 14.
55 17 CFR 240.19b–4(f)(6).
56 17 CFR 240.19b–4(f)(6)(iii).
57 See supra Item II.
E:\FR\FM\10APN1.SGM
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ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 68 / Monday, April 10, 2023 / Notices
change is based on the approved FINRA
Rules. After reviewing the filing, the
Commission believes that waiver of the
30-day operative delay for this proposal
is consistent with the protection of
investors and the public interest. The
proposed rule change supports the
objectives of the Act by providing
greater harmonization between
Exchange rules and FINRA rules of
similar purpose, resulting in less
burdensome and more efficient
regulatory compliance. Accordingly, the
Commission hereby waives the 30-day
operative delay and designates the
proposal operative upon filing.58
At any time within 60 days of the
filing of such 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) 59 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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–IEX–2023–04 and should
be submitted on or before May 1, 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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.60
Sherry R. Haywood,
Assistant Secretary.
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–2023–04 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
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–2023–04. 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/
58 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).
59 15 U.S.C. 78s(b)(2)(B).
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[FR Doc. 2023–07415 Filed 4–7–23; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–97251; File No. SR–NYSE–
2023–17]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Section 902.02 of the NYSE Listed
Company Manual With Respect to the
Qualification of Eligible Portfolio
Companies of an Investment
Management Entity for the Investment
Management Entity Group Fee
Discount
April 4, 2023.
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 March 29,
2023, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
60 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
PO 00000
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21223
Commission (the ‘‘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
The Exchange proposes to amend
Section 902.02 of the NYSE Listed
Company Manual (the ‘‘Manual’’) to
amend the provisions with respect to
the qualification of Eligible Portfolio
Companies of an Investment
Management Entity for the Investment
Management Entity Group Fee Discount.
In order to qualify for the Investment
Management Entity Group Fee Discount
in any calendar year, an issuer must
submit satisfactory proof to the
Exchange no later than the first trading
day of such calendar year that it meets
the ownership requirements specified
above. The Exchange proposes to extend
the application of the Investment
Management Entity Group Discount to
the annual fees payable with respect to
the first partial year of listing by any
newly-listed company that is able to
demonstrate at the time of listing that it
qualifies as an Eligible Portfolio
Company of an Investment Management
Entity. The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Section 902.02 of the Manual includes
a subsection entitled ‘‘Investment
Management Entity Group Fee
Discount.’’ For purposes of this
E:\FR\FM\10APN1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 68 (Monday, April 10, 2023)]
[Notices]
[Pages 21219-21223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07415]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97252; File No. SR-IEX-2023-04]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Several IEX Rules To Permit, and in Some Instances Require, Electronic
Service and Filing of Documents in Disciplinary and Other Proceedings
April 4, 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 April 3, 2023, the Investors Exchange LLC (``IEX'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. 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.
---------------------------------------------------------------------------
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) of Act,\4\ the
Exchange is filing with the Commission a proposed rule change to amend
IEX Rules 9.132, 9.133, 9.135, 9.146, 9.321, 9.341, 9.349, 9.351,
9.522, 9.524, 9.525, 9.559 and 9.630 to permit, and in some instances
require, electronic service and filing of documents in disciplinary and
other proceedings and appeals in conformity with recent changes by the
Financial Industry Regulatory Authority, Inc. (``FINRA'').
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
The Exchange has designated this proposed rule change as ``non-
controversial'' under Section 19(b)(3)(A) of the Act \5\ and provided
the Commission with the notice required by Rule 19b-4(f)(6)
thereunder.\6\
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The 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 Exchange proposes to amend IEX Rules 9.132, 9.133, 9.135,
9.146, 9.321, 9.341, 9.349, 9.351, 9.522, 9.524, 9.525, 9.559 and 9.630
to permit, and in some instances require, electronic service and filing
of documents in disciplinary and other proceedings and appeals in
conformity with recent changes by FINRA.\7\
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release Nos. 94654 (April 8,
2022), 87 FR 22264 (April 14, 2022) (SR-FINRA-2022-009)
(``Electronic Service Amendments Filing'').
---------------------------------------------------------------------------
Background
In 2020, following the outbreak of the Coronavirus Disease
(``COVID-19''), FINRA temporarily amended certain of its rules,
including rules related to the method of service and filing in
disciplinary proceedings before the Office of Hearing Officers
(``OHO'') and appeals before the National Adjudicatory Council, among
other types of administrative proceedings (the ``temporary
amendments'').\8\ The temporary amendments allowed, and in some
instances required, FINRA to serve certain documents on parties by
electronic mail (``email'') and required parties to file or serve
documents by
[[Page 21220]]
email, unless the parties agreed to an alternative method of
service.\9\
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 88917 (May 20,
2020), 85 FR 31832 (May 27, 2020) (SR-FINRA-2020-015) (Notice and
immediate effectiveness of filing to temporarily amend certain
timing, method of service and other procedural requirements in FINRA
Rules during the outbreak of COVID-19). FINRA extended the temporary
amendments several times before filing to make certain of the
aforementioned amendments permanent. The temporary amendments
included rule changes to permit the conduct of virtual hearings
(i.e., FINRA Rules 9261 and 9830), which rule changes are not being
included in this proposal. Rather, the Exchange is solely copying a
subset of rules covered by the temporary amendments as discussed
herein.
\9\ See Id.
---------------------------------------------------------------------------
In support of its Electronic Service Amendments Filing, FINRA noted
that advances in technology and its availability made filing and
service permitted by the temporary amendments more efficient than under
FINRA's ``original'' (non-amended) rules.\10\ Moreover, FINRA
determined that electronic service and filing is beneficial for
parties, panelists and FINRA staff.\11\ FINRA also noted that the
Commission likewise amended its rules in November 2020 to require
electronic filing and service of documents in its administrative
proceedings.\12\ For these reasons, FINRA determined that making
permanent the temporary amendments would similarly improve and
modernize FINRA's operations.\13\ In 2022, the Commission approved
FINRA's Electronic Service Amendments Filing, thereby making permanent
the temporary amendments to FINRA's rules regarding electronic service
and filing, with some modifications.\14\
---------------------------------------------------------------------------
\10\ See Electronic Service Amendments Filing, supra note 7, 87
FR 22267.
\11\ See Id.
\12\ See Amendments to the Commission's Rules of Practice,
Securities Exchange Act Release No. 90442 (November 17, 2020), 85 FR
86464 (File No. S7-18-15) (December 30, 2020) (codified at 17 CFR
201 (2020)).
\13\ See Electronic Service Amendments Filing, supra note 7, 87
FR 22266-67.
\14\ See Securities Exchange Act Release Nos. 95147 (June 23,
2022), 87 FR 38803 (June 29, 2022) (SR-FINRA-2022-009) (order
approving change to certain FINRA rules to permit, and in some
instances require, electronic service and filing of documents in
disciplinary and other proceedings and appeals) (``Electronic
Service Amendments Approval Order''). The Electronic Service
Amendments Approval Order related to FINRA Rules 1012, 1015, 6490,
9132, 9133, 9135, 9146, 9321, 9341, 9349, 9351, 9522, 9524, 9559 and
9630 (collectively, ``the Electronic Service Amendments'').
---------------------------------------------------------------------------
Proposal
To likewise improve and modernize its rules, the Exchange proposes
to modify certain of the rules in Chapter 9 of the IEX Rule Book to
allow for electronic service and filing of documents in disciplinary
and other proceedings in conformity with the Electronic Service
Amendments.\15\ IEX and FINRA are parties to a regulatory service
agreement pursuant to which FINRA provides various regulatory services
to and on behalf of IEX (``RSA'').\16\ Among the services that FINRA
provides are disciplinary and dispute resolution services involving IEX
Members,\17\ including adjudicating matters on IEX's behalf through
FINRA's OHO.
---------------------------------------------------------------------------
\15\ Consistent with the Electronic Service Amendments Approval
Order, the Exchange is not proposing to permit electronic service of
an initial complaint on a respondent due to heightened fair process
concerns. As is the case today, the only permissible methods of
serving the initial complaint are by hand, mail or courier. See IEX
Rule 9.131(b) (requiring that service be pursuant to IEX Rule
9.134).
\16\ See IEX Rule 9.001.
\17\ See IEX Rule 1.160(s).
---------------------------------------------------------------------------
Consistent with the Electronic Service Amendments, the Exchange
proposes to amend certain of its disciplinary rules related to filing,
service and other procedural requirements and appeals. The proposed
rule change includes provisions to allow, and in some instances
require, FINRA, acting on behalf of IEX, to serve certain documents on
parties by email and require parties to file or serve documents by
email, unless another method of service is ordered by the
Adjudicator.\18\ In addition, to support the transition to email
service and filing, the Exchange proposes to require parties in OHO
proceedings to file and serve all parties with their current email
address and contact information at the time of their first appearance,
and to file and serve any change in email address or contact
information during the course of the proceeding.
---------------------------------------------------------------------------
\18\ To the extent that a party lacks the ability to use or
access technology needed to file, serve or accept service by email,
FINRA, as adjudicator, may order an alternative method of service
upon a showing of good cause. See Electronic Service Amendments
Filing, supra note 7, 87 FR 22265.
---------------------------------------------------------------------------
The proposed rule change would permit service of documents other
than the initial complaint by email among various other methods of
service, such as personal service, mail and courier, and to provide
that service by email is deemed complete upon sending. The Exchange
intends to elect email service whenever possible. If FINRA, acting on
behalf of IEX, has knowledge that the address used for service is not
current or not functional (i.e., FINRA receives a bounce back or other
message indicating that there was a failure to deliver the email),
FINRA will use other permissible methods of service until it can verify
the party's email address.\19\ The Exchange notes that, in most cases,
FINRA and the relevant party, or their counsel, will have already
engaged in communications prior to the service of documents or other
information. Accordingly, in most cases, FINRA will already have
information regarding the relevant party, or their counsel's, preferred
method of service.
---------------------------------------------------------------------------
\19\ As indicated in the proposed rule text, the Exchange will
consider service by email complete upon sending of the relevant
document or other information. This is consistent with service by
mail under the current rules.
---------------------------------------------------------------------------
FINRA Rule Series 9000 contains procedural requirements that apply
to FINRA's own disciplinary and adjudicatory processes. Chapter 9 (Code
of Procedure) of IEX's Rule Book contains filing, service and other
procedural requirements that intentionally track the requirements in
FINRA's Rule Series 9000 in order to facilitate FINRA acting on IEX's
behalf when called upon to do so under the RSA. Due to the enactment of
the Electronic Service Amendments, IEX's Chapter 9 rules are currently
inconsistent with some of the rules in FINRA Rule Series 9000, which
now allows, and in some instances requires, FINRA to serve certain
documents on parties by email and require parties to file or serve
documents by email, unless another method of service is ordered by the
Adjudicator. IEX is therefore proposing conforming changes to its rules
to align them with the Electronic Service Amendments.
The proposed rule changes would permit IEX (and by extension FINRA,
when acting on behalf of IEX) to serve documents other than the initial
complaint by email among various other methods of service, such as
personal service, mail and courier, and to provide that service by
email is deemed complete upon sending. The proposed amendments also
contain provisions to ensure that parties who lack the ability to use
or access email can request relief from the Adjudicator to use an
alternative method of service upon a showing of good cause.\20\
---------------------------------------------------------------------------
\20\ See supra note 18.
---------------------------------------------------------------------------
Chapter 9 of IEX's Rule Book, among other things, sets forth the
procedure for IEX proceedings for disciplining a member, associated
person or formerly associated person. IEX Rule Series 9.130 is of
general applicability to all proceedings set forth in Chapter 9, unless
a rule specifically provides otherwise. IEX Rules 9.132(b),\21\
9.133(b),\22\ and 9.146(l) \23\ provide that the documents and other
information governed by those rules be served pursuant to IEX Rule
9.134, which permits service on the parties using the following
methods: (1) personal service, (2) mail, or (3) courier.\24\ IEX Rule
9.134 does not permit service by email. The proposed rule change would
amend IEX Rule 9.132(b) to allow IEX (or FINRA
[[Page 21221]]
acting on behalf of IEX) to serve the relevant documents or information
by email, and amend IEX Rules 9.133(b) and 9.146(l) to require parties
to serve documents by email, unless an alternative method of service is
ordered by the Adjudicator.
---------------------------------------------------------------------------
\21\ See IEX Rule 9.132(b) (Service of Orders, Notices, and
Decisions by Adjudicator; How Served).
\22\ See IEX Rule 9.133(b) (Service of Papers Other Than
Complaints, Orders, Notices or Decisions; How Served).
\23\ See IEX Rule 9.146(l) (Motions; General).
\24\ See IEX Rule 9.134 (Methods of, Procedures for Service).
---------------------------------------------------------------------------
The proposed rule changes would also amend IEX Rule 9.135 to add
paragraph (d), which would require parties in OHO proceedings to file
and serve the parties with their current email address and contact
information at the time of their first appearance, and to file and
serve any change in email address or contact information during the
course of the proceeding.\25\ As noted above, this will ensure that all
parties have accurate electronic contact information for all other
parties.
---------------------------------------------------------------------------
\25\ See proposed IEX Rule 9.135 (Filing of Papers with
Adjudicator; Procedure)
---------------------------------------------------------------------------
IEX Rule Series 9.300 sets forth the procedures for review of
disciplinary proceedings by the IEX Board \26\ and for applications for
SEC review. IEX Rules 9.321, 9.341(c), 9.349(c), and 9.351(e) require
IEX to serve documents in connection with those proceedings. IEX
proposes to amend IEX Rules 9.321, 9.341(c), 9.349(c), and 9.351(e) to
allow for email as a method of service.\27\
---------------------------------------------------------------------------
\26\ See IEX Rule 1.160(e).
\27\ See proposed IEX Rules 9.321 (Transmission of Record);
9.341(c) (Oral Argument; Notice Regarding Oral Argument); 9.349(c)
(IEX Appeals Committee Formal Consideration; Decision; Issuance of
Decision after Expiration of Call for Review Period); 9.351(e)
(Discretionary Review by IEX Board; Issuance of Decision After
Expiration of Call for Review Period).
---------------------------------------------------------------------------
IEX Rule Series 9.520 sets forth the procedures for eligibility
proceedings and review of those proceedings by the IEX Board. IEX Rules
9.522(a)(4),\28\ 9.524(a)(3)(A) and (B),\29\ 9.524(b)(3),\30\ and
9.525(e) \31\ require IEX to serve documents in connection with those
proceedings, but do not allow for email as a method of service. The
proposed rule change would amend those rules to allow for email as a
method of service.\32\ Further, under the proposed change to IEX Rule
9.524(a)(3)(A) and (B), the disqualified member or sponsoring member
would be required to serve documents and the exhibit and witness lists
by email unless an alternative method of service is ordered by the
Adjudicator.\33\ Additionally, IEX proposes to add new paragraph (d) to
IEX Rule 9.524, which states that service by email shall be deemed
complete upon sending the documents or decision.\34\
---------------------------------------------------------------------------
\28\ See IEX Rule 9.522(a)(4) (Initiation of Eligibility
Proceeding; Member Regulation Consideration; Service).
\29\ See IEX Rule 9.524(a)(3)(A) and (B) (IEX Appeals Committee
Consideration; Transmission of Documents).
\30\ See IEX Rule 9.524(b)(3) (IEX Appeals Committee
Consideration; Issuance of Decision After Expiration of Call for
Review Period).
\31\ See IEX Rule 9.525(e) (Discretionary Review by the IEX
Board; Issuance of Decision).
\32\ See proposed IEX Rules 9.522(a)(4); 9.524(a)(3)(A) and (B);
9.524(b)(3); and 9.525(e).
\33\ See proposed IEX Rule 9.524(a)(3)(A) and (B).
\34\ See proposed IEX Rule 9.524(c).
---------------------------------------------------------------------------
IEX Rule Series 9.550 sets forth the procedures for expedited
proceedings \35\ and the ability of the IEX Board to call for review a
proposed decision prepared under IEX Rule Series 9.550. IEX Rule
9.559(h) (Transmission of Documents) sets forth the timing and method
of service requirements for IEX (or FINRA acting on behalf of IEX) to
provide documents considered in commencing the expedited proceeding
\36\ and for the parties to exchange proposed exhibit and witness lists
\37\ in advance of an expedited proceeding.\38\ IEX Rule 9.559(h) does
not allow for email as a method of service. IEX proposes to amend IEX
Rules 9.559(h)(1) and (2) to allow for email service, unless an
alternative method of service is ordered by the Adjudicator and to
remove text from Rule 9559(h)(2) that requires that documents served by
email must also be served by overnight courier or personal service.\39\
IEX Rule 9.559(q)(2) \40\ requires the IEX Board to serve its decision
when it issues one, and IEX Rule 9.559(q)(5) \41\ requires the IEX
Board to serve the decision on the parties and all members with which
the respondent is associated. IEX Rules 9.559(q)(2) and (5) also do not
allow for email as a method of service. The proposed rule change would
amend Rule 9.559(q)(2) and (5) to allow for email as a method of
service. Further, IEX proposes to add new paragraph (s) to IEX Rule
9.559, which states that service by email shall be deemed complete upon
sending the documents or decision.\42\ Additionally, the proposed
amendment also makes a non-substantive change to correct a
typographical error in the rule's title (adding a period to ``9550'').
---------------------------------------------------------------------------
\35\ Expedited proceedings are available in a subset of
disciplinary proceedings set forth in IEX Rules 9.552 through 9.559.
Examples include IEX Rule 9.552 (Failure to Provide Information or
Keep Information Current) and IEX Rule 9.555 (Failure to Meet the
Eligibility or Qualification Standards or Prerequisites for Access
to Services).
\36\ See IEX Rule 9.559(h)(1).
\37\ See IEX Rule 9.559(h)(2).
\38\ FINRA also amended its Rule 9559(h) to eliminate the
requirements that, if the specified documents are served by
facsimile or email, they must also be served by either overnight
courier or personal delivery. IEX's amendment conforms IEX Rule
9.559(h)(1) and (2) to match FINRA's rule.
\39\ See proposed IEX Rule 9.559(h)(2).
\40\ See IEX Rule 9.559(q)(2).
\41\ See IEX Rule 9.559(q)(5).
\42\ See proposed IEX Rule 9.559(s).
---------------------------------------------------------------------------
IEX Rule Series 9.600 sets forth the procedures for Members to seek
exemptive relief from a variety of IEX rules, including appealing a
decision of the Chief Regulatory Officer, made pursuant to IEX Rule
9.620. IEX Rules 9.630(e)(1) and (2) \43\ require the IEX Board to
serve its decision pursuant to IEX Rule 9.134, which does not allow for
email as a method of service. The proposed rule change would amend IEX
Rule 9.630(e) to allow for email as an alternative method of
service.\44\ Additionally, IEX proposes to add new paragraph (f) to IEX
Rule 9.630, which states that service by email shall be deemed complete
upon sending the documents or decision.\45\
---------------------------------------------------------------------------
\43\ See IEX Rule 9.630(e) (Appeal; Decision).
\44\ See proposed IEX Rule 9.630(e)(1) and (2).
\45\ See proposed IEX Rule 9.630(f).
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IEX believes these proposed changes will modernize its rules and
make service and filing more efficient and effective because it will
align IEX's service and filing rules with those of FINRA. Email
technology is widely available, and use of electronic methods of
service and filing is common practice in the courts and other
regulatory agencies, including the Commission.\46\ At the same time,
the proposal provides for alternative methods of service for parties
who lack the ability to use or access technology needed to send or
receive documents electronically.
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\46\ See supra note 12.
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As noted below, the Exchange has filed the proposed rule change for
immediate effectiveness and has requested that the Commission waive the
requirement that the proposed rule change not become operative for 30
days after the date of the filing, so the Exchange can implement the
proposed rule change immediately.
2. Statutory Basis
IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) of the Act,\47\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\48\ in particular, because it
is 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. Additionally, the Exchange
believes the proposed rule change is designed to provide a fair
procedure for the disciplining of members and persons associated with
members, consistent
[[Page 21222]]
with Sections 6(b)(7) and 6(d) of the Act.\49\
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\47\ 15 U.S.C. 78f(b).
\48\ 15 U.S.C. 78f(b)(5).
\49\ 15 U.S.C. 78f(b)(5).
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IEX believes that the proposed rule change protects investors and
the public interest by requiring use of broadly available technology to
make service and filing processes more efficient and effective. IEX's
disciplinary and eligibility proceedings and other review processes
serve a critical role in providing investor protection and maintaining
fair and orderly markets by, for example, sanctioning misconduct and
preventing further customer harm by members and associated persons.
The proposed rule change promotes efficiency in these processes by
aligning IEX's rules with FINRA's rules that permit electronic service
and filing in most instances. To ensure that documents are effectively
sent and received, IEX (in line with FINRA's requirements) is proposing
to require parties to provide and update their contact information,
including their email address, during the course of a proceeding. These
amendments reduce the reliance on paper documents in favor of more
efficient electronic formats. IEX concurs with the Commission and FINRA
in the belief that adopting rules on electronic service and filing is
especially important as hybrid and remote work become more common.
IEX believes as well that the proposed rule change includes
important safeguards to ensure fairness. For example, there are
procedures in place for persons who lack the ability to use or access
technology necessary to send or receive documents electronically. Such
parties will have the ability to request relief from the Adjudicator to
file or serve documents by another method.\50\ As discussed in the
Purpose section, based on FINRA's representations about its experience
of operating under its temporary amendments, which have permitted
electronic service and filing since mid-2020, IEX anticipates that
requests to use non-electronic methods of service will be rare. In
addition, the proposed rule change balances the interests of fairness
and efficiency. Service of the initial complaint will continue to occur
by hand, mail or courier, rather than by electronic means, thus
ensuring there is satisfactory notice and fair process. Thus, the
proposed rule change represents a significant step toward modernizing
the service and filing processes in a manner that will protect
investors and the public interest by promoting efficiency while
preserving fair process.
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\50\ See supra note 18.
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Additionally, the Exchange believes that the proposed rule change
supports the objectives of the Act by providing greater harmonization
between Exchange rules and FINRA rules of similar purpose, resulting in
less burdensome and more efficient regulatory compliance. As such, the
proposed rule change will foster cooperation and coordination with
persons engaged in facilitating transactions in securities and will
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
Finally, as discussed in the Purpose section, this proposed rule
change is based on FINRA rule changes approved by the Commission in
2022.\51\ Therefore, IEX believes there is nothing in this proposal
that is new or novel that has not been previously considered by the
Commission.
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\51\ See supra note 14.
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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. To the contrary, IEX believes
that proposed rule change reduces the burden on competition because it
eliminates inconsistencies between IEX's Code of Procedure (Chapter 9
of the IEX Rule Book) and FINRA's rules governing the adjudication of
disputes and disciplinary proceedings. Additionally, IEX notes that the
proposed rule change is not intended to address competitive issues but
is designed to modernize the service and filing process in
harmonization with the approved FINRA Rules.
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
The Exchange has designated this rule filing as non-controversial
under Section 19(b)(3)(A) \52\ of the Act and Rule 19b-4(f)(6) \53\
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.
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\52\ 15 U.S.C. 78s(b)(3)(A).
\53\ 17 CFR 240.19b-4(f)(6).
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The Exchange believes that this filing is non-controversial and
eligible to become effective immediately because the proposal provides
a more uniform standard for disciplinary rules across self-regulatory
organizations and thereby enables the Exchange to modernize the service
and filing process to conduct disciplinary hearings. The Exchange
further believes that the proposed rule change would not significantly
affect the protection of investors or the public interest or impose any
significant burden on competition because the proposed rule change is
based on the approved FINRA Electronic Service Amendments.\54\ As such,
the IEX believes the proposal does not raise any new or novel issues
not previously considered by the Commission.
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\54\ See generally Electronic Service Amendments Approval Order,
supra note 14.
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A proposed rule change filed under Rule 19b-4(f)(6) \55\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\56\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. Additionally, the
Exchange has given 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 states that this filing is
non-controversial and eligible to become effective immediately because
the proposal promotes uniformity in disciplinary rules across self-
regulatory organizations and thereby enables the Exchange to modernize
the service and filing process to conduct disciplinary hearings.\57\
The Exchange further states that the proposed rule change would not
significantly affect the protection of investors or the public interest
or impose any significant burden on competition because the proposed
rule
[[Page 21223]]
change is based on the approved FINRA Rules. After reviewing the
filing, the Commission believes that waiver of the 30-day operative
delay for this proposal is consistent with the protection of investors
and the public interest. The proposed rule change supports the
objectives of the Act by providing greater harmonization between
Exchange rules and FINRA rules of similar purpose, resulting in less
burdensome and more efficient regulatory compliance. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\58\
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\55\ 17 CFR 240.19b-4(f)(6).
\56\ 17 CFR 240.19b-4(f)(6)(iii).
\57\ See supra Item II.
\58\ 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 such 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) \59\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\59\ 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-2023-04 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-2023-04. 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-IEX-2023-04 and
should be submitted on or before May 1, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\60\
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\60\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-07415 Filed 4-7-23; 8:45 am]
BILLING CODE 8011-01-P
