[Federal Register Volume 85, Number 198 (Tuesday, October 13, 2020)]
[Notices]
[Pages 64556-64559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22633]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90114; File No. SR-NYSECHX-2020-28]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Adopt 
Temporary Interpretation and Policy .10 Under NYSE Chicago Article 6, 
Rule 13

October 7, 2020.
    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 September 25, 2020, NYSE Chicago, Inc. (``NYSE Chicago'' 
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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes a rule change to adopt temporary 
Interpretation and Policy .10 (Temporary Extension of the Limited 
Period for Registered Persons to Function as Principals) under NYSE 
Chicago Article 6, Rule 13 (Registration Requirements) applicable to 
Participants. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to adopt temporary Interpretation and Policy 
.10 (Temporary Extension of the Limited Period for Registered Persons 
to Function as Principals) under NYSE Chicago Article 6, Rule 13 
(Registration Requirements) applicable to Participants.\4\ The proposed 
rule change would extend the 120-day period that certain individuals 
can function as a principal without having successfully passed an 
appropriate qualification examination through December 31, 2020,\5\ and 
would apply only to those individuals who were designated to function 
as a principal prior to September 3, 2020. This proposed rule change is 
based on a filing recently

[[Page 64557]]

submitted by the Financial Regulatory Authority, Inc. (``FINRA'') \6\ 
and is intended to harmonize the Exchange's registration rules with 
those of FINRA so as to promote uniform standards across the securities 
industry.
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    \4\ The term ``Participant'' means any Participant Firm that 
holds a valid Trading Permit and any person associated with a 
Participant Firm who is registered with the Exchange. A Participant 
shall be considered a ``member'' of the Exchange for purposes of the 
Exchange Act. See Article 1, Rule 1(s).
    \5\ If NYSE Chicago seeks to provide additional temporary relief 
from the rule requirements identified in this proposed rule change 
beyond December 31, 2020, NYSE Chicago will submit a separate rule 
filing to further extend the temporary extension of time.
    \6\ See Securities Exchange Act Release No. 89732 (September 1, 
2020), 85 FR 55535 (September 8, 2020) (SR-FINRA-2020-026) (the 
``FINRA Filing''). The Exchange notes that the FINRA Filing also 
provides temporary relief to individuals registered with FINRA as 
Operations Professionals under FINRA Rule 1220. The Exchange does 
not have a registration category for Operations Professionals and 
therefore, the Exchange is not proposing to adopt that aspect of the 
FINRA Filing.
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    In response to COVID-19, earlier this year FINRA began providing 
temporary relief by way of frequently asked questions (``FAQs'') \7\ to 
address disruptions to the administration of FINRA qualification 
examinations caused by the pandemic that have significantly limited the 
ability of individuals to sit for examinations due to Prometric test 
center capacity issues.\8\
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    \7\ See https://www.finra.org/rules-guidance/key-topics/covid-19/faq#qe.
    \8\ At the outset of the COVID-19 pandemic, all FINRA 
qualification examinations were administered at test centers 
operated by Prometric. Based on the health and welfare concerns 
resulting from COVID-19, in March Prometric closed all of its test 
centers in the United States and Canada and began to slowly reopen 
some of them at limited capacity in May. At this time, not all of 
these Prometric test centers have reopened at full capacity.
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    FINRA published the first FAQ on March 20, 2020, providing that 
individuals who were designated to function as principals under FINRA 
Rule 1210.04 \9\ prior to February 2, 2020, would be given until May 
31, 2020, to pass the appropriate principal qualification 
examination.\10\ On May 19, 2020, FINRA extended the relief to pass the 
appropriate examination until June 30, 2020. Most recently, on June 29, 
2020, FINRA again extended the temporary relief providing that 
individuals who were designated to function as principals under FINRA 
Rule 1210.04 prior to May 4, 2020, would be given until August 31, 
2020, to pass the appropriate principal qualification examination.
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    \9\ Interpretation and Policy .03 under NYSE Chicago Article 6, 
Rule 13 is the corresponding rule to FINRA Rule 1210.04.
    \10\ FINRA Rule 1210.04 (Requirements for Registered Persons 
Functioning as Principals for a Limited Period) allows a member firm 
to designate certain individuals to function in a principal capacity 
for 120 calendar days before having to pass an appropriate principal 
qualification examination. Interpretation and Policy .03 under NYSE 
Chicago Article 6, Rule 13 provides the same allowance to 
Participants.
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    One of the impacts of COVID-19 continues to be serious 
interruptions in the administration of FINRA qualification examinations 
at Prometric test centers and the limited ability of individuals to sit 
for the examinations.\11\ Although Prometric has begun reopening test 
centers, Prometric's safety practices mean that currently not all test 
centers are open, some of the open test centers are at limited 
capacity, and some open test centers are delivering only certain 
examinations that have been deemed essential by the local 
government.\12\ Furthermore, Prometric has had to close some reopened 
test centers due to incidents of COVID-19 cases. The initial nationwide 
closure in March along with the inability to fully reopen all Prometric 
test centers due to COVID-19 have led to a significant backlog of 
individuals who are waiting to sit for FINRA examinations.\13\
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    \11\ Information about the continued impact of COVID-19 on 
FINRA-administered examinations is available at https://www.finra.org/rules-guidance/keytopics/covid-19/exams.
    \12\ Information from Prometric about its safety practices and 
the impact of COVID-19 on its operations is available at https://www.prometric.com/corona-virus-update. See also supra note 11.
    \13\ Although an online test delivery service has been launched 
to help address the backlog, the General Securities Principal 
Examination (Series 24) is not available online. See supra note 11.
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    In addition, firms are continuing to experience operational 
challenges with much of their personnel working from home due to 
shelter-in-place orders, restrictions on businesses and social activity 
imposed in various states, and adherence to other social distancing 
guidelines consistent with the recommendations of public health 
officials.\14\ As a result, firms continue to face potentially 
significant disruptions to their normal business operations that may 
include a limitation of in-person activities and staff absenteeism as a 
result of the health and welfare concerns stemming from COVID-19. Such 
potential disruptions may be further exacerbated and may even affect 
client services if firms cannot continue to keep principal positions 
filled as they may have difficulty finding other qualified individuals 
to transition into these roles or may need to reallocate employee time 
and resources away from other critical responsibilities at the firm.
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    \14\ See, e.g., Centers for Disease Control and Prevention, How 
to Protect Yourself & Others, https://www.cdc.gov/coronavirus/2019-ncov/prevent-gettingsick/prevention.html.
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    These ongoing, extenuating circumstances make it impracticable for 
Participants to ensure that the individuals whom they have designated 
to function in a principal capacity, as set forth in Interpretation and 
Policy .03 under Article 6, Rule 13, are able to successfully sit for 
and pass an appropriate qualification examination within the 120-
calendar day period required under the rule, or to find other qualified 
staff to fill this position. The ongoing circumstances also require 
individuals to be exposed to the health risks associated with taking an 
in-person examination, because the General Securities Principal 
examination is not available online. Therefore, NYSE Chicago is 
proposing to continue the temporary relief provided through the FINRA 
FAQs by adopting Interpretation and Policy .10 under Article 6, Rule 13 
to extend the 120-day period during which an individual can function as 
a principal before having to pass an applicable qualification 
examination until December 31, 2020.\15\ The proposed rule change would 
apply only to those individuals who were designated to function as a 
principal prior to September 3, 2020. Any individuals designated to 
function as a principal on or after September 3, 2020, would need to 
successfully pass an appropriate qualification examination within 120 
days.
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    \15\ See supra note 5.
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    NYSE Chicago believes that this proposed continued extension of 
time is tailored to address the needs and constraints on a 
Participant's operations during the COVID-19 pandemic, without 
significantly compromising critical investor protection. The proposed 
extension of time will help to minimize the impact of COVID-19 on 
Participants by providing continued flexibility so that Participants 
can ensure that principal positions remain filled. The potential risks 
from the proposed extension of the 120-day period are mitigated by the 
Participant's continued requirement to supervise the activities of 
these designated individuals and ensure compliance with federal 
securities laws and regulations, as well as NYSE Chicago rules.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\16\ in general, and furthers the objectives of Section 
6(b)(5),\17\ in particular, because it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, to 
remove impediments to, and perfect the mechanism of, a free and open 
market and a national market system and, in

[[Page 64558]]

general, to protect investors and the public interest.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change is intended to minimize the impact of 
COVID-19 on Participant operations by extending the 120-day period 
certain individuals may function as a principal without having 
successfully passed an appropriate qualification examination pursuant 
to Interpretation and Policy .03 under Article 6, Rule 13 until 
December 31, 2020. The proposed rule change does not relieve 
Participants from maintaining, under the circumstances, a reasonably 
designed system to supervise the activities of their associated persons 
to achieve compliance with applicable securities laws and regulations, 
and with applicable NYSE Chicago rules that directly serve investor 
protection. In a time when faced with unique challenges resulting from 
the COVID-19 pandemic, NYSE Chicago believes that the proposed rule 
change is a sensible accommodation that will continue to afford 
Participants the ability to ensure that critical positions are filled 
and client services maintained, while continuing to serve and promote 
the protection of investors and the public interest in this unique 
environment.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
intended to provide temporary relief given the impacts of the COVID-19 
pandemic crisis and to also maintain consistency with the rules of 
other self-regulatory organizations (``SROs'') with respect to the 
registration requirements applicable to Participants and their 
registered personnel. In that regard, the Exchange believes that any 
burden on competition would be clearly outweighed by providing 
Participants with temporary relief in this unique environment while 
also ensuring clear and consistent requirements applicable across SROs 
and mitigating any risk of SROs implementing different standards in 
these important areas. In its filing, FINRA provides an abbreviated 
economic impact assessment maintaining that the changes are necessary 
to temporarily rebalance the attendant benefits and costs of the 
obligations under FINRA Rule 1210 in response to the impacts of the 
COVID-19 pandemic that is equally applicable to the changes the 
Exchange proposes.\18\ The Exchange accordingly incorporates FINRA's 
abbreviated economic impact assessment by reference.
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    \18\ FINRA Filing, 85 FR at 55537.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-
4(f)(6) \20\ thereunder.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
NYSE Chicago has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. NYSE Chicago has asked the 
Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative immediately upon filing. As noted 
above, NYSE Chicago stated that the temporary proposed rule change is 
based on a recent rule change by FINRA and is intended to harmonize 
NYSE Chicago's registration rules with those of FINRA to promote 
uniform standards across the securities industry.\21\ NYSE Chicago 
states that it will also help minimize the impact of the COVID-19 
outbreak on NYSE Chicago Participants' operations by allowing them to 
keep principal positions filled and minimizing disruptions to client 
services and other critical responsibilities. The ongoing extenuating 
circumstances of the COVID-19 pandemic make it impractical to ensure 
that individuals designated to act in principal capacities are able to 
take and pass the appropriate qualification examination during the 120-
calendar day period required under the rules. Shelter-in-place orders, 
quarantining, restrictions on business and social activity and 
adherence to other social distancing guidelines consistent with the 
recommendation of public officials remain in place in various 
states.\22\ Further, NYSE Chicago states that Prometric test centers 
have experienced serious interruptions in the administration of FINRA 
qualification examinations, resulting in a backlog of individuals 
waiting to take these examinations. Following a nationwide closure of 
all test centers earlier in the year, some test centers have re-opened, 
but are operating at limited capacity or are only delivering certain 
examinations that have been deemed essential by the local 
government.\23\ FINRA has launched an online test delivery service to 
help address this backlog. However, the General Securities Principal 
(Series 24) Examination is not available online. NYSE Chicago states 
that the temporary proposed rule change will provide needed flexibility 
to ensure that these positions remain filled and is tailored to address 
the constraints on Participants' operations during the COVID-19 
pandemic without significantly compromising critical investor 
protection.\24\
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    \21\ See supra note 6.
    \22\ See supra note 14.
    \23\ See supra notes 11 and 12. NYSE Chicago states that 
Prometric has also had to close some reopened test centers due to 
incidents of COVID-19 cases.
    \24\ NYSE Chicago states that Participants remain subject to the 
continued requirement to supervise the activities of these 
designated individuals and ensure compliance with federal securities 
laws and regulations, as well as NYSE Chicago rules.
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    The Commission also notes that the proposal provides only temporary 
relief from the requirement to pass certain qualification examinations 
within the 120-day period in the rules. As proposed, this relief would 
extend the 120-day period that certain individuals can function as 
principals through December 31, 2020. NYSE Chicago has also stated that 
if it requires temporary relief from the rule requirements identified 
in this proposal beyond December 31, 2020, it may submit a separate 
rule filing to extend the effectiveness of the temporary relief under 
these rules.\25\ For these reasons, the Commission believes that waiver 
of the 30-day operative delay is consistent with the protection of 
investors and the public interest.\26\ Accordingly, the Commission 
hereby waives the 30-day

[[Page 64559]]

operative delay and designates the proposal operative upon filing.\27\
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    \25\ See supra note 5.
    \26\ As noted above by the Exchange, this proposed temporary 
change is based on a recent filing by FINRA that the Commission 
approved with a waiver of the 30-day operative delay. See supra note 
6, 85 FR at 55538.
    \27\ 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 to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSECHX-2020-28 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-NYSECHX-2020-28. 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 (http://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, on business days between the 
hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE, 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of NYSE Chicago. 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-NYSECHX-2020-28 and 
should be submitted on or before November 3, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-22633 Filed 10-9-20; 8:45 am]
BILLING CODE 8011-01-P