[Federal Register Volume 85, Number 249 (Tuesday, December 29, 2020)]
[Notices]
[Pages 85821-85824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28661]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90754; File No. SR-NYSEAMER-2020-85]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Effective Date in Commentary .10 Under NYSE American Rule 2.1210

December 21, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on December 15, 2020, NYSE American LLC (``NYSE 
American'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been prepared by 
the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 extend the effective date in 
Commentary .10 (Temporary Extension of the Limited Period for 
Registered Persons to Function as Principals) under NYSE American Rule 
2.1210 (Registration Requirements) applicable to member organizations, 
Equity Trading Permit (``ETP'') Holders and American Trading Permit 
(``ATP'') Holders, from December 31, 2020 to April 30, 2021. 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.

[[Page 85822]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to extend the effective date in Commentary 
.10 (Temporary Extension of the Limited Period for Registered Persons 
to Function as Principals) under NYSE American Rule 2.1210 
(Registration Requirements) applicable to member organizations, ETP 
Holders and ATP Holders (collectively, ``Members'') \3\ from December 
31, 2020 to April 30, 2021. 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 April 30, 2021,\4\ and would apply only to those 
individuals who were designated to function as a principal prior to 
January 1, 2021. This proposed rule change is based on a filing 
recently submitted by the Financial Regulatory Authority, Inc. 
(``FINRA'') \5\ 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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    \3\ The term ``member organization'' is defined in Rule 24 
(Office Rules) as ``a partnership, corporation or such other entity 
as the Exchange may, by Rule, permit to become a member 
organization, and which meets the qualifications specified in the 
Rules.'' The term ``member organization'' is defined in Rule 2(b)(i) 
(Equities Rules) as a registered broker or dealer (unless exempt 
pursuant to the Exchange Act that is a member of the Financial 
Industry Regulatory Authority, Inc. (``FINRA'') or another 
registered securities exchange. Member organizations that transact 
business with public customers or conduct business on the Floor of 
the Exchange shall at all times be members of FINRA. A registered 
broker or dealer must also be approved by the Exchange and 
authorized to designate an associated natural person to effect 
transactions on the floor of the Exchange or any facility thereof. 
This term shall include a natural person so registered, approved and 
licensed who directly effects transactions on the floor of the 
Exchange or any facility thereof.'' The term ``member organization'' 
also includes any registered broker or dealer that is a member of 
FINRA or a registered securities exchange, consistent with the 
requirements of section 2(b)(i) of this Rule, which does not own a 
trading license and agrees to be regulated by the Exchange as a 
member organization and which the Exchange has agreed to regulate.'' 
See Rule 2(a)(ii) (Equities Rules). The term ``ETP Holder'' means a 
member organization that has been issued an ETP. An ETP Holder will 
agree to be bound by the Rules of the Exchange, and by all 
applicable rules and regulations of the Securities and Exchange 
Commission. See Rule 1.1E(n). References to ``member organization'' 
as used in Exchange rules include ATP Holders, which are registered 
brokers or dealers approved to effect transactions on the Exchange's 
options marketplace. Under the Exchange's rules, an ATP Holder has 
the status as a ``member'' of the Exchange as that term is defined 
in Section 3 of the Act. See Rule 900.2NY(4) & (5).
    \4\ If NYSE American seeks to provide additional temporary 
relief from the rule requirements identified in this proposed rule 
change beyond April 30, 2021, NYSE American will submit a separate 
rule filing to further extend the temporary extension of time.
    \5\ See Exchange Act Release No. 90617 (December 9, 2020), 85 FR 
81258 (December 15, 2020) (SR-FINRA-2020-043) (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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    The COVID-19 pandemic is an unpredictable, exogenous event that has 
resulted in unavoidable disruptions to the securities industry and 
impacted member firms, regulators, investors and other stakeholders. In 
response to COVID-19, earlier this year FINRA began providing temporary 
relief by way of frequently asked questions (``FAQs'') \6\ 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.\7\
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    \6\ See https://www.finra.org/rules-guidance/key-topics/covid-19/faq#qe.
    \7\ 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. Currently, Prometric has 
resumed testing in many of its United States and Canada test 
centers, at either full or limited occupancy, based on local and 
government mandates.
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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 \8\ prior to February 2, 2020, would be given until May 
31, 2020, to pass the appropriate principal qualification 
examination.\9\ On May 19, 2020, FINRA extended the relief to pass the 
appropriate examination until June 30, 2020. 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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    \8\ NYSE American Rule 2.1210.03 is the corresponding rule to 
FINRA Rule 1210.04.
    \9\ 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. NYSE American Rule 2.1210.03 provides the 
same allowance to Members.
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    On September 25, 2020, NYSE American filed with the Commission a 
proposed rule change for immediate effectiveness to extend the 
temporary relief provided via the FAQ by adopting temporary Commentary 
.10 (Temporary Extension of the Limited Period for Registered Persons 
to Function as Principals) under NYSE American Rule 2.1210 
(Registration Requirements).\10\ Pursuant to this rule filing, 
individuals who were designated prior to September 3, 2020, to function 
as a principal under NYSE American Rule 2.1210.10 have until December 
31, 2020, to pass the appropriate qualification examination.
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    \10\ See Exchange Act Release No. 90115 (October 7, 2020), 85 FR 
64595 (October 13, 2020) (Notice of Filing and Immediate 
Effectiveness of SR-NYSEAMER-2020-71).
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    The COVID-19 conditions necessitating the extension of relief 
provided in the FAQ and SR-NYSEAMER-2020-71 persist and in fact appear 
to be worsening.\11\ 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.\12\ Although Prometric has 
been reopening its 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.\13\ 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 that are not 
available online, including the General Securities Principal Exam 
(Series 24).\14\
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    \11\ See, e.g., Meryl Kornfield, Jacqueline Dupree, Marisa Iati, 
Paulina Villegas, Siobhan O'Grady and Hamza Shaban, New daily 
coronavirus cases in U.S. rise to 145,000, latest all-time high, 
Wash. Post, November 11, 2020, https://www.washingtonpost .com/
nation/2020/11/11/coronavirus-covid-live-updates-us/.
    \12\ Information about the continued impact of COVID-19 on 
FINRA-administered examinations is available at https://www.finra.org/rules-guidance/key-topics/covid-19/exams.
    \13\ 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 12.
    \14\ Earlier this year, an online test delivery service was 
launched for candidates seeking to take qualification examination 
remotely. Only certain qualification examinations are available 
online. See supra note 12. FINRA is considering making additional 
qualification examinations available remotely on a limited basis.
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    In addition, firms are continuing to experience operational 
challenges with

[[Page 85823]]

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.\15\ 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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    \15\ See, e.g., Centers for Disease Control and Prevention, How 
to Protect Yourself & Others, https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/prevention.html.
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    These ongoing, extenuating circumstances make it impracticable for 
Members to ensure that the individuals whom they have designated to 
function in a principal capacity, as set forth in NYSE American Rule 
2.1210.03, 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 American is proposing to extend the effective date of 
the temporary relief provided through SR-NYSEAMER-2020-71 until April 
30, 2021. The proposed rule change would apply only to those 
individuals who were designated to function as a principal prior to 
January 1, 2021. Any individuals designated to function as a principal 
on or after January 1, 2021, would need to successfully pass an 
appropriate qualification examination within 120 days.
    NYSE American believes that this proposed continued extension of 
time is tailored to address the needs and constraints on a Member's 
operations during the COVID-19 pandemic, without significantly 
compromising critical investor protection. The proposed extension of 
time will help to minimize the impact of COVID-19 on Members by 
providing continued flexibility so that Members can ensure that 
principal positions remain filled. The potential risks from the 
proposed extension of the 120-day period are mitigated by the Member's 
continued requirement to supervise the activities of these designated 
individuals and ensure compliance with federal securities laws and 
regulations, as well as NYSE American 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 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 Member operations by extending the 120-day period certain 
individuals may function as a principal without having successfully 
passed an appropriate qualification examination under NYSE American 
Rule 2.1210.03 until April 30, 2021. The proposed rule change does not 
relieve Members from maintaining, under the circumstances, a reasonably 
designed system to supervise the activities of their associated persons 
to achieve compliance with applicable securities laws and regulations, 
and with applicable NYSE American rules that directly serve investor 
protection. In a time when faced with unique challenges resulting from 
the COVID-19 pandemic, NYSE American believes that the proposed rule 
change is a sensible accommodation that will continue to afford Members 
the ability to ensure that critical positions are filled and client 
services maintained, while continuing to serve and promote the 
protection of investors and the public interest in this unique 
environment.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. As set forth in SR-NYSEAMER-
2020-71, the proposed rule change is intended solely to extend 
temporary relief necessitated by the continued impacts of the COVID-19 
pandemic and the related health and safety risks of conducting in-
person activities. In its filing, FINRA notes that the proposed rule 
change is 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 would otherwise result if the 
temporary amendments were to expire on December 31, 2020.\18\ The 
Exchange accordingly incorporates FINRA's abbreviated economic impact 
assessment by reference.
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    \18\ See FINRA Filing, 85 FR at 81260.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

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) thereunder.\20\
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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. 
The Exchange 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. The Exchange has asked the 
Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative immediately upon filing. As noted 
above, the Exchange stated that the proposed extension of time will 
help minimize the impact of the COVID-19 outbreak on Members' 
operations by allowing them to keep principal positions filled and 
minimizing disruptions to client services and other critical 
responsibilities. The Exchange further stated that the ongoing

[[Page 85824]]

extenuating circumstances of the COVID-19 pandemic make it impractical 
to ensure that individuals designated to act in these capacities are 
able to take and pass the appropriate qualification examination during 
the 120-calendar day period required under the rules. The Exchange also 
explained that shelter-in-place orders, quarantining, restrictions on 
business and social activity and adherence to social distancing 
guidelines consistent with the recommendations of public officials 
remain in place in various states.\21\ In addition, the Exchange 
observed that, following a nationwide closure of all test centers 
earlier in the year, some test centers have re-opened, but are 
operating at limited capacity or are only delivering certain 
examinations that have been deemed essential by the local 
government.\22\ Although, as the Exchange noted, FINRA has launched an 
online test delivery service to help address this backlog, the General 
Securities Principal (Series 24) Examination is not available 
online.\23\ Nevertheless, the Exchange explained that the proposed rule 
change will provide needed flexibility to ensure that these positions 
remain filled and is tailored to address the constraints on Members' 
operations during the COVID-19 pandemic without significantly 
compromising critical investor protection.\24\
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    \21\ See supra note 15.
    \22\ See supra notes 12 and 13. The Exchange states that 
Prometric has also had to close some reopened test centers due to 
incidents of COVID-19 cases.
    \23\ See supra note 14. FINRA is considering making additional 
qualification examinations available remotely on a limited basis.
    \24\ The Exchange states that Members remain subject to the 
continued requirement to supervise the activities of these 
designated individuals and ensure compliance with federal securities 
laws and regulations, as well as NYSE American rules.
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    The Commission observes that the Exchange's proposal, like the 
FINRA Filing, provides only an extension to temporary relief from the 
requirement to pass certain qualification examinations within the 120-
day period in the rules. As proposed, this relief would extend the 120-
day period that certain individuals can function as principals through 
April 30, 2021. If a further extension of temporary relief from the 
rule requirements identified in this proposal beyond April 30, 2021 is 
required, the Exchange noted that it may submit a separate rule filing 
to extend the effectiveness of the temporary relief under these 
rules.\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 operative delay and designates the proposal 
operative upon filing.\27\
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    \25\ See supra note 4.
    \26\ As noted above by NYSE American, this proposal is an 
extension of temporary relief provided in a prior filing where NYSE 
American also requested and the Commission granted a waiver of the 
30-day operative delay. See supra note 10, 85 FR at 64597.
    \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-NYSEAMER-2020-85 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-NYSEAMER-2020-85. 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, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of 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-NYSEAMER-2020-85 and should be submitted 
on or before January 19, 2021.

    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. 2020-28661 Filed 12-28-20; 8:45 am]
BILLING CODE 8011-01-P