[Federal Register Volume 85, Number 249 (Tuesday, December 29, 2020)]
[Notices]
[Pages 85756-85759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28666]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90762; File No. SR-NYSECHX-2020-33]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Effective Date in Interpretation and Policy .10 Under NYSE Chicago 
Article 6, Rule 13

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, the NYSE Chicago, Inc. 
(``NYSE Chicago'' 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 
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, 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.
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 
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,\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.
---------------------------------------------------------------------------

    \3\ 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).
    \4\ If NYSE Chicago seeks to provide additional temporary relief 
from the rule requirements identified in this proposed rule change 
beyond April 30, 2021, NYSE Chicago 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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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,

[[Page 85757]]

2020, to pass the appropriate principal qualification examination.
---------------------------------------------------------------------------

    \8\ Interpretation and Policy .03 under NYSE Chicago Article 6, 
Rule 13 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. Interpretation and Policy .03 under NYSE 
Chicago Article 6, Rule 13 provides the same allowance to 
Participants.
---------------------------------------------------------------------------

    On September 25, 2020, NYSE Chicago filed with the Commission a 
proposed rule change for immediate effectiveness to extend the 
temporary relief provided via the FAQ by adopting 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).\10\ Pursuant to 
this rule filing, individuals who were designated prior to September 3, 
2020, to function as a principal under Interpretation and Policy .10 of 
NYSE Chicago Article 6, Rule 13 have until December 31, 2020, to pass 
the appropriate qualification examination.
---------------------------------------------------------------------------

    \10\ See Exchange Act Release No. 90114 (October 7, 2020), 85 FR 
64556 (October 13, 2020) (Notice of Filing and Immediate 
Effectiveness of SR-NYSECHX-2020-28).
---------------------------------------------------------------------------

    The COVID-19 conditions necessitating the extension of relief 
provided in the FAQ and SR-NYSECHX-2020-28 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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.\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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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 extend the effective date of the temporary relief provided 
through SR-NYSECHX-2020-28 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 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 general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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 April 
30, 2021. 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.

[[Page 85758]]

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-NYSECHX-
2020-28, 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.
---------------------------------------------------------------------------

    \18\ See FINRA Filing, 85 FR at 81260.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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 Participants' 
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 
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 
Participants' operations during the COVID-19 pandemic without 
significantly compromising critical investor protection.\24\
---------------------------------------------------------------------------

    \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 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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \25\ See supra note 4.
    \26\ As noted above by NYSE Chicago, this proposal is an 
extension of temporary relief provided in a prior filing where NYSE 
Chicago also requested and the Commission granted a waiver of the 
30-day operative delay. See supra note 10, 85 FR at 64558.
    \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).
---------------------------------------------------------------------------

    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-2020-33 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-2020-33. 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

[[Page 85759]]

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-NYSECHX-2020-33 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\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-28666 Filed 12-28-20; 8:45 am]
BILLING CODE 8011-01-P