[Federal Register Volume 86, Number 80 (Wednesday, April 28, 2021)]
[Notices]
[Pages 22477-22479]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08859]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91634; File No. SR-NYSENAT-2021-11]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Extending 
the Expiration Date of the Temporary Amendments to Rules 10.9261 and 
10.9830

April 22, 2021.
    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 20, 2021, NYSE National, Inc. (``NYSE National'' 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 extending the expiration date of the 
temporary amendments to Rules 10.9261 and 10.9830 as set forth in SR-
NYSENAT-2020-31 from April 30, 2021, to August 31, 2021, in conformity 
with recent changes by the Financial Industry Regulatory Authority, 
Inc. (``FINRA''). The proposed rule change would not make any changes 
to the text of NYSE National Rules 10.9261 and 10.9830. 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 extending the expiration date of the 
temporary amendments as set forth in SR-NYSENAT-2020-31 \4\ to Rules 
10.9261 (Evidence and Procedure in Hearing) and 10.9830 (Hearing) from 
April 30, 2021, to August 31, 2021 to harmonize with recent changes by 
FINRA to extend the expiration date of the temporary amendments to its 
Rules 9261 and 9830. SR-NYSENAT-2020-31 temporarily granted to the 
Chief or Deputy Chief Hearing Officer the authority to order that 
hearings be conducted by video conference if warranted by public health 
risks posed by in-person hearings during the ongoing COVID-19 pandemic. 
The proposed rule change would not make any changes to the text of 
Exchange Rules 10.9261 and 10.9830.\5\
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    \4\ See Securities Exchange Act Release No. 90137 (October 8, 
2020), 85 FR 65087 (October 14, 2020) (SR-NYSENAT-2020-31) (``SR-
NYSENAT-2020-31'').
    \5\ The Exchange may submit a separate rule filing to extend the 
expiration date of the proposed extension beyond August 31, 2021 if 
the Exchange requires additional temporary relief from the rule 
requirements identified in SR-NYSENAT-2020-31. The amended NYSE 
National rules will revert back to their original state at the 
conclusion of the temporary relief period and any extension thereof.
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Background
    In 2018, NYSE National adopted disciplinary rules that are, with 
certain exceptions, substantially the same as the disciplinary rules of 
its affiliate NYSE American LLC, which are in turn substantially 
similar to the FINRA Rule 8000 Series and Rule 9000 Series, and which 
set forth rules for conducting investigations and enforcement 
actions.\6\
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    \6\ See Securities Exchange Act Release No. 83289 (May 17, 
2018), 83 FR 23968, 23976 (May 23, 2018) (SR-NYSENAT-2018-02) 
(``2018 Approval Order'').
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    In adopting disciplinary rules modeled on FINRA's rules, NYSE 
National adopted the hearing and evidentiary processes set forth in 
Rule 10.9261 and in Rule 10.9830 for hearings in matters involving 
temporary and permanent cease and desist orders under the Rule 10.9800 
Series. As adopted, the text of Rule 10.9261 and Rule 10.9830 are 
substantially the same as the FINRA rules with certain 
modifications.\7\
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    \7\ See id.
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    In response to the COVID-19 global health crisis and the 
corresponding need to restrict in-person activities, on August 31, 
2020, FINRA filed with the Commission a proposed rule change for 
immediate effectiveness, SR-FINRA-2020-027, which allowed FINRA's 
Office of Hearing Officers (``OHO'') to conduct hearings, on a 
temporary basis, by video conference, if warranted by the current 
COVID-19-related public health risks posed by an in-person hearing. 
Among the rules FINRA amended were Rules 9261 and 9830.\8\
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    \8\ See Securities Exchange Act Release No. 89737 (September 2, 
2020), 85 FR 55712 (September 9, 2020) (SR-FINRA-2020-027) (the 
``August 31 FINRA Filing'').
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    Given that FINRA and OHO administers disciplinary hearings on the 
Exchange's behalf, and that the public health concerns addressed by 
FINRA's amendments apply equally to Exchange disciplinary hearings, on 
September 29, 2020, the Exchange filed to temporarily amend Rule 
10.9261 and Rule 10.9830 to permit FINRA to conduct virtual hearings on 
its behalf.\9\ In December 2020, FINRA filed a proposed rule change, 
SR-FINRA-2020-042, to extend the expiration date of the temporary 
amendments in SR-FINRA-2020-027 from December 31, 2020, to April 30, 
2021.\10\ On December 22, 2020, the Exchange similarly filed to extend 
the temporary amendments to Rule 10.9261 and Rule 10.9830 to April 30, 
2021, after which the temporary amendments will expire absent another 
proposed rule change filing by the Exchange.\11\
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    \9\ See note 4, supra.
    \10\ See Securities Exchange Act Release No. 90619 (December 9, 
2020), 85 FR 81250 (December 15, 2020) (SR-FINRA-2020-042).
    \11\ See Securities Exchange Act Release No. 90822 (December 30, 
2020), 86 FR 627 (January 6, 2021) (SR-NYSENAT-2020-39).
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    While there are signs of improvement, FINRA has determined that the 
COVID-19 conditions necessitating these temporary amendments persist 
and, based on its assessment of current COVID-19 conditions and the 
lack of certainty as to when COVID-19-related health concerns and 
corresponding restrictions will meaningfully subside, that there is a 
continued need for this

[[Page 22478]]

temporary relief for several months beyond April 30, 2021. On April 1, 
2021, FINRA accordingly filed to extend the expiration date of the 
temporary rule amendments to, among other rules, FINRA Rule 9261 and 
9830 from April 30, 2021, to August 31, 2021.\12\
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    \12\ See Securities Exchange Act Release No. 91495 (April 7, 
2021), 86 FR 19306 (April 13, 2021) (SR-FINRA-2021-006) (``SR-FINRA-
2021-006'').
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Proposed Rule Change
    Consistent with FINRA's recent proposal, the Exchange proposes to 
extend the expiration date of the temporary rule amendments to NYSE 
National Rules 10.9261 and 10.9830 as set forth in SR-NYSENAT-2020-31 
from April 30, 2021, to August 31, 2021.
    As set forth in SR-FINRA 2021-006, while there are signs of 
improvement, the COVID-19 conditions necessitating these temporary 
amendments persist and, based on FINRA's assessment of current COVID-19 
conditions and the lack of certainty as to when COVID-19-related health 
concerns and corresponding restrictions will meaningfully subside, 
FINRA has determined that there is a continued need for this temporary 
relief for several months beyond April 30, 2021.\13\ FINRA accordingly 
proposed to extend the expiration date of the temporary rule amendments 
from April 30, 2021, to August 31, 2021.
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    \13\ See id.
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    The Exchange proposes to similarly extend the expiration date of 
the temporary rule amendments to NYSE National Rules 10.9261 and 
10.9830 as set forth in SR-NYSENAT-2020-31 from April 30, 2021, to 
August 31, 2021. The Exchange agrees with FINRA that the COVID-19 
conditions necessitating these temporary amendments persist and, for 
the reasons set forth in SR-FINRA-2021-006, that there is a continued 
need for this temporary relief for several months beyond April 30, 
2021. The proposed change would permit OHO to continue to assess, based 
on critical COVID-19 data and criteria and the guidance of health and 
security consultants, whether an in-person hearing would compromise the 
health and safety of the hearing participants such that the hearing 
should proceed by video conference. As noted in SR-FINRA-2021-006, in 
deciding whether to schedule a hearing by video conference, OHO may 
consider a variety of other factors in addition to COVID-19 trends. In 
SR-FINRA-2020-027, FINRA provided a non-exhaustive list of other 
factors OHO may take into consideration, including a hearing 
participant's individual health concerns and access to the connectivity 
and technology necessary to participate in a video conference 
hearing.\14\ The Exchange believes that this is a reasonable procedure 
to continue to follow for hearings under Rules 9261 and 9830 chaired by 
a FINRA employee.
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    \14\ See SR-FINRA-2020-042, 85 FR at 81251-52; August 31 FINRA 
Filing, 85 FR at 55713.
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    As noted below, the Exchange has filed the proposed rule change for 
immediate effectiveness and has requested that the SEC waive the 
requirement that the proposed rule change not become operative for 30 
days after the date of the filing, so the Exchange can implement the 
proposed rule change immediately.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\15\ in general, and furthers the objectives of Section 
6(b)(5),\16\ 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. 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 with Sections 6(b)(7) and 6(d) of the Act.\17\
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
    \17\ 15 U.S.C. 78f(b)(7) & 78f(d).
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    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.
    The proposed rule change, which extends the expiration date of the 
temporary amendments to Exchange rules consistent with FINRA's 
extension to its Rules 9261 and 9830 for four months as set forth in 
SR-FINRA-2021-006, will permit the Exchange to continue to effectively 
conduct hearings during the COVID-19 pandemic. Given current COVID-19 
conditions and the uncertainty around when those conditions will 
meaningfully improve, without this relief allowing OHO to proceed by 
video conference, some or all hearings may have to be postponed 
indefinitely. The ability to conduct hearings by video conference will 
permit the adjudicatory functions of the Exchange's disciplinary rules 
to continue unabated, thereby avoiding protracted delays. The Exchange 
believes that this is especially important in matters where temporary 
and permanent cease and desist orders are sought because the proposed 
rule change would enable those hearings to continue to proceed without 
delay, thereby enabling the Exchange to continue to take immediate 
action to stop significant, ongoing customer harm, to the benefit of 
the investing public.
    As set forth in detail in SR-NYSENAT-2020-31, the temporary relief 
to permit hearings to be conducted via video conference maintains fair 
process and will continue to provide fair process consistent with 
Sections 6(b)(7) and 6(d) of the Act \18\ while striking an appropriate 
balance between providing fair process and enabling the Exchange to 
fulfill its statutory obligations to protect investors and maintain 
fair and orderly markets while avoiding the COVID-19-related public 
health risks for hearing participants. The Exchange notes that this 
proposal, like SR-NYSENAT-2020-31, provides only temporary relief. As 
proposed, the changes would be in place through August 31, 2021. As 
noted in SR-NYSENAT-2020-31 and above, the amended rules will revert 
back to their original state at the conclusion of the temporary relief 
period and, if applicable, any extension thereof.
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    \18\ 15 U.S.C. 78f(b)(7) & 78f(d).
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    Accordingly, the proposed rule change extending this temporary 
relief is in the public interest and consistent with the Act's purpose.

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

    The Exchange does not believe that the proposed temporary 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 not intended to address competitive issues but is rather 
intended solely to provide continued temporary relief given the impacts 
of the COVID-19 pandemic and the related health and safety risks of 
conducting in-person activities. The

[[Page 22479]]

Exchange believes that the proposed rule change will prevent 
unnecessary impediments to critical adjudicatory processes and its 
ability to fulfill its statutory obligations to protect investors and 
maintain fair and orderly markets that would otherwise result if the 
temporary amendments were to expire on April 30, 2021.

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. As the Exchange requested in 
connection with SR-NYSENAT-2020-39,\21\ here too the Exchange has 
requested that the Commission waive the 30-day operative delay so that 
this proposed rule change may become operative immediately upon filing.
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    \21\ See SR-NYSENAT-2020-39, 86 FR at 627.
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    The Exchange has indicated that extending this proposed rule change 
will prevent unnecessary impediments to critical adjudicatory processes 
and its ability to fulfill its statutory obligations to protect 
investors and maintain fair and orderly markets that would otherwise 
result if the temporary amendments were to expire on April 30, 
2021.\22\ The Commission also notes that this proposal, like SR-
NYSENAT-2020-39, provides only temporary relief during the period in 
which the Exchange's operations are impacted by COVID-19. As proposed, 
the changes would be in place through August 31, 2021 \23\ and the 
amended rules will revert back to their original state at the 
conclusion of the temporary relief period and, if applicable, any 
extension thereof.\24\ For these reasons, 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. Accordingly, 
the Commission hereby waives the 30-day operative delay and designates 
the proposal operative upon filing.\25\
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    \22\ See supra p. 8.
    \23\ As noted above, see supra note 5, the Exchange states that 
if it requires temporary relief from the rule requirements 
identified in this proposal beyond August 31, 2021, it may submit a 
separate rule filing to extend the effectiveness of the temporary 
relief under these rules.
    \24\ See supra note 5.
    \25\ 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-NYSENAT-2021-11 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-NYSENAT-2021-11. 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-NYSENAT-2021-11 and should be submitted 
on or before May 19, 2021.
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    \26\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-08859 Filed 4-27-21; 8:45 am]
BILLING CODE 8011-01-P