[Federal Register Volume 86, Number 85 (Wednesday, May 5, 2021)]
[Notices]
[Pages 24038-24041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09434]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91705; File No. SR-NYSE-2021-28]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Effective Date in Commentary .10 Under NYSE Rule 1210

April 29, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is 
hereby given that on April 19, 2021, New York Stock Exchange LLC 
(``NYSE'' 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 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 extend the effective date in 
Commentary .10 (Temporary Extension of the Limited Period for 
Registered Persons to Function as Principals) under NYSE Rule 1210 
(Registration Requirements) applicable to member organizations, from 
April 30, 2021 to June 30, 2021. The Exchange does not anticipate 
providing any further extensions to the temporary relief identified in 
this proposed rule change beyond June 30, 2021.\4\ 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.
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    \4\ If due to unforeseen circumstances a further extension is 
necessary, the Exchange will submit a separate rule filing to 
further extend the temporary relief.
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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 these 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 aspects 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 Commentary 
.10 (Temporary Extension of the Limited Period for Registered Persons 
to Function as Principals) under NYSE Rule 1210 (Registration 
Requirements) applicable to member organizations,\5\ from April 30, 
2021 to June 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 June 30, 2021, and would apply only to those individuals who 
were designated to function as a principal

[[Page 24039]]

prior to March 3, 2021. This proposed rule change is based on a filing 
recently submitted by the Financial Industry 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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    \5\ The term ``member organization'' means a registered broker 
or dealer (unless exempt pursuant to the Exchange Act), including 
sole proprietors, partnerships, limited liability partnerships, 
corporations, and limited liability corporations, approved by the 
Exchange pursuant to NYSE Rule 311. 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. See NYSE Rule 2(b)(i). The term 
``member organization'' also includes any registered broker or 
dealer 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 NYSE Rule 2(b)(ii).
    \6\ See Exchange Act Release No. 91506 (April 8, 2021) 86 FR 
19671 (April 14, 2021) (SR-FINRA-2021-005) (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 global pandemic, last 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 2020 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 \9\ prior to February 2, 2020, would be given until May 
31, 2020, to pass the appropriate principal qualification 
examination.\10\ FINRA revised the FAQ to extend the expiration of the 
temporary relief to pass the appropriate principal examination until 
June 30, 2020, and then until August 31, 2020.
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    \9\ NYSE Rule 1210.03 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. NYSE Rule 1210.03 provides the same 
allowance to member organizations.
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    On September 25, 2020, NYSE 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 Rule 1210 (Registration Requirements).\11\ 
Pursuant to this rule filing, individuals who were designated prior to 
September 3, 2020, to function as a principal under NYSE Rule 1210.10 
had until December 31, 2020, to pass the appropriate qualification 
examination. The Exchange thereafter filed a proposed rule change to 
extend the expiration date of the temporary relief from December 31, 
2020, to April 30, 2021.\12\
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    \11\ See Exchange Act Release No. 90111 (October 7, 2020), 85 FR 
65090 (October 14, 2020) (Notice of Filing and Immediate 
Effectiveness of SR-NYSE-2020-80).
    \12\ See Exchange Act Release No. 90753 (December 21, 2020), 85 
FR 85779 (December 29, 2020) (Notice of Filing and Immediate 
Effectiveness of SR-NYSE-2020-104).
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    As mentioned in the prior filings, FINRA began providing, and then 
extended, temporary relief to address the interruptions in the 
administration of FINRA qualification examinations at Prometric test 
centers and the limited ability of individuals to sit for the 
examinations caused by the COVID-19 pandemic.\13\ The prior filings 
also noted that the pandemic could result in firms potentially 
experiencing significant disruptions to their normal business 
operations that may be exacerbated by being unable to keep principal 
positions filled. Specifically, the limitation of in-person activities 
and staff absenteeism as a result of the health and welfare concerns 
stemming from COVID-19 could result in firms having difficulty finding 
other qualified individuals to transition into that role or requiring 
them to reallocate employee time and resources away from other critical 
responsibilities at the firm.
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    \13\ 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.
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    While there are signs of improvement, the COVID-19 conditions 
necessitating the temporary relief persist and FINRA has determined 
that there is a continued need for this temporary relief beyond April 
30, 2021. Although Prometric has resumed testing in many of its U.S. 
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.\14\ In addition, while certain states have started to ease 
COVID-19 restrictions on businesses and social activities, public 
health officials continue to emphasize the importance for individuals 
to keep taking numerous steps to protect themselves and help slow the 
spread of the disease.\15\
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    \14\ Information from Prometric about its safety practices and 
the impact of COVID-19 on its operations is available at https://www.prometric.com/covid-19-update/corona-virus-update. See also 
supra note 13.
    \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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    Although the COVID-19 conditions necessitating the temporary relief 
persist, in the FINRA Filing, FINRA stated that an extension of the 
relief is necessary only until June 30, 2021, because FINRA recently 
expanded the availability of online examinations. Prior to this 
expansion, the ongoing effects of the pandemic made it impracticable 
for FINRA members to ensure that the individuals who they had 
designated to function in a principal capacity, as set forth in FINRA 
Rule 1210.04, could successfully sit for and pass an appropriate 
qualification examination within the 120-calendar day period required 
under the rule.\16\ Specifically, if the individual wanted to take a 
qualifying examination, they were required to accept the health risks 
associated with taking an in-person examination because those 
examinations were not available online. On February 24, 2021, however, 
FINRA adopted an interim accommodation request process to allow 
candidates to take additional FINRA examinations online, including the 
General Securities Principal (``Series 24'') examination.\17\ Because 
the qualifying examination has been made available online only 
recently, FINRA is concerned that individuals who have been designated 
to function in a principal capacity may not have sufficient time to 
schedule, study for, and take the applicable examination before April 
30, 2021, the date the temporary relief is set to expire.
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    \16\ See supra note 13.
    \17\ Id.
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    These ongoing circumstances make it impracticable for member 
organizations to ensure that the individuals whom they have designated 
to function in a principal capacity, as set forth in NYSE Rule 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. Therefore, NYSE 
is proposing to extend the effective date of the temporary relief 
provided through SR-NYSE-2020-104 until June 30, 2021. The proposed 
rule change would apply only to those individuals who were designated 
to function as a principal prior to March 3, 2021. Any individuals 
designated to function as a principal on or after March 3, 2021, would 
need to successfully pass an appropriate

[[Page 24040]]

qualification examination within 120 days.
    NYSE believes that this proposed continued extension of time is 
tailored to address the needs and constraints on a member 
organization'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 
member organizations by providing continued flexibility so that member 
organizations can ensure that principal positions remain filled. The 
potential risks from the proposed extension of the 120-day period are 
mitigated by the member organization's continued requirement to 
supervise the activities of these designated individuals and ensure 
compliance with federal securities laws and regulations, as well as 
NYSE rules. NYSE has filed the proposed rule change for immediate 
effectiveness and has requested that the Commission waive the 
requirement that the proposed rule change not become operative for 30 
days after the date of the filing, so NYSE can implement the proposed 
rule change immediately.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Exchange Act,\18\ in general, and furthers the objectives of Section 
6(b)(5),\19\ 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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    \18\ 15 U.S.C. 78f(b).
    \19\ 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 organization operations by extending the 120-day 
period certain individuals may function as a principal without having 
successfully passed an appropriate qualification examination under NYSE 
Rule 1210.03 until June 30, 2021. The proposed rule change does not 
relieve member organizations 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 rules that directly 
serve investor protection. In a time when faced with unique challenges 
resulting from the COVID-19 pandemic, NYSE believes that the proposed 
rule change is a sensible accommodation that will continue to afford 
member organizations 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 Exchange Act. As set forth in the 
prior filings, 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 noted 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 relief was to expire on April 30, 2021. The Exchange 
accordingly incorporates FINRA's abbreviated economic impact assessment 
by reference.

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 \20\ and Rule 19b-
4(f)(6) thereunder.\21\
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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 conditions necessitating the 
temporary relief continue to exist and the proposed extension of time 
will help minimize the impact of the COVID-19 outbreak on NYSE member 
organizations' operations by allowing them to keep principal positions 
filled and minimizing disruptions to client services and other critical 
responsibilities. Despite signs of improvement, 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 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\ However, on February 24, 2021, FINRA began providing 
the General Securities Principal (Series 24) Examination online through 
an interim accommodation request process.\23\ Prior to this change, if 
individuals wanted to take these qualifying examinations, they were 
required to accept the health risks associated with taking an in-person 
examination. Even with the expansion of online qualifications 
examinations, the Exchange stated that extending the expiration date of 
the relief set forth in SR-NYSE-2020-104 until June 30, 2021 is still 
needed. The Exchange stated that this temporary relief will provide 
flexibility to allow individuals who have been designated to function 
in a principal sufficient time to schedule, study for and take the 
applicable examination before the temporary relief expires. Notably, 
the Exchange stated

[[Page 24041]]

that it does not anticipate providing any further extensions to the 
temporary amendments and that any individuals designated to function as 
a principal on or after March 3, 2021 will need to successfully pass an 
appropriate qualification examination within 120 days.
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    \22\ See supra notes 13 and 14. 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 13 (including the February 24, 2021 
announcement of the interim accommodation process for candidates to 
take certain examinations, including the General Securities 
Principal (Series 24) Examination, online.)
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    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.\24\ Accordingly, the Commission hereby waives the 
30-day operative delay and designates the proposal operative upon 
filing.\25\
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    \24\ As noted above by the Exchange, this proposal is an 
extension of temporary relief provided in SR-NYSE-2020-080 and SR-
NYSE-2020-104 where the Exchange also requested and the Commission 
granted a waiver of the 30-day operative delay. See SR-NYSE-2020-80, 
85 FR at 65092 and SR-NYSE-2020-104, 85 FR at 85781.
    \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-NYSE-2021-28 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-NYSE-2021-28. 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, 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-NYSE-2021-28 and should be submitted on 
or before May 26, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09434 Filed 5-4-21; 8:45 am]
BILLING CODE 8011-01-P