[Federal Register Volume 86, Number 86 (Thursday, May 6, 2021)]
[Notices]
[Pages 24422-24425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09527]
[[Page 24422]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91735; File No. SR-NASDAQ-2021-026]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend the Effective Date of the Temporary Amendments Concerning
Exchange Rule 1210 From April 30, 2021, to June 30, 2021
April 30, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on April 21, 2021, The Nasdaq Stock Market LLC
(``Nasdaq'' or ``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 to extend the expiration date of the
temporary amendments initially set forth in SR-NASDAQ-2020-73 and
subsequently extended in SR-NASDAQ-2020-091 (collectively, the
``Temporary Qualification Examination Relief Filings'') from April 30,
2021 to June 30, 2021. The Exchange does not anticipate providing any
further extensions to the temporary amendments identified in this
proposed rule change beyond June 30, 2021.\3\
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\3\ If due to unforeseen circumstances a further extension is
necessary, the Exchange will submit a separate rule filing to
further extend the temporary amendments.
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The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 Exchange 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 expiration date of the
temporary amendments initially set forth in the Temporary Qualification
Examination Relief Filings from April 30, 2021 to June 30, 2021. This
proposed rule change is based on a filing recently submitted by the
Financial Industry Regulatory Authority, Inc. (``FINRA'') \4\ and is
intended to harmonize the Exchange's registration rules with those of
FINRA so as to promote uniform standards across the securities
industry.
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\4\ See Exchange Act Release No. 91506 (April 8, 2021), 86 FR
19671 (April 14, 2021) (SR-FINRA-2021-005) (``FINRA Filing''). See
also Exchange Act Release Nos. 89732 (September 1, 2020), 85 FR
55535 (September 8, 2020) (SR-FINRA-2020-026); 90617 (December 9,
2020), 85 FR 81258 (December 15, 2020) (SR-FINRA-2020-043). The
Exchange notes that the FINRA Filing also provides temporarily
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 the COVID-19 global pandemic, last year FINRA began
providing temporary relief by way of frequently asked questions
(``FAQs'') \5\ 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.\6\
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\5\ See https://www.finra.org/rules-guidance/key-topics/covid-19/faq#qe.
\6\ 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 alal of its
test centers in the United States and Canada and began to slowly
reopen some of them at limited capacity in May 2020. 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 \7\ prior to February 2, 2020, would be given until May
31, 2020, to pass the appropriate principal qualification
examination.\8\ FINRA revised the FAQ to extend the expiration of the
temporary relief to pass the appropriate principal examination
initially until June 30, 2020, and then until August 31, 2020.
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\7\ Exchange Rule 1210.04 is the corresponding rule to FINRA
Rule 1210.04.
\8\ 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. Exchange Rule 1210.04 provides the same
allowance to members.
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On October 29, 2020, the Exchange filed with the Commission a
proposed rule change for immediate effectiveness to adopt temporary
Supplementary Material .13 (Temporary Extension of the Limited Period
for Registered Persons to Function as Principals) under Exchange Rule
1210 of General 4 (Registration Requirements).\9\ Pursuant to this rule
filing, individuals who were designated prior to September 3, 2020, to
function as a principal under Exchange Rule 1210.04 had until December
31, 2020, to pass the appropriate qualification examination. The
Exchange thereafter filed SR-NASDAQ-2020-091 to extend the expiration
date of the temporary amendments set forth in SR-NASDAQ-2020-076 from
December 31, 2020, to April 30, 2021.\10\
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\9\ See Exchange Act Release No. 90359 (November 5, 2020), 85 FR
71979 (November 12, 2020) (Notice of Filing and Immediate
Effectiveness of File No. SR-NASDAQ-2020-073).
\10\ See Exchange Act Release No. 90780 (December 22, 2020), 85
FR 86600 (December 30, 2020) (Notice of Filing and Immediate
Effectiveness of File No. SR-NASDAQ-2020-091).
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As mentioned in the Temporary Qualification Examination Relief
Filings, the Exchange and 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.\11\ The Exchange also noted in the Temporary
Qualification Examination Relief Filings that the pandemic could result
in members 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 members having
[[Page 24423]]
difficulty finding other qualified individuals to transition into those
roles or requiring them to reallocate employee time and resources away
from other critical responsibilities at the member firm.
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\11\ Information about the continued impact of COVID-19 on
FINRA-administered examinations is available at https://www.finra.org/rules-guidance/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 the Exchange 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.\12\ 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.\13\
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\12\ Information from Prometric about its safety practices and
the impact of COVID- 19 on its operations is available at https://www.prometric.com/corona-virus-update. See also supra note 11.
\13\ 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, the Exchange believes 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 members to
ensure that the individuals who they had designated to function in a
principal capacity, as set forth in Exchange Rule 1210.04, could
successfully sit for and pass an appropriate qualification examination
within the 120-calendar day period required under the rule.\14\
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 the examination was 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.\15\ Because the qualifying
examination has been made available online only recently, the Exchange
and FINRA are 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 examination before April 30, 2021,
the date the temporary amendments are set to expire. Therefore, the
Exchange is proposing to extend the expiration date of the temporary
amendments set forth in the Temporary Qualification Examination Relief
Filings until June 30, 2021. The proposed rule change would apply only
to those individuals who have been designated to function as a
principal prior to March 3, 2021. As noted above, the Exchange does not
anticipate providing any further extensions to the temporary amendments
and 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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\14\ See supra note 11.
\15\ Id.
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The Exchange 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 a member's
continued requirement to supervise the activities of these designated
individuals and ensure compliance with federal securities laws and
regulations, as well as Exchange rules.
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 Exchange believes that its proposal is consistent with Section
6(b) of the Act,\16\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\17\ in particular, in that it is designed to
promote just and equitable principles of trade, 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 further extending the 120-day period
certain individuals may function as a principal without having
successfully passed an appropriate qualification examination under
Exchange Rule 1210.04 until June 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 Exchange rules that directly
serve investor protection. In a time when faced with unique challenges
resulting from the COVID-19 pandemic, the Exchange 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 not necessary or appropriate in
furtherance of the purposes of the Act. As set forth in the Temporary
Qualification Examination Relief Filings, the proposed rule change is
intended solely to extend temporary relief necessitated by the
continued impacts of the COVID-19 outbreak and the related health and
safety risks of conducting in-person activities. The Exchange believes
that the proposed rule change is necessary to temporarily rebalance the
attendant benefits and costs of the obligations under Exchange Rule
1210 in response to the impacts of the COVID- 19 pandemic that would
otherwise result if the temporary amendments were to expire on April
30, 2021.\18\
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\18\ In SR-FINRA-2020-026, FINRA provides an abbreviated
economic impact assessment maintaining that changes are necessary to
temporarily rebalance the attendant benefits and costs of the
obligations under FINRA Rule 1210 in response to the impacts of the
COVID-19 pandemic that is equally applicable to the changes the
Exchange proposes. See Exchange Act Release No. 89732 (September 1,
2020), 85 FR 55537 (September 8, 2020) (SR-FINRA-2020-026). The
Exchange accordingly incorporates FINRA's abbreviated economic
impact assessment by reference.
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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 either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-
4(f)(6) 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 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 members'
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.\21\ However, on February 24, 2021, FINRA began providing
the General Securities Principal (Series 24) examination online through
an interim accommodation request process.\22\ 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-NASDAQ-2020-091 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 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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\21\ See supra notes 11 and 12. The Exchange states that
Prometric has also had to close some reopened test centers due to
incidents of COVID-19 cases.
\22\ See supra note 11 (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.\23\ Accordingly, the Commission hereby waives the
30-day operative delay and designates the proposal operative upon
filing.\24\
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\23\ As noted above by the Exchange, this proposal is an
extension of temporary relief provided in SR-NASDAQ-2020-073 and SR-
NASDAQ-2020-091 where the Exchange also requested and the Commission
granted a waiver of the 30-day operative delay. See SR-NASDAQ-2020-
073, 85 FR at 71981-82 and SR-NASDAQ-2020-091, 85 FR at 86602.
\24\ 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-NASDAQ-2021-026 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-NASDAQ-2021-026. 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-NASDAQ-2021-026 and should be submitted
on or before May 27, 2021.
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09527 Filed 5-5-21; 8:45 am]
BILLING CODE 8011-01-P