[Federal Register Volume 85, Number 118 (Thursday, June 18, 2020)]
[Notices]
[Pages 36928-36930]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13113]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89055; File No. SR-FINRA-2020-017]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend the Effective Date of the Temporary
Amendments Set Forth in SR-FINRA-2020-015
June 12, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 10, 2020, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission
(``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\ 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
FINRA is proposing to extend the effective date of the temporary
amendments set forth in SR-FINRA-2020-015 \3\ from June 15, 2020 to
July 31, 2020. In response to the impacts on FINRA's operations caused
by the outbreak of the coronavirus disease (COVID-19), FINRA's May 8
Filing temporarily modified some timing, method of service and other
procedural requirements in FINRA rules through June 15, 2020.\4\
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\3\ See Securities Exchange Act Release No. 88917 (May 20,
2020), 85 FR 31832 (Notice of Filing and Immediate Effectiveness)
(SR-FINRA-2020-015) (filed with the Commission on May 8, 2020 for
immediate effectiveness) (the ``May 8 Filing'').
\4\ See id.
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The text of the proposed rule change is available on FINRA's
website at http://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA 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
On May 8, 2020, FINRA filed with the Commission a proposed rule
change for immediate effectiveness to temporarily amend some timing,
method of service and other procedural requirements in FINRA rules
during the period in which FINRA's operations are impacted by the
outbreak of COVID-19. Those temporary amendments set forth in FINRA's
May 8 Filing are in effect through June 15, 2020.\5\ The Commission
published its notice of filing and immediate effectiveness for the May
8 Filing on May 20, 2020.\6\
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\5\ As noted in FINRA's May 8 Filing, the temporarily amended
FINRA rules will revert back to their original state at the
conclusion of the temporary relief period, now July 31, 2020, and
any extension thereof.
\6\ See supra note 3.
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FINRA proposed the temporary amendments set forth in its May 8
Filing to address the substantial impacts of the COVID-19 outbreak on
FINRA's operations. Among other things, the need for FINRA staff, with
limited exceptions, to work remotely and restrict in-person
activities--consistent with the recommendations of public health
officials--makes it challenging to meet certain procedural requirements
and perform certain functions required under FINRA rules. The proposed
rule change addressed these concerns by easing logistical and other
issues and providing FINRA with needed flexibility for its operations
during the COVID-19 outbreak.
The COVID-19 conditions necessitating the temporary amendments in
FINRA's May 8 Filing
[[Page 36929]]
persist and FINRA continues to face the same logistical and other
challenges. For this reason and the reasons stated in the May 8 Filing,
FINRA now proposes to extend the effective date of the temporary rule
amendments in its May 8 Filing through July 31, 2020.\7\ The extension
of these temporary amendments will continue to help minimize the impact
of the COVID-19 outbreak on FINRA's operations, allowing FINRA to
continue critical adjudicatory and review processes in a reasonable and
fair manner and meet its critical investor protection goals, while also
following best practices with respect to the health and safety of its
staff.
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\7\ FINRA is monitoring the impact of COVID-19 on its
operations. If the temporary relief from the rule requirements
identified in FINRA's May 8 Filing is necessary beyond July 31,
2020, FINRA will submit a separate rule filing to extend the
effectiveness of the temporary relief under those rules.
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FINRA 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 FINRA can implement the proposed rule change
immediately.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\8\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change is also
consistent with Section 15A(b)(8) of the Act,\9\ which requires, among
other things, that FINRA rules provide a fair procedure for the
disciplining of members and persons associated with members.
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\8\ 15 U.S.C. 78o-3(b)(6).
\9\ 15 U.S.C. 78o-3(b)(8).
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The proposed rule change to extend the effective date of the
temporary amendments to FINRA rules set forth in the May 8 Filing to
July 31, 2020, will continue to provide FINRA, and in some cases
another party to a proceeding, temporary modifications to its
procedural requirements in order to allow FINRA to maintain fair
processes and protect investors while operating in a remote work
environment and with corresponding restrictions on its activities. It
is in the public interest, and consistent with the Act's purpose, for
FINRA to operate pursuant to this temporary relief. The temporary
amendments allow FINRA to specify filing and service methods, extend
certain time periods, and modify the format of oral argument for FINRA
disciplinary and eligibility proceedings and other review processes in
order to cope with the current pandemic conditions. In addition, as set
forth in the May 8 Filing, extending this temporary relief will further
support FINRA's disciplinary and eligibility proceedings and other
review processes that serve a critical role in providing investor
protection and maintaining fair and orderly markets.
B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the temporary proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. FINRA believes
that the proposed rule change, which extends the effectiveness of the
temporary rule amendments in its May 8 Filing to July 31, 2020, would
prevent unnecessary impediments to FINRA's operations and FINRA's
investor protection goals that would otherwise result if the amendments
in its May 8 Filing expire on June 15, 2020. FINRA does not believe
that the proposed rule change will have any material negative effect on
members and will not impose any new costs.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor 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 \10\ and Rule 19b-
4(f)(6) \11\ thereunder.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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.
FINRA 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 FINRA requested in connection
with its May 8 Filing, FINRA has also asked the Commission to waive the
30-day operative delay so that this proposed rule change may become
operative immediately upon filing. As in its May 8 Filing, FINRA has
reiterated that the requested relief in this proposed rule change will
help minimize the impact of the COVID-19 outbreak on FINRA's
operations, allowing FINRA to continue critical adjudicatory and review
processes in a reasonable and fair manner and meet its critical
investor protection goals, while also following best practices with
respect to the health and safety of its employees.\12\ We also note
that this proposal, like FINRA's May 8 Filing, provides only temporary
relief from, as FINRA states, the timing, method of service and other
procedural requirements, described more fully in FINRA's May 8 Filing,
during the period in which FINRA's operations are impacted by COVID-19.
As proposed, these changes would be in place through July 31, 2020.\13\
FINRA also noted in both proposed rule change filings that the amended
rules will revert back to their original, pre-May 8 Filing state at the
conclusion of the temporary relief period and, if applicable, any
extension thereof.\14\ 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. Accordingly, the Commission
hereby waives the 30-day operative delay and designates the proposal
operative upon filing.\15\
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\12\ See May 8 Filing, 85 FR at 31833.
\13\ As noted above, see supra note 5, FINRA states that if it
requires temporary relief from the rule requirements identified in
this proposal beyond July 31, 2020, it may submit a separate rule
filing to extend the effectiveness of the temporary relief under
these rules.
\14\ See May 8 Filing, 85 FR at 31833.
\15\ 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
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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 rule-comments@sec.gov. Please include
File Number SR-FINRA-2020-017 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-FINRA-2020-017. 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, on business days between the
hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE,
Washington, DC 20549. Copies of such filing also will be available for
inspection and copying at the principal office of FINRA. 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-FINRA-2020-017 and should be submitted
on or before July 9, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13113 Filed 6-17-20; 8:45 am]
BILLING CODE 8011-01-P