[Federal Register Volume 86, Number 3 (Wednesday, January 6, 2021)]
[Notices]
[Pages 647-650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29211]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90820; File No. SR-NYSEArca-2020-116]
Self-Regulatory Organizations; NYSE Arca, 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 as Set Forth in SR-NYSEArca-2020-85 From December 31, 2020, to
April 30, 2021
December 30, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'' or ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\
notice is hereby given that on December 22, 2020, NYSE Arca, Inc.
(``NYSE Arca'' or the ``Exchange'') 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 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\ 15 U.S.C. 78s(b)(1).
\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-
NYSEArca-2020-85 from December 31, 2020, to April 30, 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 Arca 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 in SR-NYSEArca-2020-85 \4\ to Rules 10.9261
(Evidence and Procedure in Hearing) and 10.9830 (Hearing) from December
31, 2020, to April 30, 2021 to harmonize with recent changes by FINRA
to extend the expiration date of the temporary amendments to its Rules
9261 and 9830. SR-NYSEArca-2020-85 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. 90088 (October 5,
2020), 85 FR 64186 (October 9, 2020) (SR-NYSEArca-2020-85) (``SR-
NYSEArca-2020-85'').
\5\ The Exchange may submit a separate rule filing to extend the
expiration date of the proposed extension beyond April 30, 2021 if
the Exchange requires additional temporary relief from the rule
requirements identified in SR-NYSEArca-2020-85. The amended NYSE
Arca 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 2019, NYSE Arca adopted disciplinary rules based on the text of
the Rule 8000 and Rule 9000 Series of its affiliate NYSE American LLC
(``NYSE American''), with certain changes. The NYSE American
disciplinary rules are, in turn, substantially the same as the Rule
8000 Series and Rule 9000 Series of FINRA and the New York Stock
Exchange LLC.\6\ The NYSE Arca disciplinary rules were implemented on
May 27, 2019.\7\
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\6\ See Securities Exchange Act Release No. 85639 (April 12,
2019), 84 FR 16346 (April 18, 2019) (SR-NYSEArca-2019-15) (``2019
Notice'').
\7\ See NYSE Arca Equities RB-19-060 & NYSE Arca Options RB-19-
02 (April 26, 2019).
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In adopting disciplinary rules modeled on FINRA's rules, NYSE Arca
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
[[Page 648]]
substantially the same as the FINRA rules with certain
modifications.\8\
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\8\ See 2019 Notice, 84 FR at 16365 & 16373-4.
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In response to the spread of COVID-19, on August 31, 2020, FINRA
filed with the Commission a proposed rule change for immediate
effectiveness, SR-FINRA-2020-027, to temporarily grant FINRA's Office
of Hearing Officers (``OHO'') and the National Adjudicatory Council
(``NAC'') the authority to conduct certain hearings by video
conference, if warranted by the current COVID-19-related public health
risks posed by in-person hearings. Among the rules FINRA amended were
Rules 9261 and 9830.\9\
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\9\ 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 23, 2020, the Exchange filed to temporarily amend Rule
10.9261 and Rule 10.9830 to permit FINRA to conduct virtual hearings on
its behalf.\10\ The temporary amendments to Rule 10.9261 and Rule
10.9830, as originally proposed, will expire on December 31, 2020,
absent another proposed rule change filing by the Exchange.
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\10\ See supra note 4.
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The COVID-19 conditions necessitating these temporary amendments
persist, with cases rapidly escalating nationwide. Based on its
assessment of current COVID-19 conditions and the lack of certainty as
to when COVID-19-related health concerns will subside, on December 1,
2020, FINRA filed to extend the expiration date of the temporary rule
amendments to, among other rules, FINRA Rule 9261 and 9830 from
December 31, 2020, to April 30, 2021.\11\
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\11\ See Securities Exchange Act Release No. 90619 (December 9,
2020), 85 FR 81250 (December 15, 2020) (SR-FINRA-2020-042) (``SR-
FINRA-2020-042'').
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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
Arca Rules 10.9261 and 10.9830 as set forth in SR-NYSEArca-2020-85 from
December 31, 2020, to April 30, 2021.
As set forth in SR-FINRA-2020-042, based on its assessment of
current COVID-19 conditions, including the recent escalation in COVID-
19 cases nationwide, FINRA does not believe that the COVID-19-related
health concerns necessitating this relief will subside by December 31,
2020, and has determined that there will be a continued need for this
temporary relief for several months beyond December 31, 2020.\12\ FINRA
accordingly proposed to extend the expiration date of the temporary
rule amendments in the August 31 FINRA Filing from December 31, 2020,
to April 30, 2021.
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\12\ See id.
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The Exchange proposes to similarly extend the expiration date of
the temporary rule amendments to NYSE Arca Rules 10.9261 and 10.9830 as
set forth in SR-NYSEArca-2020-85 from December 31, 2020, to April 30,
2021. With COVID-19 cases surging nationwide, the Exchange agrees with
FINRA that the COVID-19-related public health risks necessitating this
temporary relief have not yet abated and are unlikely to abate by
December 31, 2020. The proposed change will 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. FINRA has adopted a
detailed and thorough protocol to ensure that hearings conducted by
video conference will maintain fair process for the parties.\13\ The
Exchange believes that this is a reasonable procedure to continue to
follow for hearings under Rules 10.9261 and 10.9830 chaired by a FINRA
employee.
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\13\ 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,\14\ in general, and furthers the objectives of Section
6(b)(5),\15\ 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.\16\
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
\16\ 15 U.S.C. 78f(b)(7) and 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-2020-042, will permit the Exchange to continue to effectively
conduct hearings during the COVID-19 pandemic in situations where in-
person hearings present likely public health risks. 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 the SR-NYSEArca-2020-85, 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 \17\ 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 accounting for
the significant health and safety risks of in-person hearings stemming
from the outbreak of COVID-
[[Page 649]]
19. The Exchange notes that this proposal, like SR-NYSEArca-2020-85,
provides only temporary relief. As proposed, the changes would be in
place through April 30, 2021. As noted in SR-NYSEArca-2020-85 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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\17\ 15 U.S.C. 78f(b)(7) and 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 Exchange believes that the
proposed rule change will prevent unnecessary disruptions that would
otherwise result if the temporary amendments were to expire on December
31, 2020.
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) \18\ of the Act and Rule 19b-
4(f)(6) thereunder.\19\
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 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 requested that the
Commission waive the 30-day operative delay so that the proposed rule
change may become operative immediately upon filing. As noted above,
the Exchange states that the COVID-related health and safety risks of
conducting in-person activities, which necessitated these temporary
amendments, persist and that cases are escalating nationwide. Based on
FINRA's assessment of the current COVID-19 conditions and FINRA's
determination that there is a continued need for this temporary relief
for several months beyond December 31, 2020, the Exchange states that
it agrees with FINRA that the COVID-19-related public health risks
necessitating this temporary relief have not yet abated and are
unlikely to abate by December 31, 2020.\20\ Moreover, the Exchange
states that FINRA has adopted a detailed and thorough protocol to
ensure that hearings conducted by video conference will provide a fair
process for all parties and will enable the Exchange to fulfill its
statutory obligations to protect investors and maintain fair and
orderly markets.\21\ The Exchange believes that this is a reasonable
procedure to continue to follow for hearings under Rules 10.9261 and
10.9830 chaired by a FINRA employee. Accordingly, the Exchange states
that waiver of the operative delay would prevent unnecessary
disruptions that would otherwise result if the temporary amendments
were to expire on December 31, 2020.
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\20\ See SR-FINRA-2020-042.
\21\ See id.
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The Exchange also indicates that this filing is eligible to become
operative immediately because the proposal would continue to provide
greater harmonization between the Exchange rules and FINRA rules that
serve a similar purpose, resulting in less burdensome and more
efficient regulatory compliance. This proposal would serve to extend
the expiration date of the temporary amendments to the Exchange rules
set forth in SR-NYSEArca-2020-85, which is consistent with FINRA's
extension to its comparable rules, where FINRA requested and the
Commission granted a waiver of the 30-day operative delay.\22\ The
Exchange also states that this temporary relief is necessary in order
to continue performing adjudicatory functions necessary to meet its
statutory obligations in light of COVID-19 related health and safety
risks associated with in-person hearings and will only be temporary
relief, with the rules reverting back to their original state at the
conclusion of the relief period and any extension thereof.\23\
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\22\ See supra note 11 (referencing FINRA's proposal to extend
the expiration date of temporary rule amendments allowing hearings
to be conducted on a temporary basis by video conference if
warranted by COVID-19 related health risks).
\23\ See supra note 5 and accompanying text.
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The Commission observes that this proposal, like SR-NYSEArca-2020-
85 and FINRA's comparable filing,\24\ 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 April 30,
2021. 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.\25\
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\24\ See supra notes 9 and 11 and accompanying text.
\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 rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2020-116 on the subject line.
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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-NYSEArca-2020-116. 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 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-NYSEArca-2020-116 and should
be submitted on or before February 22, 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. 2020-29211 Filed 1-5-21; 8:45 am]
BILLING CODE 8011-01-P