[Federal Register Volume 85, Number 150 (Tuesday, August 4, 2020)]
[Notices]
[Pages 47278-47280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16875]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89423; File No. SR-FINRA-2020-022]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Further Extend the Expiration Date of the
Temporary Amendments Set Forth in SR-FINRA-2020-015
July 29, 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 July 27, 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 expiration date of the temporary
amendments in SR-FINRA-2020-015 from July 31, 2020, to a date to be
specified in a public notice issued by FINRA, which date will be at
least two weeks from the date of the notice, and no later than December
31, 2020.
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.
[[Page 47279]]
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, SR-FINRA-2020-015, 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 (the ``May 8 Filing''). The
Commission published its notice of filing and immediate effectiveness
for the May 8 Filing on May 20, 2020.\3\ The temporary amendments, as
originally proposed in the May 8 Filing, would have expired on June 15,
2020, absent another proposed rule change filing by FINRA. On June 10,
2020, FINRA filed SR-FINRA-2020-017 to extend the expiration date of
the temporary amendments set forth in the May 8 Filing from June 15,
2020, to July 31, 2020 (the ``June 10 Filing''). The Commission
published its notice of filing and immediate effectiveness for the June
10 Filing on June 12, 2020.\4\
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\3\ See Securities Exchange Act Release No. 88917 (May 20,
2020), 85 FR 31832 (May 27, 2020) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2020-015).
\4\ See Securities Exchange Act Release No. 89055 (June 12,
2020), 85 FR 36928 (June 18, 2020) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2020-017).
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FINRA proposed, and subsequently extended, the temporary amendments
set forth in the May 8 Filing to address the substantial impacts of the
COVID-19 outbreak on FINRA's operations.\5\ 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--made it challenging to meet certain procedural
requirements and perform certain functions required under FINRA rules.
The temporary amendments in 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.
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\5\ As noted in the May 8 Filing and June 10 Filing, the
temporarily amended FINRA rules will revert back to their original
state at the conclusion of the temporary relief period and any
extension thereof.
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The COVID-19 conditions necessitating the temporary amendments in
the May 8 Filing--and the extension of that relief provided for in the
June 10 Filing--persist. FINRA continues to face the same logistical
and other challenges stemming from the COVID-19-related public health
risks for in-person activities and the continued need for FINRA staff,
with few exceptions, to work remotely to protect their health and
safety. Working remotely makes it difficult to, among other things,
send and receive hard copy documents and conduct in-person oral
arguments.
FINRA has established a COVID-19 task force that is working with
outside health experts to develop a data-driven, staged plan for FINRA
staff to safely return to working in FINRA office locations and resume
other in-person activities. In developing its plan, FINRA will consider
numerous data points and criteria, including, among others, public
health considerations such as trends in COVID-19 cases, government
orders addressing COVID-19, and the availability of, and risks
associated with, public transportation. With COVID-19 transmission
rates, orders and other localized considerations in a state of flux,
and numerous states experiencing negative trends, FINRA must remain
flexible in order to protect the health and safety of its staff and
other stakeholders.
In light of those considerations and its assessment of current
COVID-19 conditions, FINRA anticipates its staff continuing to work
remotely and otherwise restricting in-person activities--to the extent
possible--for at least several months. Accordingly, FINRA proposes to
extend the expiration date of the temporary rule amendments in the May
8 Filing from July 31, 2020, to a date to be specified in a public
notice issued by FINRA, which date will be at least two weeks from the
date of the notice, and no later than December 31, 2020.\6\ The
extension of these temporary amendments 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
staff.
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\6\ FINRA is closely monitoring the impact of COVID-19 on its
operations. If the temporary relief from the rule requirements
identified in the May 8 Filing is necessary beyond the December 31,
2020 sunset provision, FINRA will submit a separate rule filing to
extend the expiration date of the temporary relief under those
rules. In addition, if conditions improve such that the temporary
relief is no longer necessary prior to December 31, 2020, the
proposed rule change would allow FINRA to set an earlier expiration
date for the temporary relief.
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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,\7\ 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,\8\ 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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\7\ 15 U.S.C. 78o-3(b)(6).
\8\ 15 U.S.C. 78o-3(b)(8).
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The proposed rule change to extend the expiration date of the
temporary amendments to FINRA rules set forth in the May 8 Filing 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, 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 expiration date of the
temporary rule amendments in the May 8 Filing to a date to be specified
in a public notice issued by FINRA, and no later than December 31,
[[Page 47280]]
2020, will prevent unnecessary impediments to FINRA's operations and
FINRA's investor protection goals that would otherwise result if the
temporary amendments were to expire on July 31, 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 \9\ and Rule 19b-
4(f)(6) \10\ thereunder.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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 and June 10 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 both
its May 8 Filing and June 10 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.\11\ We also note that this proposal, like FINRA's May 8
Filing and June 10 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 a date to be
specified in a public notice issued by FINRA, which date will be at
least two weeks from the date of the notice, and no later than December
31, 2020.\12\ 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.\13\
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\11\ See May 8 Filing, 85 FR at 31833.
\12\ As noted above, see supra note 6, FINRA states that if the
temporary relief from the rule requirements identified in the May 8
Filing is necessary beyond December 31, 2020, FINRA will submit a
separate rule filing to extend the expiration date of the temporary
relief under those rules. In addition, if conditions improve such
that the temporary relief is no longer necessary prior to December
31, 2020, the proposed rule change would allow FINRA to set an
earlier expiration date for the temporary relief.
\13\ 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-FINRA-2020-022 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-2020-022. 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-2020-022 and should be submitted
on or before August 25, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16875 Filed 8-3-20; 8:45 am]
BILLING CODE 8011-01-P