Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices 653 

26 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Exchange Act Release No. 90067 (October 1, 

2020), 85 FR 63314 (‘‘Notice’’). Comments on the 

proposed rule change can be found at: https://

www.sec.gov/comments/sr-finra-2020-031/ 

srfinra2020031.htm. 

4 15 U.S.C. 78s(b)(2). 

5See Exchange Act Release No. 90335 (November 

4, 2020). The Commission designated January 5, 

2021 as the date by which the Commission shall 

approve or disapprove, or institute proceedings to 

determine whether to approve or disapprove, the 

proposed rule change. 

6Amendment No. 1 is a partial amendment in 

which FINRA included a representation that it will 

not cease operation of the OTCBB until the 

enhanced regulatory requirements under Rule 6439 

(except for certain provisions related to order-level 

information reports that also relate to information 

required for the Consolidated Audit Trail) become 

effective. See infra note 41. Amendment No. 1 may 

be found at: https://www.sec.gov/comments/srfinra-2020-031/srfinra2020031.htm. 

7 15 U.S.C. 78s(b)(2)(B). 

8FINRA Rule 6420(c) defines ‘‘inter-dealer 

quotation system’’ as ‘‘any system of general 

circulation to brokers or dealers which regularly 

disseminates quotations of identified brokers or 

dealers.’’ This definition tracks the Commission’s 

definition of the same term in Exchange Act Rule 

15c2–11, 17 CFR 240.15c2–11. 

9The term ‘‘OTC Equity Security’’ is defined in 

FINRA Rule 6420(f) as any equity security that is 

not an ‘‘NMS stock’’ as that term is defined in Rule 

600(b)(47) of Regulation NMS; provided, however, 

that the term ‘‘OTC Equity Security’’ shall not 

include any Restricted Equity Security. The term 

‘‘Restricted Equity Security’’ is further defined in 

FINRA Rule 6420(k) to mean any equity security 

that meets the definition of ‘‘restricted security’’ as 

contained in Rule 144(a)(3) under the Securities Act 

of 1933. 

10See Notice, supra note 3, at 63315. 

11See id. 

12See id. 

13See id. 

All submissions should refer to File 

Number SR–NYSEAMER–2020–88. 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–NYSEAMER–2020–88 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

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–29214 Filed 1–5–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90824; File No. SR–FINRA– 

2020–031] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Amendment No. 1 and Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove a Proposed 

Rule Change, as Modified by 

Amendment No. 1, To Adopt Proposed 

Rule 6439 (Requirements for Member 

Inter-Dealer Quotation Systems) and 

Rescind the Rules Related to the OTC 

Bulletin Board Service 

December 30, 2020. 

I. Introduction 

On September 24, 2020, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

rescind the rules related to the OTC 

Bulletin Board Service and cease its 

operation and to adopt new 

requirements for member inter-dealer 

quotation systems that disseminate 

quotations in equity securities traded 

over-the-counter (‘‘OTC’’). The proposed 

rule change was published for comment 

in the Federal Register on October 7, 

2020.3 On November 4, 2020, pursuant 

to Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.5 On December 

21, 2020, FINRA filed Amendment No. 

1 to the proposed rule change.6 The 

Commission is publishing this notice 

and order to solicit comments on the 

proposed rule change, as modified by 

Amendment No. 1, from interested 

persons and to institute proceedings 

pursuant to Section 19(b)(2)(B) of the 

Act 7 to determine whether to approve 

or disapprove the proposed rule change, 

as modified by Amendment No. 1. 

II. Summary of the Proposal, as 

Modified by Amendment No. 1 

As further described below, FINRA 

proposes to (i) rescind FINRA’s rules 

governing the OTC Bulletin Board 

Service (‘‘OTCBB’’) and cease its 

operation; and (ii) adopt new Rule 6439 

(Requirements for Member Inter-Dealer 

Quotation Systems) to expand the 

obligations of member interdealer 

quotation systems (‘‘IDQSs’’) 8 that 

disseminate quotation updates on a realtime basis in OTC Equity Securities.9

A. Rescission of Rules Governing the 

OTCBB 

The OTCBB is a FINRA-operated 

IDQS available for use by broker-dealers 

to publish quotations in eligible OTC 

Equity Securities.10 FINRA has operated 

the OTCBB since 1990.11 FINRA states 

that, due to technological advancements 

since 1990 and the increase in 

alternative electronic venues with more 

extensive functionality than the OTCBB, 

the level of quotation activity occurring 

on the OTCBB has continued to decline 

over the past several years and is now 

nonexistent.12 FINRA represents that, as 

of the date that it filed the proposed rule 

change, the OTCBB does not display or 

widely disseminate quotation 

information on any OTC Equity 

Security.13

FINRA states that it does not believe 

that continued operation of the OTCBB 

serves any benefit to investors or the 

marketplace and that ceasing operation 

of the OTCBB would eliminate potential 


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14See id. at 63318. For example, FINRA states 

that where investors look to feeds that solely 

disseminate OTCBB data for quotation information 

on a particular OTC Equity Security, investors 

mistakenly may conclude that there are no current 

quotations in the security (when, in fact, there may 

be numerous quotations available elsewhere—i.e., 

on member-operated IDQSs). See id. 

15Section 17B of the Act mandates, among other 

things, that the Commission facilitate the 

widespread dissemination of quotation information 

for penny stocks through automated quotation 

systems operated by registered securities 

associations. See 15 U.S.C 78q–2(b). Under 

Exchange Act Rule 3a51–1, ‘‘penny stock’’ is a nonNMS stock that among other things, does not 

include securities that have a price of five dollars 

or more as determined either on a per transaction 

basis or, in the absence of a transaction, on the basis 

of the inside bid quotation for the security 

displayed on an automated quotation system that 

has the characteristics set forth in Section 17B(b)(2) 

of the Act or any other system that is designated 

by the Commission. See 17 CFR 240.3a51–1. 

16See Amendment No. 1, supra note 6. 

17See Notice, supra note 3 at 63320. 

18 Id. at 63316. 

19FINRA currently has in place rules that govern 

the activity of member firms when they engage in 

quoting OTC Equity Securities. Specifically, the 

FINRA Rule 6400 Series (Quoting and Trading in 

OTC Equity Securities), among other things, 

provides a regulatory framework that governs the 

form and content of OTC Equity Securities’ 

quotations, and the FINRA Rule 5200 Series sets 

forth rules of general applicability that govern 

quoting and trading practices in this market sector 

(hereinafter, the FINRA Rule Series 6400 and 5200 

are collectively referred to as the ‘‘FINRA Quotation 

Governance Rules’’). See Notice, supra note 3, at 

63314–15. Rather than governing the activity of 

member firms, like the FINRA Quotation 

Governance Rules, proposed Rule 6439 would 

provide quotation governance standards for member 

IDQSs on or through which quotations are 

displayed. 

20See supra note 15. 

21For example, FINRA states that a member IDQS 

would be required to address in its procedures its 

methodology for ranking quotations, including at a 

minimum, addressing factors such as price 

(including any applicable quote access fee), size, 

time, capacity and type of quotation (such as 

unpriced quotes and bid/offer wanted quotations). 

The member IDQS also would be required to 

include any other factors relevant to the ranking 

and display of quotations (e.g., reserve sizes, 

quotation updates, treatment of closed quotations, 

and quotation information imported from other 

systems). See Notice, supra note 3, at 63316. 

22FINRA states that a member that is an IDQS at 

the time of the effective date of this proposed rule 

change would be required to prominently disclose 

the required information to its subscribers upon the 

effective date of the proposed rule change and, 

thereafter, within five business days of the 

implementation of any material update, 

modification or revision thereto. See id., at n.16. 

23FINRA states that this proposed requirement is 

consistent with the ‘‘fair access’’ requirements of 

Regulation ATS but would apply to quoting and 

trading in all OTC Equity Securities on the member 

IDQS, regardless of the percentage of average daily 

volume that such member IDQS had in the security. 

See 17 CFR 242.301(b)(5). FINRA states that while 

certain member IDQSs may already be subject to the 

similar volume-based fair access requirements 

under Regulation ATS, proposed Rule 6439 would 

ensure the application of fair access requirements 

to all member IDQSs. See Notice, supra note 3, at 

63316. 

24See id. at 63316–17. See also supra note 22. 

25See proposed Rule 6439(b). 

26FINRA Rule 5220 and its associated 

Supplementary Material set forth members’ firm 

quote obligations. Specifically, FINRA Rule 5220 

provides that no member shall make an offer to buy 

from or sell to any person any security at a stated 

investor confusion regarding the 

availability of quotation information for 

OTC Equity Securities.14 In addition, 

FINRA notes that it does not believe that 

the OTCBB, in its current state, furthers 

the goals and objectives of Section 17B 

of the Act and, therefore, does not meet 

the characteristics of a system described 

in Section 17B of the Act regarding the 

widespread dissemination of reliable 

and accurate quotation information with 

respect to ‘‘penny stocks.’’ 15

As a result, FINRA proposes to 

rescind the FINRA Rule 6500 Series, 

which governs the operation of the 

OTCBB. Among other things, the FINRA 

Rule 6500 Series contains provisions 

regarding the securities eligible to be 

quoted on the OTCBB (FINRA Rule 

6530), market maker obligations on the 

OTCBB (FINRA Rule 6540), and 

transaction reporting (FINRA Rule 

6550). FINRA also proposes to rescind 

FINRA Rule 7720, which sets forth the 

fees applicable to a broker-dealer that 

displays quotations or trading interest in 

the OTCBB, and to amend FINRA Rule 

9217 (Violations Appropriate for 

Disposition Under Plan Pursuant to SEA 

Rule 19d–1(c)(2)) to remove reference to 

FINRA Rule 6550 (Transaction 

Reporting). While these proposed 

changes to the FINRA rulebook would 

cause the operation of the OTCBB to 

terminate when effective, in 

Amendment No. 1, FINRA states that it 

would not cease operation of the 

OTCBB until proposed Rule 6439 

(except for proposed Rule 

6439(d)(1)(B)), discussed below, is 

effective.16

B. Proposed Rule 6439 (Requirements 

for Member Inter-Dealer Quotation 

Systems) 

FINRA states that all quotation 

activity in OTC Equity Securities now 

occurs on member-operated IDQSs, 

rather than the OTCBB.17 FINRA 

proposes, in conjunction with the 

cessation of the OTCBB, to adopt new 

requirements for member IDQSs that 

provide quotations in OTC Equity 

Securities in order to ensure that they 

have minimum standards in place.18

FINRA states that it believes that the 

proposed requirements would 

complement the existing framework 

governing the form and content of 

quotations 19 and are consistent with the 

goals and objectives of Section 17B of 

the Act regarding the facilitation of 

widespread dissemination of reliable 

and accurate quotation information in 

penny stocks.20

Proposed Rule 6439 would apply to 

member IDQSs (whether or not such 

member is also an alternative trading 

system (‘‘ATS’’)) that permits quotation 

updates on a real-time basis in OTC 

Equity Securities. Under proposed Rule 

6439(a), member IDQSs must establish, 

maintain and enforce written policies 

and procedures relating to the collection 

and dissemination of quotation 

information in OTC Equity Securities on 

or through their systems. Such written 

policies and procedures must be 

reasonably designed to ensure that 

quotations received and disseminated 

are informative, reliable, accurate, firm, 

and treated in a not unfairly 

discriminatory manner, including by 

establishing non-discretionary standards 

under which quotations are prioritized 

and displayed.21 Member IDQSs must 

also prominently disclose these written 

policies and procedures, along with any 

material updates, modifications and 

revisions thereto, to subscribers within 

five business days following the date of 

establishment of a policy or procedure 

or implementation of a material change, 

as well as provide them to prospective 

subscribers upon request.22

Under proposed Rule 6439(b), each 

member IDQS must establish nondiscriminatory written standards for 

granting access to quoting and trading in 

OTC Equity Securities on its systems 

that do not unreasonably prohibit or 

limit any person with respect to access 

to services offered by such member 

IDQS.23 As with the requirements under 

proposed Rule 6439(a), member IDQSs 

would be required to prominently 

disclose these written standards relating 

to fair access, and any material updates, 

modifications and revisions thereto, to 

their subscribers within five business 

days following the date of establishment 

of written standards or implementation 

of a material change, as well as provide 

them to prospective subscribers upon 

request.24 In addition, member IDQSs 

would be required to make and keep 

records of all grants of access and all 

denials or limitations of access. Such 

records must include, for all 

subscribers, the reasons for granting 

access, and, for all denials or limitations 

of access, the reasons for denying or 

limiting such access.25

Proposed Rules 6439(c) and (d) would 

apply only to member IDQSs that do not 

automatically execute all orders 

presented for execution against 

displayed quotations for which a 

member subscriber has an obligation 

under FINRA Rule 5220 (Offers at 

Stated Prices) 26 (such a system is 


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price unless such member is prepared to purchase 

or sell, as the case may be, at such price and under 

such conditions as are stated at the time of such 

offer to buy or sell. 

27See Notice, supra note 3, at 63317. 

28FINRA states that following Commission 

approval, FINRA would announce in a Regulatory 

Notice details about the required manner and 

timing of the submission of this information to 

FINRA. See Notice, supra note 3, at 63317, n.27. 

29FINRA states that in this context, a ‘‘marketable 

order’’ refers to a message presented against a 

market maker’s quote that is priced to be 

immediately executable. See id., n.29. 

30See proposed Rule 6439(d)(1)(A). 

31See proposed Rule 6439(d)(1)(B). 

32See proposed Rule 6439(d)(2). If such 

information is reportable to the CAT pursuant to 

FINRA Rule 6830, this information will be available 

to FINRA. Thus, separate reporting pursuant to 

proposed FINRA Rule 6439(d) would be 

duplicative. 

33See proposed Rule 6439(e). 

34FINRA would announce in a Regulatory Notice 

the methods and process by which members may 

provide systems disruption notifications to FINRA. 

See Notice, supra note 3, at 63318. 

35See proposed Rule 6439(f). 

36 17 CFR 242.1002(b). 

37See Notice, supra note 3, at 63318. 

38See id. 

39See id. 

40See Notice, supra note 3, at 63319. 

41See Amendment No. 1, supra note 6. FINRA 

states that proposed Rule 6439, with one exception 

related to the reporting to FINRA of order-level 

information, will become effective at the same time 

as, or prior to, the rescission of the OTCBB rules. 

FINRA states that paragraph (d)(1)(B) of proposed 

Rule 6439 (requiring reporting of specified orderlevel information) may be phased in at a later date 

within the 365-day timeframe to allow FINRA to 

better coordinate with the timeline for reporting 

information in OTC Equity Securities to the CAT 

under FINRA Rule 6830 (Industry Member Data 

Reporting). See id. 

hereafter referred to as a ‘‘non-autoexecuting member IDQS’’). Under 

proposed Rule 6439(c), non-autoexecuting member IDQSs must 

establish, maintain and enforce written 

policies and procedures that are 

reasonably designed to address 

instances of unresponsiveness to orders 

in an OTC Equity Security. At a 

minimum, these policies and 

procedures must specify an efficient 

process for: (i) Monitoring subscriber 

unresponsiveness; (ii) subscribers to 

submit complaints to the non-autoexecuting member IDQS regarding 

potential instances of order 

unresponsiveness; (iii) documenting the 

subscriber’s rationale for 

unresponsiveness; and (iv) determining 

specified steps when an instance of, or 

repeated, order unresponsiveness may 

have occurred.27

Under proposed Rule 6439(d), nonauto-executing member IDQSs must 

report to FINRA, in a form and manner 

prescribed by FINRA,28 certain 

aggregate and order-level information in 

OTC Equity Securities. Specifically, 

proposed Rule 6439(d) would require a 

non-auto-executing member IDQS to 

report to FINRA on a monthly basis the 

following aggregated information, 

categorized by FINRA member 

subscriber market participant identifier 

(MPID) across all symbols quoted by the 

MPID during the previous calendar 

month: (i) Total number of marketable 

orders presented for execution against 

the MPID’s quotation; 29 (ii) average 

execution (full or partial) time for 

marketable orders presented against the 

MPID’s quotation based on the time an 

order is presented; (iii) total number of 

full or partial executions based on the 

time a marketable order is presented 

that are within the following execution 

timeframes: < 5 seconds; ≥ 5 and < 10 

seconds; ≥ 10 and < 20 seconds; and ≥ 

20 seconds; (iv) total number of 

marketable orders presented against the 

MPID’s quotation that did not receive a 

full or partial execution; and (v) average 

response time of the highest 10% and 

highest 50% of the MPID’s response 

times for marketable orders (for full or 

partial executions).30

Proposed Rule 6439(d) would require 

non-auto-executing member IDQSs to 

provide to FINRA the following orderlevel information for each order 

presented against an MPID’s quotation 

during the previous calendar month: (i) 

Buy/sell; (ii) security symbol; (iii) price; 

(iv) size; (v) All or None indicator (yes 

or no); (vi) order entry firm MPID; (vii) 

order receipt time; (viii) time in force; 

(ix) response time; (x) order response 

(e.g., execute, reject cancel, etc.); (xi) 

executed quantity; (xii) systemgenerated order number (if any); and 

(xiii) position in queue for quote (e.g., 

IL1, IL2).31 However, to the extent that 

the above order-level information is or 

becomes reportable under the 

Consolidated Audit Trail (‘‘CAT’’) 

pursuant to FINRA Rule 6830 (Industry 

Member Data Reporting), non-autoexecuting member IDQSs would not be 

required to report this order-level 

information under proposed Rule 

6439(d).32

Proposed Rule 6439(e) would require 

each member IDQS to make available to 

customers on its website (or its affiliate 

distributor’s website) a written 

description of each OTC Equity Security 

order- or quotation-related data product 

offered by such member IDQS and 

related pricing information, including 

fees, rebates, discounts and crossproduct pricing incentives. Member 

IDQSs would be required to keep the 

relevant website page(s) accurate and 

up-to-date with respect to the required 

data product descriptions and pricing 

information and to make such 

information available at least two 

business days in advance of offering a 

data product.33 Proposed Rule 6439(e) 

would specify that a member IDQS is 

not precluded from negotiating lower 

fees with customers, provided that the 

member IDQS discloses on such website 

page(s) the circumstances under which 

it may do so. 

Finally, under proposed Rule 6439(f), 

a member IDQS must provide FINRA 

with prompt notification when it 

reasonably becomes aware of any 

systems disruption that is not de 

minimis that degrades, limits, or 

otherwise impacts the member IDQS’s 

functionality with respect to trading or 

the dissemination of market data.34

Such notification must include, on a 

reasonable best efforts basis, a brief 

description of the event, its impact, and 

the member IDQS’s resolution efforts.35

FINRA states that to comply with this 

requirement, a member IDQS that is an 

SCI ATS, as defined in Rule 1000 of 

Regulation SCI, could provide FINRA 

with the same information (or a 

duplicate copy of any notification) 

submitted to the Commission as 

required under Regulation SCI Rule 

1002(b) 36 promptly after filing the 

notification with the Commission.37

FINRA states that if a member IDQS is 

not an SCI ATS, it could comply with 

this requirement by providing FINRA 

prompt notification when it reasonably 

becomes aware of any such systems 

disruption, and by providing periodic 

updates on the event and its 

resolution.38 Such notifications would 

include, on a reasonable best efforts 

basis, a brief description of the event, its 

impact, and resolution efforts.39

FINRA states that if the proposed rule 

change is approved by the Commission, 

FINRA will announce in a Regulatory 

Notice the effective date(s) of the 

proposed rule change, which may be 

phased in but will be no later than 365 

days following Commission approval.40

The effective date for rescinding the 

rules related to the OTCBB will not 

occur until proposed Rule 6439 (except 

for Rule 6439(d)(1)(B)) is effective.41

FINRA also states that it will examine 

for compliance by member IDQSs with 

proposed Rule 6439, including by 

reviewing the adequacy of member 

IDQSs’ written policies and procedures 

and written fair access standards 

required under the proposal, conducting 

a targeted exam of impacted member 

IDQSs after the initial effectiveness of 

the rule, and incorporating a Rule 6439 


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42See Notice, supra note 3, at 63316, n.17. 

43 15 U.S.C. 78s(b)(2)(B). 

44 Id. 

45 15 U.S.C. 78o–3(b)(6). 

46 15 U.S.C. 78o–3(b)(11). 

47See Letters from Christopher Bok, Chief 

Compliance Officer, OTC Link, LLC, dated October 

28, 2020; Kimberly Unger, CEO and Executive 

Director, The Security Traders Association of New 

York, Inc., dated October 28, 2020; and Sherry J. 

Sandler, Global OTC, dated November 9, 2020. 

48See Letter from Racquel Russell, Associate 

General Counsel, FINRA, dated November 20, 2020. 

49See supra note 6. 

50See id. See also supra notes 31–32 and 

accompanying text. 

51Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

52See id. 

53See id. 

54Section 19(b)(2) of the Act, as amended by the 

Securities Act Amendments of 1975, Public Law 

94–29 (June 4, 1975), grants the Commission 

flexibility to determine what type of proceeding— 

either oral or notice and opportunity for written 

comments—is appropriate for consideration of a 

particular proposal by a self-regulatory 

organization. See Securities Act Amendments of 

1975, Senate Comm. on Banking, Housing & Urban 

Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 

(1975). 

55See supra notes 3 and 6. 

review as part of the regular exam 

program for impacted member firms.42

III. Proceedings To Determine Whether 

To Approve or Disapprove SR–FINRA– 

2020–031, as Modified by Amendment 

No. 1, and Grounds for Disapproval 

Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 43 to determine 

whether the proposed rule change, as 

modified by Amendment No. 1, should 

be approved or disapproved. Institution 

of such proceedings is appropriate at 

this time in view of the legal and policy 

issues raised by the proposal. Institution 

of proceedings does not indicate that the 

Commission has reached any 

conclusions with respect to any of the 

issues involved. Rather, as described 

below, the Commission seeks and 

encourages interested persons to 

provide comments on the proposed rule 

change to inform the Commission’s 

analysis of whether to approve or 

disapprove the proposal. 

Pursuant to Section 19(b)(2)(B) of the 

Act,44 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of the proposal’s 

consistency with the Act, and, in 

particular, with Section 15A(b)(6) of the 

Act, which requires, among other 

things, that the rules of a national 

securities association be ‘‘designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade,’’ and ‘‘to 

protect investors and the public 

interest,’’ 45 and Section 15A(b)(11) of 

the Act, which requires that the rules of 

a national securities association include 

provisions governing the form and 

content of quotations relating to 

securities sold otherwise than on a 

national securities exchange which may 

be distributed or published by any 

member or person associated with a 

member, and the persons to whom such 

quotations may be supplied, and that 

such rules ‘‘be designed to produce fair 

and informative quotations, to prevent 

fictitious or misleading quotations, and 

to promote orderly procedures for 

collecting, distributing, and publishing 

quotations.’’ 46

As discussed above, FINRA is 

proposing to rescind FINRA’s rules 

governing the OTCBB and cease its 

operation and adopt new Rule to 

expand the obligations of Member 

IDQSs that disseminate quotation 

updates on a real-time basis in OTC 

Equity Securities. The Commission has 

received three comment letters 

regarding the proposed rule change,47

and a response to comments from 

FINRA.48 In addition, on December 21, 

2020, FINRA filed partial Amendment 

No. 1, which states that FINRA would 

not cease operation of the OTCBB until 

proposed Rule 6439 (except for 

proposed Rule 6439(d)(1)(B)) is 

effective.49 FINRA further states that 

paragraph (d)(1)(B) of proposed Rule 

6439 (requiring reporting of specified 

order-level information) may be phased 

in at a later date within the 365-day 

timeframe to allow FINRA to better 

coordinate with the timeline for 

reporting information in OTC Equity 

Securities to the CAT under FINRA Rule 

6830 (Industry Member Data 

Reporting).50 Given the filing of this 

recent amendment, and the comment 

letters received and the response from 

FINRA, the Commission is seeking 

additional public comment on the 

proposed rule change in order to 

determine whether it is consistent with 

the requirements of Sections 15A(b)(6) 

and 15A(b)(11) of the Act. 

The Commission notes that, under the 

Commission’s Rules of Practice, the 

‘‘burden to demonstrate that a proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder. . .is on the self-regulatory 

organization [‘SRO’] that proposed the 

rule change.’’ 51 The description of a 

proposed rule change, its purpose and 

operation, its effect, and a legal analysis 

of its consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding,52 and 

any failure of an SRO to provide this 

information may result in the 

Commission not having sufficient basis 

to make an affirmative finding that a 

proposed rule change is consistent with 

the Act and the applicable rule and 

regulations.53

IV. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposed rule change, as modified by 

Amendment No. 1, is consistent with 

Sections 15A(b)(6) and 15A(b)(11) of the 

Act or any other provision of the Act, 

or the rules and regulations thereunder. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.54

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposed rule change, as modified by 

Amendment No. 1, should be approved 

or disapproved by January 27, 2021. 

Any person who wishes to file a rebuttal 

to any other person’s submission must 

file that rebuttal by February 10, 2021. 

The Commission asks that 

commenters address the sufficiency of 

FINRA’s statements in support of the 

proposal, which are set forth in the 

Notice and in Amendment No. 1,55 in 

addition to any other comments they 

may wish to submit about the proposed 

rule change. 

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–2020–031 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. 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 86, No. 3 / Wednesday, January 6, 2021 / Notices 657 

56 17 CFR 200.30–3(a)(12) and 17 CFR 200.30– 

3(a)(57). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release Nos. 88596 

(April 8, 2020), 85 FR 20796 (April 14, 2020) (SR– 

NYSEArca–2020–29); 88812 (May 5, 2020), 85 FR 

27787 (May 11, 2020) (SR–NYSEArca–2020–38). 

5See Securities Exchange Act Release Nos. 89038 

(June 10, 2020), 85 FR 36447 (June 16, 2020) (SR– 

NYSEArca–2020–52); 89242 (June 7, 2020), 85 FR 

42037 (July 13, 2020) (SR–NYSEArca–2020–60); 

89480 (August 5, 2020), 85 FR 48591 (August 11, 

2020) (SR–NYSEArca–2020–69); 89694 (August 27, 

2020), 85 FR 54608 (September 2, 2020) (SR– 

NYSEArca–2020–76); 90191 (October 15, 2020), 85 

FR 67032 (October 21, 2020) (SR–NYSEArca–2020– 

90). See also Fee Schedule, NYSE Arca OPTIONS: 

FLOOR and EQUIPMENT and CO-LOCATION 

FEES. 

6See proposed Fee Schedule, NYSE Arca 

OPTIONS: FLOOR and EQUIPMENT and COLOCATION FEES. 

7See id. 

All submissions should refer to File 

Number SR–FINRA–2020–031. 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 the 

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–FNRA– 

2020–031 and should be submitted on 

or before January 27, 2021. Rebuttal 

comments should be submitted by 

February 10, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.56

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–29215 Filed 1–5–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90838; File No. SR– 

NYSEArca–2020–115] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Modify the NYSE Arca 

Options Fee Schedule 

December 31, 2020. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on December 

29, 2020, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify the 

NYSE Arca Options Fee Schedule (‘‘Fee 

Schedule’’) to extend the waiver of 

certain Floor-based fixed fees. The 

Exchange proposes to implement the fee 

change effective January 1, 2021. 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this filing is to modify 

the Fee Schedule to extend the waiver 

of certain Floor-based fixed fees for 

market participants that have been 

unable to resume their Floor operations 

to a certain capacity level, as discussed 

below. The Exchange proposes to 

implement the fee change effective 

January 1, 2021. 

On March 18, 2020, the Exchange 

announced that it would temporarily 

close the Trading Floor, effective 

Monday, March 23, 2020, as a 

precautionary measure to prevent the 

potential spread of COVID–19. 

Following the temporary closure of the 

Trading Floor, the Exchange waived 

certain Floor-based fixed fees for April 

and May 2020.4 Although the Trading 

Floor partially reopened on May 4, 2020 

and Floor-based open outcry activity is 

supported, certain participants have 

been unable to resume pre-Floor closure 

levels of operations. As a result, the 

Exchange extended the fee waiver 

through December 2020, but only for 

Floor Broker firms that were unable to 

operate at more than 50% of their March 

2020 on-Floor staffing levels and for 

Market Maker firms that have vacant or 

‘‘unmanned’’ Podia for the entire month 

due to COVID–19 related considerations 

(the ‘‘Qualifying Firms’’).5 Because the 

Trading Floor will continue to operate 

with reduced capacity, the Exchange 

proposes to extend the fee waiver for 

Qualifying Firms through the earlier of 

the first full month of a full reopening 

of the Trading Floor facilities to Floor 

personnel or March 2021.6

Specifically, as with the prior fee 

waivers, the proposed fee waiver covers 

the following fixed fees for Qualifying 

Firms, which relate directly to Floor 

operations, are charged only to Floor 

participants and do not apply to 

participants that conduct business offFloor: 

• Floor Booths; 

• Market Maker Podia; 

• Options Floor Access; 

• Wire Services; and 

• ISP Connection.7

The proposed fee change is designed 

to reduce monthly costs for all 

Qualifying Firms whose operations 

continue to be disrupted even though 

the Trading Floor has partially 

reopened. In reducing this monthly 

financial burden, the proposed change 

would allow Qualifying Firms that had 

Floor operations in March 2020 to 

reallocate funds to assist with the cost 

of shifting and maintaining their prior 

fully-staffed on-Floor operations to offFloor and recoup losses as a result of the 


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