[Federal Register Volume 86, Number 3 (Wednesday, January 6, 2021)]
[Notices]
[Pages 636-640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29218]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90829; File No. SR-EMERALD-2020-21]


Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Exchange Rule 1900, Registration Requirements, To Adopt Temporary 
Interpretation and Policy .13 (Temporary Extension of the Limited 
Period for Registered Persons To Function as Principals)

December 30, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on December 28, 2020, MIAX Emerald, LLC (``MIAX 
Emerald'' or the

[[Page 637]]

``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend Exchange Rule 1900, 
Registration Requirements, to adopt temporary Interpretation and Policy 
.13 (Temporary Extension of the Limited Period for Registered Persons 
to Function as Principals).
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/emerald, at MIAX 
Emerald's principal office, and at the Commission's Public Reference 
Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of 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 to adopt Interpretation and Policy .13 
(Temporary Extension of the Limited Period for Registered Persons to 
Function as Principals) to Exchange Rule 1900, Registration 
Requirements. The proposed rule change would extend the 120-day period 
that certain individuals can function as principals without having 
successfully passed an appropriate qualification examination through 
April 30, 2021,\3\ and would apply only to those individuals who were 
designated to function as principals prior to January 1, 2021. This 
proposed rule change is based on a filing recently submitted by the 
Financial Regulatory Authority, Inc. (``FINRA'') \4\ and is intended to 
harmonize the Exchange's registration rules with those of FINRA so as 
to promote uniform standards across the securities industry.
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    \3\ See Exchange Act Release No. 90617 (December 9, 2020), 85 FR 
81258 (December 15, 2020) (SR-FINRA-2020-043) (``FINRA Filing''). 
The Exchange notes that the FINRA Filing also provides temporarily 
relief to individuals registered with FINRA as Operations 
Professionals under FINRA Rule 1220. The Exchange does not have a 
registration category for Operations Professionals and therefore, 
the Exchange is not proposing to adopt that aspect of the FINRA 
Filing. If the Exchange seeks to provide additional temporary relief 
from the rule requirement identified in this proposal beyond April 
30, 2021, it will submit a separate rule filing to further extend 
the temporary extension of time.
    \4\ See id.
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    In response to COVID-19, earlier this year FINRA began providing 
temporary relief by way of frequently asked questions (``FAQs'') \5\ to 
address disruptions to the administration of FINRA qualification 
examinations caused by the pandemic that have significantly limited the 
ability of individuals to sit for examinations due to Prometric test 
center capacity issues.\6\
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    \5\ See https://www.finra.org/rules-guidance/key-topics/covid-19/faq#qe.
    \6\ At the outset of the COVID-19 pandemic, all FINRA 
qualification examinations were administered at test centers 
operated by Prometric. Based on the health and welfare concerns 
resulting from COVID-19, in March Prometric closed all of its test 
centers in the United States and Canada and began to slowly reopen 
some of them at limited capacity in May. At this time, not all of 
these Prometric test centers have reopened at full capacity.
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    FINRA published the first FAQ on March 20, 2020, providing that 
individuals who were designated to function as principals under FINRA 
Rule 1210.04 \7\ prior to February 2, 2020, would be given until May 
31, 2020, to pass the appropriate principal qualification 
examination.\8\ On May 19, 2020, FINRA extended the relief to pass the 
appropriate examination until June 30, 2020. On June 29, 2020, FINRA 
extended the temporary relief providing that individuals who were 
designated to function as principals under FINRA Rule 1210.04 prior to 
May 4, 2020, would be given until August 31, 2020, to pass the 
appropriate principal qualification examination. On August 28, 2020, 
FINRA filed with the Commission a proposed rule change for immediate 
effectiveness to extend the temporary relief provided via the two FAQs 
by adopting: (1) Temporary Supplementary Material .12 (Temporary 
Extension of the Limited Period for Registered Persons to Function as 
Principals) under FINRA Rule 1210 (Registration Requirements), and (2) 
temporary Supplementary Material .07 (Temporary Extension of the 
Limited Period for Persons to Function as Operations Professionals) 
under FINRA Rule 1220 (Registration Categories).\9\ Pursuant to this 
rule filing, individuals who were designated prior to September 3, 
2020, to function as a principal under FINRA Rule 1210.04 would have 
until December 31, 2020, to pass the appropriate qualification 
examination.
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    \7\ Exchange Rule 1900, Interpretation and Policy .04, is the 
corresponding rule to FINRA Rule 1210.04.
    \8\ FINRA Rule 1210.04 (Requirements for Registered Persons 
Functioning as Principals for a Limited Period) allows a FINRA-
member firm to designate certain individuals to function in a 
principal capacity for 120 calendar days before having to pass an 
appropriate principal qualification examination. Exchange Rule 1900, 
Interpretation and Policy .04, provides the same allowance to 
Exchange Members.
    \9\ See Exchange Act Release No. 89732 (September 1, 2020), 85 
FR 55535 (September 8, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2020-026).
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    Thereafter, on December 9, 2020, FINRA filed with the Commission a 
proposed rule change for immediate effectiveness to extend the limited 
period for registered persons to function as a principal through April 
30, 2021.\10\ Pursuant to this rule filing, individuals who were 
designated prior to January 1, 2021 to function as a principal would 
have until April 30, 2021 to pass the appropriate qualifying 
examination.
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    \10\ See supra note 3.
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    The Exchange continues to closely monitor the impact of the COVID-
19 pandemic on Members,\11\ investors, and other stakeholders. The 
COVID-19 conditions necessitating the extension of relief provided in 
the FINRA's FAQs and rule amendments persist and, in fact, appear to be 
worsening.\12\ One of the impacts of COVID-19 continues to be serious 
interruptions in the administration of FINRA qualification examinations 
at Prometric test centers and the limited ability of individuals to sit 
for the examinations.\13\ Although Prometric has begun reopening test 
centers, Prometric's safety practices mean that currently not all test 
centers are open, some of the open test centers are at limited 
capacity, and some open test centers are delivering only certain

[[Page 638]]

examinations that have been deemed essential by the local 
government.\14\ Furthermore, Prometric has had to close some reopened 
test centers due to incidents of COVID-19 cases. The initial nationwide 
closure in March along with the inability to fully reopen all Prometric 
test centers due to COVID-19 have led to a significant backlog of 
individuals who are waiting to sit for FINRA examinations.\15\
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    \11\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \12\ See, e.g., Meryl Kornfield, Jacqueline Dupree, Marisa Iati, 
Paulina Villegas, Siobhan O'Grady and Hamza Shaban, New daily 
coronavirus cases in U.S. rise to 145,000, latest all-time high, 
Wash. Post, November 11, 2020, https://www.washingtonpost.com/nation/2020/11/11/coronavirus-covid-live-updates-us/.
    \13\ Information about the continued impact of COVID-19 on 
FINRA-administered examinations is available at https://www.finra.org/rules-guidance/key-topics/covid-19/exams.
    \14\ Information from Prometric about its safety practices and 
the impact of COVID-19 on its operations is available at https://www.prometric.com/corona-virus-update.
    \15\ Although an online test delivery service has been launched 
to help address the backlog, the General Securities Principal Exam 
(Series 24) is not available online. See supra note 13. FINRA is 
considering making additional qualifications examinations available 
remotely on a limited basis.
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    In addition, firms are continuing to experience operational 
challenges with much of their personnel working from home due to 
shelter-in-place orders, restrictions on businesses and social activity 
imposed in various states, and adherence to other social distancing 
guidelines consistent with the recommendations of public health 
officials.\16\ As a result, firms continue to face potentially 
significant disruptions to their normal business operations that may 
include a limitation of in-person activities and staff absenteeism as a 
result of the health and welfare concerns stemming from COVID-19. Such 
potential disruptions may be further exacerbated and may even affect 
client services if firms cannot continue to keep principal positions 
filled as they may have difficulty finding other qualified individuals 
to transition into these roles or may need to reallocate employee time 
and resources away from other critical responsibilities at the firm.
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    \16\ See, e.g., Centers for Disease Control and Prevention, How 
to Protect Yourself & Others, https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/prevention.html.
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    These ongoing, extenuating circumstances make it impracticable for 
Members to ensure that the individuals whom they have designated to 
function in a principal capacity, as set forth in Exchange Rule 1900, 
Interpretation and Policy .04, are able to successfully sit for and 
pass an appropriate qualification examination within the 120-calendar 
day period required under the rule, or to find other qualified staff to 
fill this position. The ongoing circumstances also require individuals 
to be exposed to the health risks associated with taking an in-person 
examination, because the General Securities Principal examination is 
not available online. Therefore, the Exchange is proposing to provide 
the temporary relief provided through the FINRA FAQs by adopting 
Interpretation and Policy .13 to Exchange Rule 1900 to extend the 120-
day period during which an individual can function as a principal 
before having to pass an applicable qualification examination until 
April 30, 2021.\17\ The proposed rule change would apply only to those 
individuals who were designated to function as a principal prior to 
January 1, 2021. Any individuals designated to function as a principal 
on or after January 1, 2021, would need to successfully pass an 
appropriate qualification examination within 120 days.
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    \17\ See supra note 3.
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    The Exchange believes that this proposed extension of time is 
tailored to address the needs and constraints on a Member's operations 
during the COVID-19 pandemic, without significantly compromising 
critical investor protection. The proposed extension of time will help 
to minimize the impact of COVID-19 on Members by providing flexibility 
so that Members can ensure that principal positions remain filled. The 
potential risks from the proposed extension of the 120-day period are 
mitigated by the Member's requirement to supervise the activities of 
these designated individuals and ensure compliance with federal 
securities laws and regulations, as well as Exchange rules.
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Exchange Act \18\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \19\ in particular, in that 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 
mechanisms of a free and open market and a national market system and, 
in general, to protect investors and the public interest.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change is intended to minimize the impact of 
COVID-19 on Member operations by extending the 120-day period certain 
individuals may function as a principal without having successfully 
passed an appropriate qualification examination under Exchange Rule 
1900, Interpretation and Policy. 04, until April 30, 2021. The proposed 
rule change does not relieve Members from maintaining, under the 
circumstances, a reasonably designed system to supervise the activities 
of their associated persons to achieve compliance with applicable 
securities laws and regulations, and with applicable Exchange rules 
that directly serve investor protection. In a time when faced with 
unique challenges resulting from the COVID-19 pandemic, the Exchange 
believes that the proposed rule change is a sensible accommodation that 
will continue to afford Members the ability to ensure that critical 
positions are filled and client services maintained, while continuing 
to serve and promote the protection of investors and the public 
interest in this unique environment.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act. The proposed rule 
change is intended to provide temporary relief given the impacts of the 
COVID-19 pandemic crisis and to also maintain consistency with the 
rules of other self-regulatory organizations (``SROs'') with respect to 
the registration requirements applicable to Members and their 
registered personnel. In that regard, the Exchange believes that any 
burden on competition would be clearly outweighed by providing Members 
with temporary relief in this unique environment while also ensuring 
clear and consistent requirements applicable across SROs and mitigating 
any risk of SROs implementing different standards in these important 
areas. In its filing, FINRA provides an abbreviated economic impact 
assessment maintaining that the changes are necessary to temporarily 
rebalance the attendant benefits and costs of the obligations under 
FINRA Rule 1210 in response to the impacts of the COVID-19 pandemic 
that is equally applicable to the changes the Exchange proposes.\20\ 
The Exchange accordingly incorporates FINRA's abbreviated economic 
impact assessment by reference.
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    \20\ See supra notes 3 and 9.
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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.

[[Page 639]]

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 \21\ and Rule 19b-
4(f)(6) thereunder.\22\
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has asked the 
Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative immediately upon filing. As noted 
above, the Exchange stated that the proposed extension of time will 
help minimize the impact of the COVID-19 outbreak on Members' 
operations by allowing them to keep principal positions filled and 
minimizing disruptions to client services and other critical 
responsibilities. The Exchange further stated that the ongoing 
extenuating circumstances of the COVID-19 pandemic make it impractical 
to ensure that individuals designated to act in these capacities are 
able to take and pass the appropriate qualification examination during 
the 120-calendar day period required under the rules. The Exchange also 
explained that shelter-in-place orders, quarantining, restrictions on 
business and social activity and adherence to social distancing 
guidelines consistent with the recommendations of public officials 
remain in place in various states.\23\ In addition, the Exchange 
observed that, following a nationwide closure of all test centers 
earlier in the year, some test centers have re-opened, but are 
operating at limited capacity or are only delivering certain 
examinations that have been deemed essential by the local 
government.\24\ Although, as the Exchange noted, FINRA has launched an 
online test delivery service to help address this backlog, the General 
Securities Principal (Series 24) Examination is not available 
online.\25\ Nevertheless, the Exchange explained that the proposed rule 
change will provide needed flexibility to ensure that these positions 
remain filled and is tailored to address the constraints on Members' 
operations during the COVID-19 pandemic without significantly 
compromising critical investor protection.\26\
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    \23\ See supra note 16.
    \24\ See supra notes 13 and 14. The Exchange states that 
Prometric has also had to close some reopened test centers due to 
incidents of COVID-19 cases.
    \25\ See supra note 15. FINRA is considering making additional 
qualification examinations available remotely on a limited basis.
    \26\ The Exchange states that Members remain subject to the 
continued requirement to supervise the activities of these 
designated individuals and ensure compliance with federal securities 
laws and regulations, as well as MIAX Emerald rules.
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    The Commission observed that the Exchange's proposal, like FINRA's 
analogous filing, provides only temporary relief from the requirement 
to pass certain qualification examinations within the 120-day period in 
the rules. As proposed, this relief would extend the 120-day period 
that certain individuals can function as principals through April 30, 
2021. If a further extension of temporary relief from the rule 
requirements identified in this proposal beyond April 30, 2021 is 
required, the Exchange noted that it may submit a separate rule filing 
to extend the effectiveness of the temporary relief under these 
rules.\27\ 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.\28\ Accordingly, the Commission 
hereby waives the 30-day operative delay and designates the proposal 
operative upon filing.\29\
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    \27\ See supra note 3.
    \28\ As noted above by the Exchange, this proposed temporary 
change is based on a recent filing by FINRA that the Commission 
approved with a waiver of the 30-day operative delay. See supra note 
3, FINRA Filing at 81260.
    \29\ 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

    <bullet> Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#5624233a337b35393b3b333822251625333578313920"><span class="__cf_email__" data-cfemail="c0b2b5aca5eda3afadada5aeb4b380b3a5a3eea7afb6">[email protected]</span></a>. Please include 
File Number SR-EMERALD-2020-21on the subject line.

Paper Comments

    <bullet> 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-EMERALD-2020-21. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of MIAX Emerald. 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-EMERALD-2020-21and

[[Page 640]]

should be submitted on or before January 27, 2021.
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    \30\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-29218 Filed 1-5-21; 8:45 am]
BILLING CODE 8011-01-P


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