6944 Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices 

and hearing procedure for an order instituting 

proceedings. 274See generally Sections III.A and III.B; supra 

notes 31–42, 89–102 and 139–145 and 

accompanying text. 

275See supra note 273 and accompanying text. 

276See supra note 266 and accompanying text. 

277See supra notes 259–261 and accompanying 

text. 

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

2 17 CFR 240.19b–4. 

determination would be informed by 

any comments received on a fee filing. 

Therefore, the Commission does not 

believe that FINRA’s use of the 

immediately effective fee filing process 

would allow FINRA to avoid regulatory 

scrutiny for its proposed fees for the 

service. 

Finally, while the Commission 

outlined various concerns relating to 

effective-upon-filing fee changes for 

NMS plans under Rule 608(b) in the 

Proposed Regulation NMS Fee 

Amendment, we do not believe those 

concerns call into question our 

approach here. Fee filings in this 

context are governed by Section 19 of 

the Act rather than Rule 608. More 

importantly, as stated above, the 

Commission assesses whether or not 

any fee proposal filed under Section 19 

of the Act is consistent with the Act. If 

the Commission determines that a fee 

filing pursuant to Section 19(b)(3)(A) 

merits further review, which may be 

informed by the required notice and 

comment process, the Commission may 

temporarily suspend it and issue an 

order instituting proceedings to 

determine whether to approve or 

disapprove the proposal. 

b. Assessment of Proposal’s Consistency 

With the Act 

The Commission further disagrees 

that it cannot adequately assess the 

proposal’s consistency with the Act and 

its economic effects without knowing 

the fees that FINRA will charge for the 

proposed reference data service or the 

costs to build the service. The 

Commission has evaluated the 

economic effects, including the 

qualitative costs and benefits, of the 

proposal based on the record before it 

and has concluded that there is a lack 

of broadly available and accessible new 

issue reference data on the first day of 

secondary market trading that impedes 

the efficiency and competition in the 

current marketplace, and that FINRA’s 

proposal would address this 

information asymmetry to the benefit of 

the market and market participants.274

The Commission’s consideration of the 

proposal’s economic effects, including 

the burden on underwriters, the 

proposal’s impact on competition 

among market participants, including 

other data vendors, and its impact on 

efficiency and capital formation, as 

discussed above, is based upon the 

understanding that the fees assessed 

will be consistent with the Act and will 

be assessed using a cost-based formula. 

It is reasonable for the Commission to 

assume that any future fees assessed 

will be consistent with the Act because, 

as discussed above, if it believes such 

fees are not consistent with the Act, the 

Commission must suspend and 

disapprove them.275 The Commission 

will evaluate FINRA’s eventual fee 

application based on the requirements 

of the Act and assess FINRA’s proposed 

cost-based formula. It is that fee filing 

that will merit a consideration of 

FINRA’s cost to build the New Issue 

Reference Data Service because the costs 

of the system, which will be better 

known once the system is built, will be 

necessary to assess whether FINRA has 

proposed a fee for that service that is 

consistent with the Act, including 

Section 15A(b)(5).276 FINRA has 

expressly and clearly committed that its 

fees will be cost-based, and it will be 

required to set forth why such costbased fees meet the requirements of the 

Act. While commenters have raised 

concerns regarding FINRA’s costs to 

build and operate the new reference 

data service,277 should FINRA 

hypothetically build a New Issue 

Reference Data Service at a high cost 

that would be unreasonable to pass on 

to end-users, FINRA would not be able 

to make a showing that any such fees 

proposed to be assessed on the basis of 

its cost to build the service are 

reasonable, as required by Section 

15A(b)(5) of the Act. In such a case, as 

discussed above, the Commission would 

suspend and disapprove the proposal. 

c. Application of Section 15A(b)(5) to 

FINRA’s Proposal 

The Commission disagrees with one 

commenter’s argument that the 

Commission is required to make a 

finding under Section 15A(b)(5) of the 

Act that the current proposal ‘‘provides 

for the equitable allocation of reasonable 

dues, fees, and other charges among 

members and issuers and other persons 

using any facility or system which the 

association operates or controls.’’ The 

plain language of the Act necessitates 

that the proposal involve a due, fee or 

other charge in order to make such a 

finding concerning Section 15A(b)(5) of 

the Act. 

IV. Conclusion 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to a national 

securities association. 

It is therefore ordered, pursuant to 

Rule 431 of the Commission’s Rules of 

Practice, that the earlier action taken by 

delegated authority, Exchange Act 

Release No. 87656 (December 4, 2019), 

84 FR 67491 (December 10, 2019), is set 

aside and, pursuant to Section 19(b)(2) 

of the Act, the proposed rule change 

(SR–FINRA–2019–008), as modified by 

Amendment No. 2, hereby is approved. 

By the Commission. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–01438 Filed 1–22–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90937; File No. SR–MIAX– 

2021–01] 

Self-Regulatory Organizations; Miami 

International Securities Exchange LLC; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Exchange Rule 

1308, Supervision of Accounts, To 

Adopt Temporary Rules To Extend the 

Time by Which Members Must 

Complete Their Branch Office 

Inspections for the Calendar Year 2020 

and To Provide Temporary Remote 

Inspection Relief for Their Office 

Inspections for Calendar Years 2020 

and 2021 

January 15, 2021. 

Pursuant to the provisions of 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 January 08, 2021, Miami 

International Securities Exchange, LLC 

(‘‘MIAX Options’’ or the ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change as described in 

Items I, II, and III 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. 

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 1308, 

Supervision of Accounts, to: (1) Remove 

obsolete rule text; and (2) adopt 

temporary rules to extend the time by 


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Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices 6945 

3The 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. 

4A ‘‘branch office’’ is any location where one or 

more associated persons of a Member regularly 

conduct the business of effecting any transactions 

in, or inducing or attempting to induce the 

purchase or sale of any security, or is held out as 

such, with such exclusions pursuant to Exchange 

Rule 1306(c)(1)–(7). See Exchange Rule 1306(c). 

5See Securities Exchange Act Release No. 89261 

(July 8, 2020), 85 FR 42447 (July 14, 2020) (SR– 

MIAX–2020–24) (Notice of Filing and Immediate 

Effectiveness of a Proposed Rule Change To 

Temporarily Extend Filing Deadlines for Certain 

Supervision-Related Reports). The Exchange filed 

this rule change amidst continued and 

unprecedented market uncertainty, and sought to 

address potential challenges that Members could 

face in timely meeting their obligations to submit 

to the Exchange annual supervision-related reports 

under Rule 1308(g) and (h). 

6The proposed rule change will automatically 

sunset on March 31, 2021. If the Exchange seeks to 

provide additional temporary relief from the rule 

requirement identified in this proposal beyond 

March 31, 2021, it will submit a separate rule filing 

to further extend the temporary extension of time. 

7The proposed rule change will automatically 

sunset on December 31, 2021. If the Exchange seeks 

to extend the duration of the temporary proposed 

rule beyond December 31, 2021, it will submit a 

separate rule filing to further renew the temporary 

relief. The Exchange notes that SEC staff has stated 

in guidance that inspections must include a 

physical, on-site review component. See SEC 

National Examination Risk Alert, Volume I, Issue 2 

(November 30, 2011); SEC Division of Market 

Regulation, Staff Legal Bulletin No. 17: Remote 

Office Supervision (March 19, 2004) (stating, in 

part, that broker-dealers that conduct business 

through geographically dispersed offices have not 

adequately discharged their supervisory obligations 

where there are no on-site routine or ‘‘for cause’’ 

inspections of those offices). 

8See Centers for Disease Control and Prevention 

(‘‘CDC’’), International Classification of Diseases, 

Tenth Revision, Clinical Modification, https://

www.cdc.gov/nchs/data/icd/Announcement-NewICD-codeforcoronavirus-3-18-2020.pdf; WHO 

Director-General, Opening Remarks at the Media 

Briefing on COVID–19 (March 11, 2020), https://

www.who.int/dg/speeches/detail/who-directorgeneral-s-openingremarksat-the-media-briefing-oncovid-19---11-march-2020; and Centers for Disease 

Control and Prevention, How to Protect Yourself & 

Others (last visited November 12, 2020), https://

www.cdc.gov/coronavirus/2019-ncov/ 

preventgettingsick/prevention.html. 

9See e.g., FINRA Regulatory Notice 20–16 (May 

2020) (‘‘Notice 20–16’’) (describing practices 

implemented by small, mid-sized and large firms to 

transition to, and supervise in, remote work 

environment during the COVID–19 pandemic). 

10The Exchange notes that notwithstanding the 

exclusions in subparagraphs (c)(1)–(7) of Exchange 

Rule 1306, any location that is responsible for 

supervising the activities of persons associated with 

a Member at one or more non-branch locations of 

such Member is considered to be a branch office. 

See Exchange Rule 1306(d). 

11A Member may demonstrate to the satisfaction 

of the Exchange that because of proximity, special 

reporting or supervisory practice, other 

arrangements may satisfy Exchange Rule 1308(d)’s 

requirements for a particular branch office, or that, 

based upon the written policies and procedures of 

such Member providing for a systematic risk-based 

surveillance system, the Member submits a 

proposal to the Exchange and receives, in writing, 

an exemption from the requirement in Exchange 

1308(d), pursuant to Exchange Rule 1308(e). 

12See Exchange Rule 1308(d)(2). 

which Members 3 must complete their 

branch office 4 inspections for the 

calendar year 2020 and to provide 

temporary remote inspection relief for 

their office inspections for calendar 

years 2020 and 2021. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/ at MIAX Options’ 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 these 

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 aspects 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 amend 

Exchange Rule 1308, Supervision of 

Accounts, to: (1) Remove obsolete rule 

text; and (2) adopt temporary rules to 

extend the time by which Members 

must complete their branch office 

inspections for the calendar year 2020 

and to provide temporary remote 

inspection relief for their office 

inspections for calendar years 2020 and 

2021. 

The Exchange proposes to amend 

Exchange Rule 1308 by removing 

obsolete rule text that is the first 

sentence prior to subparagraph (a). The 

first sentence of Exchange Rule 1308 

currently provides as follows: ‘‘The 

deadline to submit the annual 

supervision-related reports pursuant 

paragraphs (g) and (h) will be extended 

from June 30, 2020 to July 31, 2020.’’ 5

After the July 31, 2020 extension 

passed, the Exchange determined not to 

file to amend its rules to extend it any 

further. Accordingly, this rule text is 

obsolete and no longer necessary. The 

purpose of this proposed change is to 

provide clarity to Members and market 

participants regarding the Exchange’s 

rules. 

In light of the operational challenges 

that Members are facing due to the 

outbreak of the coronavirus disease 

(‘‘COVID–19’’), the Exchange proposes 

to extend the time by which Members 

must complete their calendar year 2020 

inspection obligations under Exchange 

Rule 1308(d) (Annual Branch Office 

Inspections) to March 31, 2021,6 and to 

provide Members with the option to 

complete their calendar year 2020 and 

calendar year 2021 inspection 

obligations under Exchange Rule 

1308(d) remotely, without an on-site 

visit to the office or location.7

The Exchange has observed the 

impact of the COVID–19 pandemic on 

its Members’, investors, and the 

industry generally and recognizes that 

Members are experiencing operational 

challenges with much of their personnel 

working from home due to stay-at-home 

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.8 In response, like many 

employers across the United States, 

Members closed their offices to the 

public, transitioned their employees to 

telework arrangements to comply with 

stay-at-home orders, and implemented 

other restrictive measures in an effort to 

slow the spread of COVID–19, such as 

curtailing or eliminating non-essential 

business travel and significantly 

limiting or canceling in-person 

activities.9

Exchange Rules require Members to 

conduct branch 10 and non-branch office 

and location inspections pursuant to 

certain annual cycles. Specifically, 

pursuant to Exchange Rule 1308(d), 

each branch office that supervises one 

or more non-branch locations must be 

inspected no less often than once each 

calendar year, unless it qualifies for 

certain exemptions.11 Every branch 

office, without exception, must be 

inspected at least once every three 

calendar-years. Members must maintain 

written reports of such inspections.12

As a result of the compelling health 

and welfare concerns stemming from 

the COVID–19 pandemic, Members are 

facing potentially significant 

disruptions to their normal business 

operations that include staff 

absenteeism, the increased use of 

remote offices or telework arrangements, 

travel or transportation limitations, and 

technology interruptions or slowdowns. 

Pandemic-related operational changes 

have made it impracticable for Members 

to conduct the on-site inspections 

pursuant to Exchange Rule 1308(d) at 

many or most locations for calendar 

year 2020 because this compliance 


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13See e.g., City of Chicago, Emergency Travel 

Order (November 10, 2020) https://

www.chicago.gov/city/en/sites/covid-19/home/ 

emergency-travelorder.html (announcing certain 

travel restrictions applicable to different states 

based on the status of the outbreak in the states and 

how the data compares to the situation in Chicago); 

New York Department of Health, Interim Guidance 

for Quarantine Restrictions on Travelers Arriving in 

New York State Following Out of State Travel 

(November 3, 2020). 

14See CDC, Travel During the COVID–19 

Pandemic (updated October 21, 2020) https://

www.cdc.gov/coronavirus/2019-ncov/travelers/ 

travel-during-covid19.html (stating, in part, ‘‘[t]ravel 

increases your chance of getting and spreading 

COVID–19. Staying home is the best way to protect 

yourself and others from COVID–19’’). 

15See CDC, COVIDView, Key Updates for Week 

44, ending October 31, 2020 (November 5, 2020), 

https://www.cdc.gov/coronavirus/2019-ncov/ 

coviddata/pdf/covidview-11-06-2020.pdf (stating 

that surveillance indicators tracking levels of 

SARS–CoV–2 virus circulation and associated 

illnesses have been increasing since September). 

16See supra note 9. 

17See supra note 13. 

18See supra note 15. 

19See Exchange Rule 1306(g)–(h). 

20Red flags that suggest the increased risk or 

occurrence of violations may include, among other 

events: Customer complaints; an unexplained 

increase or change in the types of investments or 

trading concentration that a representative is 

recommending or trading; an unexpected 

improvement in a representative’s production, 

lifestyle, or wealth; questionable or frequent 

function requires firm employees to 

travel to geographically dispersed 

branch and non-branch office locations. 

Such travel not only has been restricted 

by government orders,13 but also puts 

the health and safety of employees at 

great risk of contracting and spreading 

COVID–19.14 By mid-year, with many 

restrictive measures still in place, and in 

some instances additional quarantine 

requirements imposed on interstate 

travel, on-site inspections of Member 

offices or locations scheduled for 

calendar year 2020 remain pending. The 

acute health and safety concerns related 

to COVID–19 persist, with the number 

of confirmed cases of COVID–19 in the 

U.S. continuing to rise through the fall 

of 2020.15 While Members have 

continued to supervise all offices and 

locations by, among other things, 

implementing remote supervisory 

practices through novel uses of 

technology as well as existing methods 

of supervision (e.g., supervisory 

checklists, surveillance tools, incident 

trackers, email review, and trade 

exception reports),16 they are still 

experiencing logistical challenges 

related to conducting the onsite portion 

of their inspections due to continuing 

business and governmental restrictions 

and public health concerns.17 As a 

result, the Exchange understands that 

Members have not yet been able to 

conduct on-site inspections scheduled 

for calendar year 2020, and, with no 

certainty as to when pandemic-related 

health concerns will subside and 

restrictions recently re-implemented in 

light of the resurgence of cases during 

the fall of 2020,18 Members may have a 

considerable backlog of 2020 

inspections that may have been 

difficult, if not impossible, to overcome 

on or before calendar year 2020 ended. 

Additionally, the Exchange recognizes 

that planning on-site inspections for 

calendar year 2021 for Member branch 

and non-branch offices and locations in 

the current environment may be 

impacted as well. In light of pandemicrelated developments and the 

approaching end of calendar year 2020, 

the Exchange believes it is appropriate 

to provide tailored temporary relief for 

Members to meet their inspection 

obligations under Exchange Rule 

1308(d) for calendar years 2020 and 

2021. 

Specifically, the Exchange proposes to 

adopt temporary Rule 1308(d)(4), to 

provide that each Member obligated to 

complete an annual branch office 

inspection pursuant to Exchange Rule 

1308(d) in calendar year 2020 will be 

deemed to have satisfied such obligation 

if the applicable inspection is 

completed on or before March 31, 2021. 

The Exchange believes that this 

proposed temporary 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, as potential 

risks that may arise from providing 

firms additional time to comply with 

their inspection obligations due in 

calendar year 2020 are mitigated by 

their ongoing supervisory obligations, 

off-site monitoring, and the temporary 

nature of the extension. The proposed 

extension will provide Members with an 

opportunity to better manage the 

operational challenges resulting from 

the COVID–19 pandemic and the 

resources needed to fulfill these 

supervisory obligations during the 

pandemic. 

In addition to this, the Exchange 

proposes to extend temporary remote 

inspection relief for calendar year 2020 

and 2021. In particular, the Exchange 

proposes to adopt temporary Exchange 

Rule 1308(d)(5), which provides that 

each Member obligated to conduct an 

inspection of a branch office or nonbranch location in calendar year 2020 

and calendar year 2021 pursuant to 

Exchange Rule 1308(d), as applicable, 

may, subject to the requirements of Rule 

1308(d)(5), satisfy such obligation by 

conducting the applicable inspection 

remotely, without an on-site visit to the 

office or location. In accordance with 

Exchange Rule 1308(d)(4), inspections 

for calendar year 2020 must be 

completed on or before March 31, 2021. 

Inspections for calendar year 2021 must 

be completed on or before December 31, 

2021. Notwithstanding proposed 

Exchange Rule 1308(d)(5), a Member 

remains subject to the other 

requirements of Exchange Rule 1308(d). 

The proposed rule change also adopts 

written supervisory procedures for 

remote inspections in proposed 

Exchange Rule 1308(d)(5)(i), which 

provides that, consistent with a 

Member’s obligations under Rule 

1308(d), a Member that elects to 

conduct each of its calendar year 2020 

or calendar year 2021 branch office 

inspections remotely must amend or 

supplement its written supervisory 

procedures to provide for remote 

inspections that are reasonably designed 

to assist in detecting and preventing 

violations of and achieving compliance 

with applicable securities laws and 

regulations, and with applicable 

Exchange Rules. Reasonably designed 

procedures for conducting remote 

inspections of offices or locations 

should include, among other things: (i) 

A description of the methodology, 

including technologies permitted by the 

branch office, that may be used to 

conduct remote inspections; and (ii) the 

use of other risk-based systems 

employed generally by the branch office 

to identify and prioritize for review 

those areas that pose the greatest risk of 

potential violations of applicable 

securities laws and regulations, and of 

applicable Exchange Rules. The 

Exchange believes the proposed rule 

change is consistent with a Member’s 

existing supervisory obligations to 

establish and maintain written 

supervisory procedures for branch office 

reviews and review of non-branch 

offices and locations.19

Proposed temporary Rule 

1308(d)(5)(ii) provides that the 

requirement to conduct inspections of 

offices and locations is one part of a 

Member’s overall obligation to have an 

effective supervisory system and, 

therefore, a Member must continue with 

its ongoing review of the activities and 

functions occurring at all offices and 

locations, whether or not the Member 

conducts inspections remotely. A 

Member’s use of a remote inspection of 

an office or location will be held to the 

same standards for review as set forth 

under Exchange Rule 1308(d). Where a 

Member’s remote inspection of an office 

or location identifies any indicators of 

irregularities or misconduct (i.e., ‘‘red 

flags’’),20 the Member may need to 


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transfers of cash or securities between customer or 

third party accounts, or to or from the 

representative; a representative that serves as a 

power of attorney, trustee or in a similar capacity 

for a customer or has discretionary control over a 

customer’s account(s); representative with 

disciplinary records; customer investments in one 

or a few securities or class of securities that is 

inconsistent with firm policies related to such 

investments; churning; trading that is inconsistent 

with customer objectives; numerous trade 

corrections, extensions, liquidations; or significant 

switching activity of mutual funds or variable 

products held for short time periods. See generally 

SEC Division of Market Regulation, Staff Legal 

Bulletin 17: Remote Office Supervision (March 19, 

2004). 

21See generally Exchange Rule 1308(g)(5)(i). 

22See supra notes 6 and 7. 

23See FINRA Rule 3110.16; see also Securities 

and Exchange Act Release Nos. 89188 (June 30, 

2020), 85 FR 40713 (July 7, 2020) (SR–FINRA– 

2020–019); 90454 (November 18, 2020), 85 FR 

75097 (November 24, 2020) (SR–FINRA–2020–040) 

(Notice of Filing and Immediate Effectiveness of a 

Proposed Rule Change To Adopt Temporary 

Supplementary Material .17 (Temporary Relief To 

Allow Remote Inspections for Calendar Year 2020 

and Calendar Year 2021) Under FINRA Rule 3110 

(Supervision)); 90583 (December 7, 2020), 85 FR 

80207 (December 11, 2020) (SR–CBOE–2020–112) 

(Notice of Filing and Immediate Effectiveness of a 

Proposed Rule Change Relating To Adopt 

Temporary Rules To Extend the Time by Which 

Trading Permit Holders must Complete Their Office 

Inspections for the Calendar Year 2020 and To 

Provide Temporary Remote Inspection Relief for 

Their Office Inspections for Calendar Years 2020 

and 2021). 

24 15 U.S.C. 78f(b). 

25 15 U.S.C. 78f(b)(5). 

26 Id. 

impose additional supervisory 

procedures for that office or location or 

may need to provide for more frequent 

monitoring or oversight of that office or 

location, including potentially a 

subsequent physical, on-site visit on an 

announced or unannounced basis when 

the branch office’s operational 

difficulties associated with COVID–19 

abate, nationally or locally as relevant, 

and the challenges a branch office is 

facing in light of the public health and 

safety concerns make such on-site visits 

feasible using reasonable best efforts. 

The temporary relief provided by 

proposed Exchange Rule 1308(d)(5) 

does not extend to a Member’s 

inspection requirements beyond 

calendar year 2021 and such inspections 

must be conducted in compliance with 

Exchange Rule 1308(d)(1) through (3). 

The Exchange believes that the 

proposed rule is consistent with a 

Member’s existing supervisory 

obligations to maintain policies and 

procedures, and a system for applying 

such procedures, reasonably designed to 

achieve compliance with, as well as 

assist in preventing and detecting 

violations of, applicable securities laws 

and regulations and Exchange Rules.21

Finally, proposed temporary 

Exchange Rule 1308(d)(5)(iii) provides 

for a documentation requirement and 

specifically provides that a Member 

must maintain and preserve a 

centralized record for each of calendar 

year 2020 and calendar year 2021 that 

separately identifies: (1) All offices or 

locations that had inspections that were 

conducted remotely; and (2) any offices 

or locations for which the Member 

determined to impose additional 

supervisory procedures or more 

frequent monitoring, as provided in 

Exchange Rule 1308(d)(5). A Member’s 

documentation of the results of a remote 

inspection for an office or location must 

identify any additional supervisory 

procedures or more frequent monitoring 

for that office or location that were 

imposed as a result of the remote 

inspection. The Exchange believes that 

this documentation requirement would 

help readily distinguish the offices and 

locations that underwent remote 

inspections and their attendant 

supervisory procedures, and their more 

frequent monitoring, as applicable. 

As noted above, even in the current 

environment, Members have an ongoing 

obligation to establish and maintain a 

system to supervise the activities of 

their associated persons that is 

reasonably designed to achieve 

compliance with applicable securities 

laws and regulations, and with 

applicable Exchange Rules. The 

proposed temporary additions of 

Exchange Rule 1308(d)(4) and (d)(5) are 

not intended to lessen the supervisory 

obligations prescribed under the 

Exchange Rules. The Exchange believes 

that the proposed temporary rule 

changes, which address the needs and 

constraints on a Member’s operations 

during the COVID–19 pandemic by 

extending the time to conduct 

inspections for calendar year 2020 and 

permitting firms to remotely inspect, 

subject to specified requirements 

described above, their offices and 

locations for calendar years 2020 and 

2021, would provide Members a way to 

comply with Exchange Rule 1308(d) 

that would not materially diminish, and 

is reasonably designed to achieve, the 

investor protection objectives of the 

inspection requirements under these 

unique circumstances. The Exchange 

notes that potential risks that may arise 

from providing Members extended time 

to conduct their 2020 inspections and 

the option to conduct their inspections 

remotely are mitigated by their use of 

technology to meet their supervisory 

obligations on an ongoing basis, the 

unique circumstances under which they 

are operating, and the temporary nature 

of the proposed rules, which would 

expire on March 31, 2021 and December 

31, 2021, respectively.22

The Exchange notes that the proposed 

temporary rules are substantively 

identical to the temporary inspection 

extension and remote relief rules 

recently filed by the Financial Industry 

Regulatory Authority (‘‘FINRA’’) and the 

Cboe Exchange, Inc. (‘‘Cboe’’).23 The 

Exchange notes too that it will continue 

to monitor the situation and engage with 

Members, other financial regulators, and 

governmental authorities to determine 

whether further regulatory relief or 

guidance related to Exchange Rule 1308 

may be appropriate. 

The Exchange notes that MIAX 

Chapter XIII is incorporated by 

reference into the rulebooks of the 

Exchange’s affiliates, MIAX PEARL, LLC 

(‘‘PEARL’’) and MIAX Emerald, LLC 

(‘‘Emerald’’). As such, the amendments 

to MIAX Chapter XIII proposed herein 

will also apply to MIAX PEARL and 

MIAX Emerald Chapters XIII. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.24 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 25 requirements that the rules of 

an exchange be 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 regulating, clearing, settling, 

processing information with respect to, 

and 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 consistent with 

the Section 6(b)(5) 26 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes that the 

proposed change to remove obsolete text 

in Exchange Rule 1308 is designed to 

prevent fraudulent and manipulative 

acts and practices, promotes just and 

equitable principles of trade, fosters 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitates transactions in 

securities, remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 


jbell on DSKJLSW7X2PROD with NOTICES
6948 Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Notices 

27 15 U.S.C. 78s(b)(3)(A). 

28 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

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. 29 17 CFR 200.30–3(a)(12). 

system, and, in general, protects 

investors and the public interest. The 

Exchange believes that the proposed 

change is a non-substantive and 

clarifying change and will reduce 

potential investor or market participant 

confusion regarding the Exchange’s 

rules. Further, the Exchange believes the 

proposed change is not material as the 

waiver period under this rule text 

expired at the end of July 2020. 

In particular, the Exchange believes 

that, in light of the impact of COVID– 

19 on the performance of on-site office 

and location inspections pursuant to 

Exchange Rule 1308(d), the proposed 

temporary rule changes are intended to 

provide Members additional time to 

comply with their Exchange Rule 

1308(d) inspection obligations due in 

calendar year 2020 and a temporary 

regulatory option to conduct inspections 

of offices and locations remotely for 

calendar years 2020 and 2021. The 

proposed temporary rule changes do not 

relieve firms from meeting their existing 

regulatory obligations to establish and 

maintain a supervisory system that is 

reasonably designed to achieve 

compliance with applicable securities 

laws and regulations, and with 

applicable Exchange Rules, which 

directly serve investor protection. In a 

time when faced with unique challenges 

resulting from the COVID–19 pandemic, 

the Exchange believes that the proposed 

temporary rule changes provide 

appropriately tailored relief that will 

afford Members the ability to observe 

the recommendations of public health 

officials to provide for the health and 

safety of their personnel, while 

continuing to serve and promote the 

protection of investors and the public 

interest. 

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 Act. 

The Exchange does not believe the 

proposed rule change to delete obsolete 

text will impose any burden on intramarket and inter-market competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act 

because the proposed change is not 

intended to address competitive issues 

but rather are corrective, nonsubstantive changes that are concerned 

solely with the removal of rule text that 

is no longer effective. 

The Exchange does not believe the 

proposed temporary rule changes to 

Exchange Rule 1308(d) will impose any 

burden on intra-market competition that 

is not necessary or appropriate in 

furtherance of the Act, because the 

extension for inspections and the 

remote inspection relief will apply 

equally to all Members required to 

conduct office and location inspections 

in calendar year 2020 and 2021. The 

Exchange further does not believe that 

the proposed temporary rule changes 

will impose any burden on inter-market 

competition because it relates only to 

the extension of time for 2020 

inspections and the manner in which 

inspections for 2020 and 2021 may be 

conducted. Additionally, and as stated 

above, FINRA and Cboe have recently 

submitted filings to adopt substantively 

identical temporary inspection relief 

rules for their members and trading 

permit holders. 

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 after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to 19(b)(3)(A) 

of the Act 27 and Rule 19b–4(f)(6) 28

thereunder. 

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– 

MIAX–2021–01 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–MIAX–2021–01. 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 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–MIAX–2021–01 and should 

be submitted on or before February 16, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.29

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01420 Filed 1–22–21; 8:45 am] 

BILLING CODE 8011–01–P 


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