10372 Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f)(2). 

18 15 U.S.C. 78s(b)(2)(B). 

19 17 CFR 200.30–3(a)(12). 

1The independent public accountant must be 

qualified and independent in accordance with Rule 

2–01 of Regulation S–X and must be registered with 

the Public Company Accounting Oversight Board 

(‘‘PCAOB’’) if required by the Sarbanes-Oxley Act 

of 2002 (‘‘Sarbanes-Oxley Act’’). See Public Law 

107–204, 116 Stat. 745 (2002); 17 CFR 240.17a– 

5(f)(1). 

2See 17 CFR 240.17a–5(d)(5). 

3See 17 CFR 240.17a–5(m)(3) (stating that on 

written request of any national securities exchange, 

registered national securities association, brokerdealer, or on its own motion, the Commission may 

grant an extension of time or an exemption from 

any of the requirements of Rule 17a–5 either 

unconditionally or on specified terms and 

conditions). 

4See Letter from Kris Dailey, Vice President, 

Office of Financial and Operational Risk Policy, 

FINRA to Michael A. Macchiaroli, Associate 

Director, SEC (February 11, 2021). 

5See id. at 2. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 16 of the Act and 

subparagraph (f)(2) of Rule 19b–4 17

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such 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 

under Section 19(b)(2)(B) 18 of the Act to 

determine whether the proposed rule 

change 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– 

NYSE–2021–11 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–NYSE–2021–11. 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–NYSE–2021–11 and should 

be submitted on or before March 12, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–03340 Filed 2–18–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91128] 

Order Extending the Annual Reports 

Filing Deadline for Certain Smaller 

Broker-Dealers 

February 12, 2021. 

I. Introduction 

Broker-dealers registered with the 

U.S. Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

are generally required to file with the 

Commission, within 60 calendar days 

after the end of the fiscal year of the 

broker-dealer, a financial report and 

either a compliance report or exemption 

report, along with reports prepared by 

an independent public accountant 1

covering the financial report and, as 

applicable, the compliance or 

exemption report (collectively the 

‘‘annual reports’’).2 Pursuant to 

paragraph (m)(3) of Exchange Act Rule 

17a–5 (‘‘Rule 17a–5’’), the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) has requested that the 

Commission extend by 30 calendar days 

the deadline for certain smaller brokerdealers to file the annual reports.3 This 

order grants such an extension to certain 

smaller broker-dealers, subject to the 

conditions described in section III 

below. 

II. Discussion 

A. FINRA’s Request 

In a letter dated February 11, 2021, 

FINRA requested that the Commission 

issue an order pursuant to paragraph 

(m)(3) of Rule 17a–5 to extend by 30 

calendar days the deadline for certain 

smaller broker-dealers to file their 

annual reports.4 In FINRA’s request, it 

indicated that it had been informed by 

smaller broker-dealers and auditors that 

permitting an additional 30 days for 

filing of the annual reports may help to 

reduce the burdens in obtaining audit 

services by providing an expanded time 

frame for the completion of such audits 

thereby easing the availability of 

auditors.5 FINRA stated in the letter that 

the fiscal year for most broker-dealers 

ends on the last calendar day of the year 

(December 31), which results in the 

greatest demand for audit services in the 

60 calendar days following that date. 

Further, much of the work required to 

complete these audits is performed after 

the broker-dealer files the final FOCUS 

Report (Form X–17A–5 Part II or IIA) for 

the audit year, which is due to be filed 

with the Commission 17 business days 

after the end of the prior month (i.e., 

January 27 for broker-dealers with 

December 31 fiscal year ends). As a 

result, the required audit work is 

conducted within a compressed period 

when audit services are in greatest 

demand and the availability of 

independent public accountants and 


tkelley on DSKBCP9HB2PROD with NOTICES
Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 10373 

6 In its 2012 Annual Report on the Interim 

Inspection Program Related to the Audits of Brokers 

and Dealers (‘‘Annual Inspection Report’’), the 

PCAOB reported that there were 783 registered 

public accounting firms. In the 2019 Annual 

Inspection Report, that figure had declined to 411. 

See PCAOB, Information for Auditors of BrokerDealers, available at https://pcaobus.org/Pages/ 

BrokerDealers.aspx. 

7See 17 CFR 240.15c3–1. 

8See 17 CFR 240.17a–5(d)(1)(i)(B) (prescribing 

whether a broker-dealer must file the compliance 

report or the exemption report). A broker-dealer 

must file an exemption report if the firm claimed 

it was exempt from Rule 15c3–3 (17 CFR 240.15c3– 

3) throughout the most recent fiscal year and was 

not subject to paragraph (p) of Rule 15c3–3 (which 

addresses segregation requirements with respect to 

security-based swaps). Otherwise, the broker-dealer 

must file the compliance report. See also BrokerDealer Reports, Exchange Act Release No. 70073 

(July 30, 2013), 78 FR 51910, 51915 (Aug. 21, 2013) 

n. 74 (stating that a broker-dealer should file an 

exemption report if it has not held customer 

securities or funds during the fiscal year even if it 

does not fit into one of the exemption provisions 

of Rule 15c3–3 identified on the FOCUS Report). 

See also Frequently Asked Questions Concerning 

the July 30, 2013 Amendments to the Broker-Dealer 

Financial Reporting Rule (updated July 1, 2020) 

(describing the Division and Trading and Markets 

staff’s views regarding the eligibility of certain 

broker-dealers to file exemption reports in 

accordance with the circumstances described in 

footnote 74 of the 2013 Broker-Dealer Reports 

release, among other things). Staff statements, 

including Frequently Asked Questions, represent 

the views of the staff. They are not rules, 

regulations, or statements of the Commission. The 

Commission has neither approved nor disapproved 

their content. These staff statements, like all staff 

guidance, have no legal force or effect: They do not 

alter or amend applicable law, and they create no 

new or additional obligations for any person. 

other third-party professionals may be 

limited. 

FINRA further identified a number of 

factors that compound the burden of 

smaller broker-dealers in preparing the 

annual reports and undergoing an audit 

of them. For example, the auditors of 

smaller broker-dealers typically do not 

perform interim audit work prior to the 

fiscal year end. Interim audit work 

typically includes the auditors testing 

items such as revenue, expenses, and 

internal controls. In addition, some 

smaller broker-dealers utilize outside 

professional and consulting services to 

assist them in preparing supporting 

materials for the audit and to respond to 

auditor requests. These outside 

professional and consulting service 

providers often have multiple smaller 

broker-dealer clients with the same 

fiscal year end. As a result, the service 

providers’ may have a limited capacity 

during the audit period to provide their 

services to smaller broker-dealers. 

Furthermore, because many smaller 

broker-dealers do not have fully 

automated financial and operational 

recordkeeping and reporting 

infrastructures, they must rely on 

manual processes to prepare documents 

for the independent public accountant 

to audit or review, which can take 

additional time as compared to more 

automated processes. 

FINRA also stated that some audit 

firms have chosen to forego registration 

with the PCAOB, resulting in fewer 

independent public accountants 

qualified under Rule 17a–5 to perform 

broker-dealer audits.6 FINRA indicates 

that the additional 30 days to complete 

a smaller broker-dealer audit may 

alleviate capacity issues for PCAOBregistered auditors. FINRA stated that it 

has been informed by broker-dealers 

and auditors that the additional 30 days 

would help the limited number of 

PCAOB-registered auditors to perform 

the work necessary to complete reports 

covering them. FINRA stated the 

additional time could promote better 

quality of the annual reports. 

B. FINRA’s Proposed Conditions for the 

Requested Relief 

FINRA proposed that the extension of 

30 calendar days be made available only 

to broker-dealers that meet certain 

conditions. The first condition is that 

the broker-dealer must be in compliance 

with Exchange Act Rule 15c3–1 7 (‘‘Rule 

15c3–1’’) as of the date of its most recent 

fiscal year end. FINRA believes this 

condition is appropriate because the 

financial condition of a member that 

avails itself of the additional 30 days 

should not be such as to raise concerns 

about whether the member may 

continue to conduct its broker-dealer 

activities. The second condition is that 

as of the date of the broker-dealer’s most 

recent fiscal year-end, the broker-dealer 

must have had total capital and 

allowable subordinated liabilities of less 

than $50 million, as reported in box 

3530 of Part II or IIA of its FOCUS 

Report. FINRA believes this condition is 

appropriate because it helps to target the 

contemplated extension to the smaller 

firms that are in need of such relief. The 

third condition is that the extension be 

made available only to those brokerdealers eligible to file an exemption 

report as part of its most recent fiscal 

year end annual reports.8 FINRA 

believes this condition is appropriate so 

as to ensure that the extension is only 

available to firms that, by virtue of their 

business activities, generally pose less 

risk to customers because they do not 

custody funds and securities. The fourth 

condition is that the broker-dealer 

submits written notification to FINRA of 

its intent to avail itself of the additional 

30 calendar days for filing its annual 

reports on an ongoing basis for as long 

as it meets these conditions. FINRA 

believes that the notification is 

appropriate so as to enable FINRA to 

monitor effectively firms that avail 

themselves of the additional 30 days. 

The final condition is that the brokerdealer submits the annual reports 

electronically to the Commission using 

an appropriate process. FINRA believes 

this condition is appropriate because it 

permits greater efficiency and is 

consistent with SEC staff guidance. 

C. Commission Analysis 

According to FINRA, a smaller brokerdealer’s window of time to prepare the 

annual reports and undergo an audit by 

an independent public accountant is 

often particularly compressed because 

much of the audit work does not 

commence until after the broker-dealer 

files its fiscal year-end FOCUS Report. 

According to FINRA, audit work for 

small broker-dealers is performed 

predominantly during the period of time 

between the due date for the fiscal yearend FOCUS Report (17 business days 

after the firm’s fiscal year end) and the 

annual reports filing due date (60 

calendar days after the fiscal year end). 

Further, according to FINRA, the 

auditors of smaller broker-dealers do not 

typically perform interim audit work 

prior to the broker-dealer’s fiscal year 

end, unlike most larger broker-dealers. 

The lack of this interim audit work, 

which typically includes the testing of 

items such as revenue, expenses, and 

internal controls, compresses the time 

auditors have to perform required 

procedures in advance of the filing 

deadline. This also restricts the time 

frame for smaller broker-dealers and 

their auditors to identify and resolve 

issues. 

Moreover, according to FINRA, many 

smaller broker-dealers use manual 

processes to prepare supporting 

documentation for the audit or review 

and respond to auditor inquiries, rather 

than the more automated processes 

typically used by larger broker-dealers. 

This can make the work necessary to 

prepare the annual reports and audit 

them more labor intensive and time 

consuming. In addition, according to 

FINRA, some smaller broker-dealers 

retain third-party professionals to assist 

them with their financial reporting. 

These professionals often provide 

services to multiple smaller brokerdealers with the same fiscal year end, 

resulting in these professionals having 

limited capacity during the relatively 

brief period between the FOCUS Report 

filing due date and the annual reports 

filing due date. These professionals’ 

limited capacity can further compress 

the timeframe for performing the work 

necessary to prepare the annual reports. 


tkelley on DSKBCP9HB2PROD with NOTICES
10374 Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 

9FINRA requested relief on behalf of its member 

broker-dealers. This Order extends relief to all 

broker-dealers satisfying its conditions in order to 

treat similarly situated broker-dealers equally 

regardless of whether they are FINRA members. 

10The Commission notes that the staff of the 

Division of Trading and Markets has previously 

issued no-action positions related to the electronic 

filing of broker-dealer annual reports. See Letter to 

Kris Daily, Vice President, FINRA from Michael A. 

Macchiaroli, Associate Director, Commission, dated 

January 27, 2017. Available at https://www.sec.gov/ 

divisions/marketreg/mr-noaction/2017/finra012717-electronic-filing-annual-reports.pdf. For 

further instructions relating to filing broker-dealer 

annual reports through EDGAR, see Electronic 

Filing of Broker-Dealer Annual Reports. Available at 

https://www.sec.gov/divisions/marketreg/electronicfiling-broker-dealer-annual-reports.htm. 

See also Updated Division of Trading and 

Markets Staff Statement Regarding Requirements 

for Certain Paper Submissions in Light of COVID– 

19 Concerns. Available at https://www.sec.gov/tm/ 

paper-submission-requirements-covid-19-updates061820. 

Staff statements represent the views of the staff. 

They are not rules, regulations, or statements of the 

Commission. The Commission has neither 

approved nor disapproved their content. These staff 

statements, like all staff guidance, have no legal 

force or effect: They do not alter or amend 

applicable law, and they create no new or 

additional obligations for any person. 

Paragraph (m)(3) of Rule 17a–5 

provides that the Commission may grant 

an extension of time for broker-dealers 

to file their annual reports. After 

considering the points raised in 

FINRA’s letter and the burdens faced by 

smaller broker-dealers in preparing and 

filing the annual reports, the 

Commission believes that it would be 

appropriate to extend the deadline for 

certain smaller broker-dealers to file 

their annual reports by 30 calendar 

days.9 This additional time should 

expand the timeframe (from slightly 

more than one month) between the 

deadline for submitting the fiscal yearend FOCUS Report and the deadline to 

file the annual reports (i.e., the 

timeframe in which much of the work 

is performed to prepare the annual 

reports). To the extent auditors are able 

to better focus on the audit and review 

of annual reports for the small brokerdealer clients who avail themselves of 

the extension, this relief could help 

promote quality financial reporting. 

The Commission further believes it is 

appropriate to limit this relief to brokerdealers meeting the conditions 

described in FINRA’s request, which 

should also maintain investor 

protections. Conditioning the extension 

on the broker-dealer being in 

compliance with the net capital 

requirements of Rule 15c3–1 as of the 

date of its fiscal year end is appropriate 

because a broker-dealer that is not in 

compliance with the rule poses a 

heightened risk to its customers and 

other securities market participants 

because of its financial condition. 

Excluding a net capital-deficient brokerdealer from this relief will assist the 

Commission and the broker-dealer’s 

designated examining authority to 

monitor the financial condition of the 

firm on a timely basis, including 

analyzing whether the firm will be able 

to continue as a going concern. 

Therefore, a broker-dealer with a net 

capital deficiency will not be able to 

avail itself of the additional 30 days 

provided for in this Order. 

The Commission also believes it is 

appropriate to limit the availability of 

the extension to smaller broker-dealers. 

As discussed above, the extension could 

alleviate unique burdens associated 

with the compressed timeframe for 

smaller broker-dealers to prepare their 

annual reports and their independent 

public accountants to perform the audit 

work necessary to prepare reports 

covering them. Moreover, broker-dealers 

that conduct a substantial securities 

business and thus are in a position to 

potentially pose significant risk to 

investors and to the fair, orderly, and 

efficient functioning of the markets, will 

not be eligible for the extension. 

Therefore, the Commission is limiting 

the relief to broker-dealers that have 

total capital and allowable subordinated 

liabilities of less than $50 million, as 

requested by FINRA. Broker-dealers 

falling below the $50 million threshold 

constitute approximately 3% of the total 

capital of all broker-dealers. The 

Commission believes that the $50 

million threshold is appropriate in this 

context because smaller broker-dealers 

pose less significant risks to the fair, 

orderly, and efficient functioning of the 

markets. 

Broker-dealers that maintain custody 

of customer securities and cash are not 

eligible to file exemption reports and are 

generally larger in size than brokerdealers that do not carry customer 

accounts. The Commission believes 

firms that file an exemption report— 

because of their relative size and the fact 

that they do not hold customer funds or 

securities, or owe money or securities to 

customers and do not carry customer 

accounts, or are exempt from Rule 

15c3–3 pursuant to paragraph (k)(2) of 

that rule—present less risk to customers. 

Therefore, a broker-dealer must be 

permitted to file an exemption report as 

part of the annual reports to qualify for 

the relief. Based upon information 

included in broker-dealers’ FOCUS 

Reports, the Commission believes that 

approximately 3,000 of the 3,620 brokerdealers registered with the Commission 

would meet the $50 million threshold 

and exemption report filing conditions. 

The Commission believes that it is 

appropriate to make the 30-day 

extension available only to brokerdealers that have provided written 

notice to their designated examining 

authority of their intent to avail 

themselves of the extension. The 

designated examining authority is 

responsible for oversight of brokerdealers’ adherence to the financial 

responsibility rules, including Rule 

17a–5. This requirement will allow the 

broker-dealer’s designated examining 

authority to more effectively monitor 

firms by enabling it to distinguish 

between broker-dealers that are filing 

their annual reports late as opposed to 

firms availing themselves of the relief in 

this Order. 

Finally, the Commission believes it is 

appropriate to limit the availability of 

the relief in this order to broker-dealers 

that file the annual reports 

electronically with the Commission 

using an appropriate process.10 The 

electronic filing condition promotes 

efficiency by ensuring broker-dealers 

that rely on the 30-day extension will 

have their annual reports made 

available to Commission staff and to the 

public more quickly than if they had 

been filed in paper within the deadline 

provided in Rule 17a–5. Paper filings 

must be manually processed, which is 

time consuming and delays the 

availability of annual reports to the staff 

of the Commission and to the public. By 

comparison, annual reports that are 

filed electronically need minimal or no 

manual processing. Therefore, to help 

ensure the annual reports are made 

promptly available, the Commission is 

conditioning the relief on electronic 

filing. 

III. Conclusion 

It is hereby ordered pursuant to 

section 17(a)(1) of the Exchange Act and 

paragraph (m)(3) of Rule 17a–5 

thereunder that the deadline in 

paragraph (d)(5) of Rule 17a–5 for filing 

the annual reports is extended by 30 

calendar days, provided that the brokerdealer: 

(1) As of its most recent fiscal year 

end: 

a. Was in compliance with Rule 15c3– 

1; and 

b. Had total capital and allowable 

subordinated liabilities of less than $50 

million, as reported in box 3530 of Part 

II or Part IIA of its FOCUS Report; 

(2) Is permitted to file an exemption 

report as part of its most recent fiscal 

year end annual reports; 

(3) Submits written notification to its 

designated examining authority of its 

intent to rely on this order on an 

ongoing basis for as long as it meets the 

conditions of the order; and 


tkelley on DSKBCP9HB2PROD with NOTICES
Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 10375 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 90384 

(November 9, 2020), 85 FR 73113 (November 16, 

2020) (‘‘Notice’’). Comments on the proposed rule 

change can be found at https://www.sec.gov/ 

comments/sr-bx-2020-032/srbx2020032.htm. 

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

5See Securities Exchange Act Release No. 90796 

(December 23, 2020), 85 FR 86590 (December 30, 

2020). 

6 In Amendment No. 1, the Exchange: (1) Stated 

that the proposed changes in Supplementary 

Material .07 of Options 4, Section 5 supersede 

Supplementary Material .03(d) and that the 

Exchange will not be able to utilize the rule text 

within Supplementary Material .03(d) to permit 

additional series to be opened for trading on the 

Exchange that have an expiration date more than 

twenty-one days from the listing date despite the 

noted circumstances when such additional series 

could otherwise be added; (2) clarified how a Short 

Term Option Opening Date is calculated when the 

Exchange is not open for business on the applicable 

Thursday or Friday; (3) provided that that Short 

Term Options Series that are newly eligible for 

listing pursuant to Options 4, Section 3(a) will not 

be subject to proposed Supplementary Material .07 

until after the end of the first full calendar quarter 

following the date the option class was first listed 

for trading on any options market; (4) discussed 

additional data underlying its proposal; (5) 

proposed to make publically available a report on 

a quarterly basis that indicates, for each Short Term 

Options Series eligible to be listed under proposed 

Supplementary Material .07 of Options 4, Section 

5, the applicable tiering, which includes the closing 

price of the underlying, and the average daily 

Customer volume of the option; and (6) changed its 

implementation timeframe for the proposed rule 

change from prior to March 31, 2021 to prior to June 

30, 2021. When the Exchange filed Amendment No. 

1, it also submitted it as a comment to the filing 

so that the text of Amendment No. 1 promptly 

became available at https://www.sec.gov/comments/ 

sr-bx-2020-032/srbx2020032-8359799-229182.pdf. 

7See Supplementary Material .03 of Options 4, 

Section 5. There are limits on the number of series 

that can participate in STOS (i.e., 30 initial series 

and up to 50 currently listed classes). See 

Supplementary Material .03 of Options 4, Section 

5(c). In addition to the weeklies, the Exchange may 

list series of options for trading with monthly 

expirations (that expire on the third Friday of the 

month) or quarterly expirations. See Options 4, 

Section 5(g) and Supplementary Material .04 of 

Options 4, Section 5, respectively. Exchange rules 

set forth the intervals between strike prices of series 

of options on individual stocks, which generally are 

$2.50, $5, and $10. In addition to those intervals, 

the Exchange may list certain series of options in 

finer increments, including, e.g., pursuant to the $1 

Strike Price Interval Program (Supplementary 

Material .01 of Options 4, Section 5) and the $0.50 

Strike Program (Supplementary Material .05 of 

Options 4, Section 5). 

8Specifically, (i) $0.50 or greater where the strike 

price is less than $100, and $1 or greater where the 

strike price is between $100 and $150 for all option 

classes that participate in the Short Term Options 

Series Program; (ii) $0.50 for option classes that 

trade in one dollar increments and are in the Short 

Term Options Series Program; or (iii) $2.50 or 

greater where the strike price is above $150. See 

Amendment No. 1, supra note 6, at 34. 

9The proposal does not apply to index options. 

10The table supersedes Supplementary Material 

.03(d), which currently permits additional series to 

be opened for trading on the Exchange when the 

Exchange deems it necessary to maintain an orderly 

market, to meet customer demand, or when the 

market price of the underlying security moves 

substantially from the exercise price or prices of the 

series already opened. As a result, the Exchange 

will not be able to utilize the rule text within 

Supplementary Material .03(d) to permit additional 

series to be opened for trading on BX that have an 

expiration date more than twenty-one days from the 

listing date despite the noted circumstances when 

such additional series could otherwise be added. 

(4) Files the annual report 

electronically with the Commission 

using an appropriate process. 

By the Commission. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–03353 Filed 2–18–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91125; File No. SR–BX– 

2020–032] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing of 

Amendment No. 1 and Order Granting 

Accelerated Approval of Proposed 

Rule Change, as Modified by 

Amendment No. 1, To Amend Options 

4, Section 5, To Limit Short Term 

Options Series Intervals Between 

Strikes That Are Available for Quoting 

and Trading on BX 

February 12, 2021. 

I. Introduction 

On November 6, 2020, Nasdaq BX, 

Inc. (‘‘BX’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend Options 4, Section 5, ‘‘Series of 

Options Contracts Open for Trading’’ to 

limit Short Term Options Series 

intervals between strikes which are 

available for quoting and trading on BX. 

The proposed rule change was 

published for comment in the Federal 

Register on November 16, 2020.3 On 

December 23, 2020, pursuant to Section 

19(b)(2) of the Act,4 the Commission 

extended the time period within which 

to approve the proposed rule change, 

disapprove the proposed rule change, or 

institute proceedings to determine 

whether to approve or disapprove the 

proposed rule change, to February 14, 

2021.5 On February 10, 2021, the 

Exchange filed Amendment No. 1 to the 

proposed rule change, which replaced 

and superseded the proposed rule 

change in its entirety.6 The Commission 

is publishing this notice to solicit 

comments on the proposed rule change, 

as modified by Amendment No. 1, from 

interested persons, and is approving the 

proposed rule change, as modified by 

Amendment No. 1, on an accelerated 

basis. 

II. Description of the Proposed Rule 

Change 

Currently, under the Short Term 

Options Series (‘‘STOS’’) program (also 

referred to as the ‘‘weekly series’’ or 

‘‘weeklies’’), BX may open for trading 

on a Thursday or Friday (‘‘Short Term 

Option Opening Date’’) a series of 

options that expires on each of the next 

five Fridays that are business days and 

are not Fridays in which monthly 

options series or Quarterly Options 

series expire (‘‘Short Term Option 

Expiration Dates’’).7 Weeklies currently 

may have strike price intervals of $0.50, 

$1, or $2.50.8

In the proposed rule change, as 

modified by Amendment No. 1, the 

Exchange proposes to amend its STOS 

Program to increase, and thereby limit, 

the intervals between strikes in multiply 

listed equity options (excluding options 

on Exchange Traded Funds (‘‘ETFs’’) 

and Exchange Traded Notes (‘‘ETNs’’)) 

under the STOS program for those 

weeklies that have an expiration date 

more than twenty-one days from the 

listing date.9 Accordingly, the proposal 

seeks to reduce the number of strikes in 

the weeklies furthest from expiration. 

Specifically, the new applicable strike 

intervals will be as follows: 10

Tier Customer-range options average daily 

volume 

Underlying share price 

Less than 

$25 

$25 to less 

than $75 

$75 to less 

than $150 

$150 to less 

than $500 

$500 or 

greater 

1 ........................ greater than 5,000 ................................ $0.50 $1.00 $1.00 $5.00 $5.00 

2 ........................ 1,000 to 5,000 ....................................... 1.00 1.00 1.00 5.00 10.00 

3 ........................ 0 to 1,000 .............................................. 2.50 5.00 5.00 5.00 10.00 


tkelley on DSKBCP9HB2PROD with NOTICES