Federal Register / Vol. 89, No. 15 / Tuesday, January 23, 2024 / Notices 4355 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4 15 U.S.C. 78s(b)(1). 

5 17 CFR 240.19b–4. 

6See IEX Rule 1.160(s). 

7See Securities Exchange Act Release No. 97398 

(April 28, 2023), 88 FR 28620 (May 4, 2023) 

(‘‘Remote Inspections Pilot Program Proposal’’); 

Securities Exchange Act Release No. 98982 

(November 17, 2023), 88 FR 82464 (November 24, 

2023) (‘‘Remote Inspections Pilot Program Approval 

Order’’) (SR–FINRA–2023–007). 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4. 

10SEC staff and FINRA have 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) 

and FINRA Regulatory Notice 11–54 (November 

2011) (joint SEC and FINRA guidance stating, a 

‘‘broker-dealer must conduct onsite inspections of 

each of its office locations; [OSJs] and non-OSJ 

branches that supervise non-branch locations at 

least annually, all non-supervising branch offices at 

least every three years; and non-branch offices 

periodically.’’) (footnote defining an OSJ omitted). 

See also SEC Division of Market Regulation, Staff 

Legal Bulletin No. 17: Remote Office Supervision 

(March 19, 2004) (stating, in part, that brokerdealers 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). 

11 In the Remote Inspections Pilot Program 

Proposal, FINRA stated it will announce the 

effective date of the program in a Regulatory Notice 

(‘‘Pilot Program Regulatory Notice’’). See Remote 

Inspections Pilot Program Proposal, 88 FR 28620, 

28635. 

12See Securities Exchange Act Release No. 92222 

(June 22, 2021), 86 FR 34069 (June 28, 2021) (SR– 

IEX–2021–09) (providing remote inspection relief to 

Members for calendar year 2021), Securities 

Exchange Act Release No. 96460 (December 7, 

2022), 87 FR 76222 (December 13, 2022) (SR–IEX– 

2022–12) (providing remote inspection relief to 

Members for calendar year 2022), and Securities 

Exchange Act Release No. 96606 (January 6, 2023), 

88 FR 2140 (January 12, 2023) (SR–IEX–2022–14) 

(providing remote inspection relief to Members for 

calendar year 2023). 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01189 Filed 1–22–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99383; File No. SR–IEX– 

2024–02] 

Self-Regulatory Organizations; 

Investors Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Extend the 

Temporary Remote Inspection Relief to 

IEX Members To Include Calendar Year 

2024 Inspection Obligations Through 

the Earlier of the Effective Date of the 

Recently Approved FINRA Pilot 

Program on Remote Inspections, or 

June 30, 2024 

January 17, 2024. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that, on January 

8, 2024, the Investors Exchange LLC 

(‘‘IEX’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Pursuant to the provisions of Section 

19(b)(1) under the Act,4 and Rule 19b– 

4 thereunder,5 the Exchange is filing 

with the Commission a proposed rule 

change to amend Supplementary 

Material .15 of IEX Rule 5.110 

(Supervision) to extend the temporary 

remote inspection relief to IEX 

Members 6 to include calendar year 

2024 inspection obligations through the 

earlier of the effective date of the 

recently-approved FINRA pilot program 

on remote inspections (the ‘‘Remote 

Inspections Pilot Program’’) 7, or June 

30, 2024. 

The Exchange has designated this 

proposed rule change as ‘‘noncontroversial’’ under Section 19(b)(3)(A) 

of the Act 8 and provided the 

Commission with the notice required by 

Rule 19b–4(f)(6) thereunder.9

The text of the proposed rule change 

is available at the Exchange’s website at 

https://www.iexexchange.io/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of 

and basis for the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

IEX proposes to extend the temporary 

remote inspection relief of 

Supplementary Material .15 to IEX Rule 

5.110 to IEX Members to include 

calendar year 2024 inspection 

obligations through the earlier of the 

effective date of the Remote Inspections 

Pilot Program, or June 30, 2024. IEX 

makes this proposal to provide its 

Members continuity related to 

conducting inspections as part of 

satisfying the obligations of IEX Rule 

5.110(c) (Internal Inspections) at offices 

and locations requiring inspection 

during the first half of calendar year 

2024.10 IEX believes the proposed 

extension is necessary to provide firms 

the time to prepare for the 

implementation of the Remote 

Inspections Pilot Program. The SEC 

approved the Remote Inspections Pilot 

Program on November 17, 2023, but 

FINRA has not yet announced the 

implementation timeline.11 IEX plans to 

make a rule filing to incorporate the 

Remote Inspections Pilot Program into 

IEX Rule 5.110 (and specify the end date 

of the temporary remote inspection 

relief of Supplementary Material .15 to 

IEX Rule 5.110) after FINRA provides 

details about the implementation plan 

in the Pilot Program Regulatory Notice. 

The COVID–19 pandemic caused a 

host of operational disruptions to the 

securities industry and impacted IEX 

Members, regulators, investors, and 

other stakeholders. In response to the 

pandemic, IEX adopted Supplementary 

Material .15 of IEX Rule 5.110 to 

provide Members the temporary option 

of satisfying their inspection obligations 

for offices of supervisory jurisdiction, 

branch offices, or non-branch locations 

under IEX Rule 5.110 (Supervision) 

remotely for calendar years 2021, 2022, 

and 2023, subject to specified 

conditions,12 due to the logistical 

challenges of going on-site while public 

health and safety concerns related to 

COVID–19 persisted. Supplementary 

Material .15 of IEX Rule 5.110 lapsed on 

December 31, 2023. 

The pandemic accelerated the 

industry’s adoption of a broad remote 

work environment and IEX recognizes 

that the pandemic has profoundly 

changed attitudes on where work can 

occur. As a result of this change many 

firms have adopted, in varying scale, 

hybrid work models involving 

personnel who are working at least part 

time from alternative work locations 

(e.g., private residences). As part of an 

effort to modernize its rules to reflect 

evolving technologies and business 

models, in April 2023, FINRA filed the 


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4356 Federal Register / Vol. 89, No. 15 / Tuesday, January 23, 2024 / Notices 

13See supra note 7. 

14See supra note 7. 

15See supra note 11. 

16See supra note 10. 

17While the World Health Organization declared 

an end to COVID–19 as a public health emergency, 

COVID–19 remains an ongoing public health 

problem. See WHO Director-General, Statement on 

the fifteenth meeting of the IHR (2005) Emergency 

Committee on the COVID–19 pandemic (May 5, 

2023) (stating, in part, that the ‘‘[w]hile the global 

risk assessment remains high, there is evidence of 

reducing risks to human health’’), https://

www.who.int/news/item/05-05-2023-statement-onthe-fifteenth-meeting-of-the-international-healthregulations-(2005)-emergency-committee-regardingthe-coronavirus-disease-(covid-19)-pandemic (last 

visited January 8, 2024); see also Benjamin J. Silk, 

et al., COVID–19 Surveillance After Expiration of 

the Public Health Emergency Declaration—United 

States, May 11, 2023 (stating, among other things, 

that ‘‘[a]lthough COVID–19 no longer poses the 

societal emergency that it did when it first emerged 

in late 2019, COVID–19 remains an ongoing public 

health challenge. By April 26, 2023, more than 104 

million U.S. COVID–19 cases, 6 million related 

hospitalizations, and 1.1 million COVID–19– 

associated deaths were reported to CDC[.]’’), 72 

MMWR Morb Mortal Wkly Rep, 523–528 (2023), 

https://www.cdc.gov/mmwr/volumes/72/wr/pdfs/ 

mm7219e1-H.pdf (last visited January 8, 2024). 

Recent data on hospitalizations from the CDC 

indicate that the number of hospitalizations is up 

20.4% in the most recent week (as of December 24 

to December 30, 2023). See Centers for Disease 

Control and Prevents (‘‘CDC’’), COVID Data Tracker, 

Data Update for the United States, https://covid.cdc.

gov/covid-data-tracker/#datatracker-home (last 

visited January 8, 2024). 

18Those standards provide, in part, that based on 

the factors set forth under that supplementary 

material, members ‘‘may need to provide for more 

frequent review of certain locations.’’ 

19 15 U.S.C. 78f. 

20 15 U.S.C. 78f(b)(5). 

Remote Inspections Pilot Program 

Proposal with the Commission to 

establish a voluntary, three-year remote 

inspections pilot program that would 

allow eligible firms to conduct 

inspections of all or some offices or 

locations, remotely, subject to the 

specified terms therein.13

On November 17, 2023, the 

Commission approved the Remote 

Inspections Pilot Program.14 The 

Remote Inspections Pilot Program is 

designed to allow both FINRA and the 

firms that are planning to participate in 

the Remote Inspections Pilot Program 

additional time to develop the 

technology and processes that will be 

essential to operationalize compliance 

with the Remote Inspections Pilot 

Program’s requirements. For example, 

firms will need to conduct an eligibility 

review, and conduct and document a 

risk assessment for each office and 

location that they elect to inspect 

remotely and implement technology to 

collect and report the required data and 

information to FINRA. Further, FINRA 

guidance will be needed to guide 

implementation in various 

circumstances.15 Firms that do not elect 

to participate or would be excluded 

from participating in the Remote 

Inspections Pilot Program will also be 

impacted and would need additional 

time to staff, schedule, and resume onsite inspections of offices or locations 16

within the context of some lingering 

health concerns and fluid work 

locations.17

In sum, as calendar year 2024 begins, 

the proposed extension of 

Supplementary Material .15 to IEX Rule 

5.110 would provide firms continuity in 

meeting their inspection obligations and 

would allow FINRA time to 

operationalize the Remote Inspections 

Pilot Program. Relatedly, the proposed 

extension would give time for: (1) firms 

that are planning to participate in the 

Remote Inspections Pilot Program to 

implement the processes needed to 

comply with the proposed terms 

therein; and (2) firms that are not 

planning to participate or are excluded 

from participating in the Remote 

Inspections Pilot Program, to prepare to 

resume conducting on-site inspections 

of their offices and locations as part of 

satisfying the obligations of IEX Rule 

5.110(c). 

IEX is not proposing to amend the 

other conditions of the temporary rule. 

The current conditions of the 

supplementary material for firms that 

elect to conduct remote inspections 

would remain unchanged: such firms 

must amend or supplement their written 

supervisory procedures for remote 

inspections, use remote inspections as 

part of an effective supervisory system, 

and maintain the required 

documentation. IEX continues to believe 

this temporary remote inspection option 

is a reasonable alternative for firms to 

fulfill their IEX Rule 5.110(c) obligations 

under the current circumstances 

described above. This proposed 

extension is designed to maintain the 

investor protection objectives of the 

inspection requirements under these 

circumstances. As part of those 

objectives, firms should consider 

whether, under their particular 

operating conditions, continued reliance 

on Supplementary Material .15 to IEX 

Rule 5.110 to conduct remote 

inspections would be reasonable under 

the circumstances. For example, firms 

with offices that are open to the public 

or that are otherwise doing business as 

usual should consider whether some inperson inspections would be feasible 

and add value to the firms’ supervisory 

program. IEX emphasizes that the 

inspection requirement is one aspect of 

a firm’s overall supervisory system, and 

that the inspection, whether done 

remotely under Supplementary Material 

.15 to IEX Rule 5.110 or in accordance 

with the proposed Remote Inspections 

Pilot Program, or on-site, would be held 

to the existing standards of review 

under Supplementary Material .12 to 

IEX Rule 5.110 (Standards for 

Reasonable Review).18

2. Statutory Basis 

IEX believes that the proposed rule 

change is consistent with the provisions 

of Section 6(b) 19 of the Act in general, 

and furthers the objectives of Section 

6(b)(5) of the Act 20 in particular, in that 

it is designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, 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. The 

Exchange’s rule proposal is intended to 

harmonize IEX’s supervision rules, 

specifically with respect to the 

requirements for inspections of 

Members’ branch offices and other 

locations, with those of FINRA, on 

which they are based. Consequently, the 

proposed change will conform the 

Exchange’s rules to changes made to 

corresponding FINRA rules, thus 

promoting application of consistent 

regulatory standards with respect to 

rules that FINRA enforces pursuant to 

its regulatory services agreement with 

the Exchange. The proposed rule change 

would also avoid a potential lapse in the 

temporary relief while FINRA prepares 

the implementation of its recently 

approved Remote Inspections Pilot 

Program and allow firms time to adapt 

to the pilot program, and prepare for 

conducting on-site inspections, as 

applicable, while continuing to serve 

and promote the protection of investors 

and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

IEX does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change is not designed to 

address any competitive issue but to 

align the Exchange’s rules with those of 

FINRA, which will assist FINRA in its 

oversight work done pursuant to a 

regulatory services agreement with IEX. 

The proposed rule change will also 

provide for consistent application of the 

Exchange’s supervision rules with those 

of FINRA, on which they are based. 

Consequently, the Exchange does not 

believe that the proposed change 

implicates competition at all. 


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Federal Register / Vol. 89, No. 15 / Tuesday, January 23, 2024 / Notices 4357 

21 15 U.S.C. 78s(b)(3)(A). 

22 17 CFR 240.19b–4(f)(6). 

23 17 CFR 240.19b–4(f)(6)(iii). 

24 17 CFR 240.19b–4(f)(6). 

25 17 CFR 240.19b–4(f)(6)(iii). 

26For 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). 

27 15 U.S.C. 78s(b)(2)(B). 28 17 CFR 200.30–3(a)(12). 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments on the proposed 

rule change were neither solicited nor 

received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has designated this rule 

filing as non-controversial under 

Section 19(b)(3)(A) 21 of the Act and 

Rule 19b–4(f)(6) 22 thereunder. Because 

the 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 and Rule 19b– 

4(f)(6) thereunder. In addition, the 

Exchange provided the Commission 

with 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.23

The Exchange believes that this filing 

is non-controversial because it raises no 

novel issues and is consistent with 

FINRA rules previously approved by or 

filed with the Commission. In 

particular, the purpose of the proposed 

rule change is to harmonize with and 

conform to FINRA rules. The Exchange 

believes that the proposal promotes the 

protection of investors as it will 

harmonize the Exchange’s supervision 

rules with those of FINRA, which will 

simplify the oversight process 

conducted by FINRA pursuant to a 

regulatory services agreement with the 

Exchange. Moreover, the Exchange does 

not believe that the proposed rule 

change implicates competition at all 

because the proposed change aligns the 

Exchange’s rules with those of FINRA, 

which will assist it in its oversight work 

done pursuant to such regulatory 

services agreement. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 24 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),25 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 to permit the Exchange 

to harmonize its rules with FINRA, as 

described herein, upon effectiveness of 

the proposed rule filing. 

Since the proposed rule change would 

address IEX Members’ ability to conduct 

remote inspections for any inspections 

to be conducted through the earlier of 

the effective date of the Remote 

Inspections Pilot Program, or June 30, 

2024, waiving the 30-day operative 

delay would help ensure that IEX 

Members could plan their 2024 

inspection program and conduct remote 

inspections under a harmonized rule 

set, while at the same time helping 

ensure that its Members continue to 

perform their supervisory obligations. 

The Exchange stated that the proposed 

rule change does not present any new or 

novel issues because IEX is harmonizing 

its supervision rules with those of 

FINRA, on which they are based. IEX 

further stated that the proposed rule 

change would provide only temporary 

relief during the period in which IEX 

harmonizes its supervision rules with 

FINRA. For these reasons, the 

Commission believes that waiver of the 

30-day operative delay for this proposed 

rule change is consistent with the 

protection of investors and the public 

interest. Accordingly, the Commission 

hereby waives the 30-day operative 

delay and designates the proposed rule 

change operative upon filing.26

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 

under Section 19(b)(2)(B) 27 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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

IEX–2024–02 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–IEX–2024–02. 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 (https://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. Do not include 

personal identifiable information in 

submissions; you should submit only 

information that you wish to make 

available publicly. We may redact in 

part or withhold entirely from 

publication submitted material that is 

obscene or subject to copyright 

protection. All submissions should refer 

to file number SR–IEX–2024–02 and 

should be submitted on or before 

February 13, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01202 Filed 1–22–24; 8:45 am] 

BILLING CODE 8011–01–P 


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