Federal Register / Vol. 89, No. 203 / Monday, October 21, 2024 / Notices 84221 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 60409 

(July 30, 2009), 74 FR 39353, (August 6, 2009) (File 

No. 4–587). The 17d–2 Agreement includes a 

certification by NYSE that states that the 

requirements contained in certain Exchange rules 

are identical to, or substantially similar to, certain 

FINRA rules that have been identified as 

comparable. 

5See Securities Exchange Act Release No. 73554 

(November 6, 2014), 79 FR 67508 (November 13, 

2014) (SR–NYSE–2014–56). 

6See NYSE Rule 3110(a). 

7See NYSE Rule 3110(c)(1)(A). 

8See NYSE Rule 3110(c)(1)(B). 

9See NYSE Rules 3110(c)(1)(C) and 3110.13 

(General Presumption of Three-Year Limit for 

Periodic Inspection Schedules). 

10See NYSE Rule 3110(c)(2). 

11See NYSE Rule 3110(c)(2)(A). 

12See NYSE Rule 3110(c)(3). Rule 3110(c)(3) 

provides a limited exception from this requirement 

if a firm determines compliance is not possible 

either because of the firm’s size or its business 

model. See Rule 3110.14 (Exception to Persons 

Prohibited from Conducting Inspections). 

13See Securities Exchange Act Release No. 98982 

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

2023) (File No. SR–FINRA–2023–007) (Order 

Approving a Proposed Rule Change To Adopt 

Supplementary Material .18 (Remote Inspections 

Pilot Program) Under FINRA Rule 3110 

(Supervision)). Pursuant to FINRA Rule 3110.18(m), 

on the sunset of Rule 3110.18, if FINRA Rule 

Continued 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101325; File No. SR–NYSE– 

2024–64] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Harmonize 

NYSE Rule 3110 

October 15, 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 October 

3, 2024, New York Stock Exchange LLC 

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

the Securities and Exchange 

Commission (the ‘‘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 

The Exchange proposes to harmonize 

NYSE Rule 3110 (Supervision) with 

certain changes by the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) to FINRA Rule 3110 to 

permit eligible member organizations to 

participate in FINRA’s remote 

inspections program (‘‘FINRA Pilot 

Program’’) and to adopt FINRA’s 

Residential Supervisory Location 

(‘‘RSL’’) classification. The proposed 

rule change is available on the 

Exchange’s website at www.nyse.com, at 

the principal office of the Exchange, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to harmonize 

NYSE Rule 3110 (Supervision) with 

certain changes by FINRA to FINRA 

Rule 3110 to permit eligible member 

organizations to participate in the 

FINRA Pilot Program and to adopt 

FINRA’s RSL classification. The 

proposed rule change would harmonize 

the Exchange’s office and other location 

inspection rules with those of FINRA 

and thus promote uniform inspection 

standards across the securities industry. 

Additionally, because proposed 

Supplementary Material .18 to NYSE 

Rule 3110 and proposed Supplementary 

Material .19 to NYSE Rule 3110 would 

be substantially similar to FINRA Rule 

3110.18 and FINRA Rule 3110.19, 

respectively, this rule change enables 

NYSE Rule 3110 to continue to be 

incorporated into the agreement 

between NYSE and FINRA to allocate 

regulatory responsibility for common 

rules (the ‘‘17d–2 Agreement’’).4

Background and Proposed Rule Change 

NYSE Rule 3110 is based on FINRA 

Rule 3110 5 and requires member 

organizations to establish and maintain 

a system to supervise the activities of 

each associated person that is 

reasonably designed to achieve 

compliance with applicable securities 

laws and regulations, and with 

applicable Exchange rules, and sets 

forth the minimum requirements for 

such supervisory system.6 Under NYSE 

Rule 3110, final responsibility for 

proper supervision rests with the 

member organization. 

As part of an overall supervisory 

system, member organizations must 

conduct inspections of each of their 

offices or locations on a designated 

frequency depending on the 

classification of the location or the 

nature of the activities that take place: 

an office of supervisory jurisdiction 

(‘‘OSJ’’) and supervisory branch offices 

must be inspected at least annually; 7

non-supervisory branch offices, at least 

every three years; 8 and non-branch 

locations on a periodic schedule, 

presumed to be at least every three 

years.9 Moreover, member organizations 

must retain a written record of the date 

upon which each review and inspection 

occurred, reduce a location’s inspection 

to a written report and keep each 

inspection report on file either for a 

minimum of three years or, if the 

location’s inspection schedule is longer 

than three years, until the next 

inspection report has been written.10 If 

applicable to the location being 

inspected, the inspection report must 

include the testing and verification of 

the member organization’s policies and 

procedures, including supervisory 

policies and procedures, in specified 

areas.11 Finally, the rule requires a 

member to ensure that the person 

conducting the inspection is not an 

associated person assigned to the 

location or is not directly or indirectly 

supervised by, or otherwise reporting to, 

an associated person assigned to the 

location.12 The factors governing what 

constitutes a reasonable review are set 

out in NYSE Rule 3110.12 (Standards 

for Reasonable Review). 

In 2023, recognizing how operations 

and business models within the 

financial services industry have evolved 

with changes in technology that were 

accelerated by the COVID–19 pandemic, 

including in particular the 

implementation by a large number of 

firms of a hybrid work environment 

during the public health crisis, FINRA 

adopted two amendments to FINRA 

Rule 3110. First, FINRA established a 

voluntary, three-year remote inspections 

pilot program to allow eligible members 

to fulfill their FINRA Rule 3110(c)(1) 

inspection obligation of qualified 

branch offices, including OSJs and nonbranch locations remotely, without an 

on-site visit to such offices or locations 

subject to certain conditions and 

criteria.13 The FINRA Pilot Program is 


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3110.18 has not already expired by its own terms, 

FINRA Rule 3110.18 will automatically sunset on 

June 30, 2024. 

14See Securities Exchange Act Release No. 98980 

(November 17, 2023), 88 FR 82447 (November 24, 

2023) (File No. SR–FINRA–2023–006) (Notice of 

Filing of Amendment No. 2 and Order Granting 

Accelerated Approval of a Proposed Rule Change, 

as Modified by Amendment Nos. 1 and 2, To Adopt 

Supplementary Material .19 (Residential 

Supervisory Location) Under FINRA Rule 3110 

(Supervision)). 

15The Exchange would add new Supplementary 

Material .17 marked ‘‘Reserved’’ in order to 

maintain consistency with FINRA. 

16Currently, all NYSE member organizations with 

one exception are also FINRA members. 

17Where the Exchange states herein that only 

conforming and technical changes have been made, 

the Exchange is referring to instances in which it 

changed FINRA’s ‘‘member’’ to the Exchange’s 

equivalent ‘‘member organization;’’ changed crossreferences to FINRA rules to cross-references to 

Exchange rules unless there was no equivalent 

NYSE rule; and made other non-substantive 

technical or grammatical changes. 

18See proposed NYSE Rule 3110.18(b)(2)(A), 

mirroring FINRA Rule 3110.18(b)(2)(A). 

19See proposed NYSE Rule 3110.18(b)(2)(B), 

mirroring FINRA Rule 3110.18(b)(2)(B). 

20See proposed NYSE Rule 3110.18(b)(2)(C), 

mirroring FINRA Rule 3110.18(b)(2)(C). 

21See proposed NYSE Rule 3110.18(b)(2)(D), 

mirroring FINRA Rule 3110.18(b)(2)(D). 

22See proposed NYSE Rule 3110.18(b)(2)(E), 

mirroring FINRA Rule 3110.18(b)(2)(E). 

set forth in Supplementary Material .18 

of FINRA Rule 3110. Second, FINRA 

adopted new Supplementary Material 

.19 to FINRA Rule 3110 that treats an 

associated person’s private residence 

where specified supervisory activities 

are conducted, subject to certain 

safeguards and limitations, as a nonbranch location (i.e., unregistered 

office). As a non-branch location under 

FINRA Rule 3110(c), the RSL would be 

subject to inspections on a regular 

periodic schedule instead of the annual 

inspection currently required for every 

OSJ and supervisory branch offices.14

The Exchange proposes to incorporate 

each of these amendments into NYSE 

Rule 3110, as follows. 

NYSE Rule 3110, Supplementary 

Material .18 15

The Exchange proposes, consistent 

with current FINRA Rule 3110, 

Supplementary Material .18, to adopt 

new Supplementary Material .18 to 

NYSE Rule 3110 in order to provide 

eligible member organizations that are 

also FINRA members 16 with the 

flexibility to opt into the FINRA Pilot 

Program, consisting of a voluntary, 

three-year remote inspections pilot 

program to fulfill their office inspection 

obligations under NYSE Rule 3110(c) by 

conducting inspections of eligible OSJs, 

branch offices, and non-branch 

locations remotely without an on-site 

visit to such locations, subject to certain 

conditions and criteria. The 

requirements in connection with the 

participation in the FINRA Pilot 

Program under proposed 

Supplementary Material .18 would 

mirror in all material respects the 

requirements with respect to a FINRA 

member’s participation under FINRA 

rules in the FINRA Pilot Program. 

Member organizations opting into the 

FINRA Pilot Program would do so 

pursuant to the provisions of proposed 

Supplementary Material .18 and 

through the mechanisms and processes 

established by FINRA in connection 

with the FINRA Pilot Program. The 

proposed rule change also re-orders and 

streamlines some of the provisions of 

FINRA Rule 3110.18, as described 

below. 

Proposed NYSE Rule 3110.18(a) (Scope) 

Proposed Supplementary Material 

.18(a) of NYSE Rule 3110 would 

establish the standards by which a 

member organization that is also a 

FINRA member may participate in the 

FINRA Pilot Program. 

Proposed subsection (a) would permit 

member organizations to avail 

themselves of the FINRA Pilot Program 

for the required inspection of OSJs, 

branch offices and non-branch locations 

pursuant to, as applicable, paragraphs 

(c)(1)(A), (B) and (C) of NYSE Rule 3110, 

for a period starting on the effective date 

of the proposed rule filing and expiring 

on June 30, 2027. If FINRA extends the 

pilot program and the proposed 

Supplementary Material .18 is not 

amended to allow continued 

participation by member organizations 

in the FINRA Pilot Program, member 

organizations would not be able to 

participate in the FINRA Pilot Program 

after the prescribed provisions under 

the proposed Supplementary Material 

sunset. 

With the exception of conforming and 

technical changes,17 proposed NYSE 

Rule 3110.18(a) is substantially the 

same as FINRA Rule 3110.18(a). 

Proposed NYSE Rule 3110.18(b) (Risk 

Assessment) 

Proposed Supplementary Material 

.18(b) of NYSE Rule 3110 governing risk 

assessment would outline the need for 

member organizations to undertake a 

risk assessment in order to participate in 

the FINRA Pilot Program. 

Proposed Supplementary Material 

.18(b)(1) would set forth the applicable 

standard for review and would provide 

that a member organization could elect 

to conduct the applicable inspection 

remotely, without an on-site visit for an 

office or location, when such member 

organization reasonably determines that 

the purposes of the Supplementary 

Material can be accomplished by 

conducting such required inspection 

remotely. The member organization 

would be required to develop a 

reasonable risk-based approach to using 

remote inspections and conduct and 

document a risk assessment for an office 

or location prior to conducting a remote 

inspection. The risk assessment must 

document the factors considered, 

including, among other things, the 

factors set forth in current NYSE Rule 

3110.12 such as a firm’s size, 

organizational structure, scope of 

business activities, number and location 

of the firm’s offices, the nature and 

complexity of the products and services 

offered by the firm, the volume of 

business done, the number of associated 

persons assigned to a location, the 

disciplinary history of registered 

representatives or associated persons, 

and any indicators of irregularities or 

misconduct (i.e., ‘‘red flags’’), and must 

take into account any higher-risk 

activities that take place at, or higherrisk associated persons that are assigned 

to, that office or location. Additionally, 

proposed Supplementary Material 

.18(b)(1) would require a member 

organization to conduct an on-site 

inspection on the required cycle for 

such offices or locations that are 

ineligible for remote office inspections 

because of not having met the firm or 

location level requirements under 

proposed Supplementary Material .18(f) 

or (g), respectively. Notwithstanding 

proposed Supplementary Material .18, a 

member organization would remain 

subject to the other requirements of 

NYSE Rule 3110(c). 

Proposed Supplementary Material 

.18(b)(2) would address other risk 

assessment factors and would provide 

that when conducting the risk 

assessment of each office or location in 

accordance with proposed paragraph 

(b)(1) of the Supplementary Material, a 

member organization must consider, 

among other things, the following 

factors with respect to an office or 

location in making its risk assessment 

for remotely inspecting an office or 

location: 

• the volume and nature of customer 

complaints; 18

• the volume and nature of outside 

business activities, particularly 

investment-related; 19

• the volume and complexity of 

products offered; 20

• the nature of the customer base, 

including vulnerable adult investors; 21

• whether associated persons are 

subject to heightened supervision; 22


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23See proposed NYSE Rule 3110.18(b)(2)(F), 

mirroring FINRA Rule 3110.18(b)(2)(F). 

24See proposed NYSE Rule 3110.18(b)(2)(G), 

mirroring FINRA Rule 3110.18(b)(2)(G). 

25See proposed NYSE Rule 3110.18(c)(1), 

mirroring FINRA Rule 3110.18(c)(1). 

26See proposed NYSE Rule 3110.18(c)(2), 

mirroring FINRA Rule 3110.18(c)(2). 

27See proposed NYSE Rule 3110.18(c)(3), 

mirroring FINRA Rule 3110.18(c)(3). 

28See proposed NYSE Rule 3110.18(c)(4), 

mirroring FINRA Rule 3110.18(c)(4). 

29See proposed NYSE Rule 3110.18(e)(1), 

mirroring FINRA Rule 3110.18(e)(1). 

30See proposed NYSE Rule 3110.18(e)(2), 

mirroring FINRA Rule 3110.18(e)(2). 

31See proposed NYSE Rule 3110.18(f)(1)(A), 

mirroring FINRA Rule 3110.18(f)(1)(A). The 

Exchange has not adopted FINRA Rule 4111. 

32See proposed NYSE Rule 3110.18(f)(1)(B), 

mirroring FINRA Rule 3110.18(f)(1)(B). 

33See proposed NYSE Rule 3110.18(f)(1)(C), 

mirroring FINRA Rule 3110.18(f)(1)(C). 

34See proposed NYSE Rule 3110.18(f)(1)(D), 

mirroring FINRA Rule 3110.18(f)(1)(D). 

35See proposed NYSE Rule 3110.18(f)(1)(E), 

mirroring FINRA Rule 3110.18(f)(1)(E). 

36See proposed NYSE Rule 3110.18(f)(1)(F), 

mirroring FINRA Rule 3110.18(f)(1)(F). 

• failures by associated persons to 

comply with the member organization’s 

written supervisory procedures; 23 and 

• any recordkeeping violations.24

Further, proposed Supplementary 

Material .18(b)(2) would prescribe that 

member organizations should conduct 

on-site inspections or make more 

frequent use of unannounced, on-site 

inspections for high-risk offices or 

locations or when there are red flags, 

and supervisory systems must take into 

consideration any red flags when 

determining whether to conduct a 

remote inspection of an office or 

location, consistent with NYSE Rule 

3110(a). 

With the exception of conforming and 

technical changes, proposed NYSE Rule 

3110.18(b) is substantially the same as 

FINRA Rule 3110.18(b). 

Proposed NYSE Rule 3110.18(c) 

(Written Supervisory Procedures for 

Remote Inspections) 

Proposed Supplementary Material 

.18(c) would provide that, consistent 

with a member organization’s obligation 

under NYSE Rule 3110(b), a member 

organization that elects to participate in 

the FINRA Pilot Program must establish, 

maintain, and enforce written 

supervisory procedures regarding 

remote inspections that are reasonably 

designed to detect and prevent 

violations of and achieve compliance 

with applicable securities laws and 

regulations, and with applicable FINRA 

and Exchange rules. 

As proposed, reasonably designed 

procedures for conducting remote 

inspections of offices or locations must 

address, among other things: 

• the methodology, including 

technology, that may be used to conduct 

remote inspections; 25

• the factors considered in the risk 

assessment made for each applicable 

office or location pursuant to proposed 

Supplementary Material .18(b); 26

• the procedures specified in 

paragraph (h)(1)(G) and (h)(4) of FINRA 

Rule 3310.18; 27 and 

• the use of other risk-based systems 

employed generally by the member 

organization 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 FINRA 

and Exchange rules.28

With the exception of conforming and 

technical changes and the addition of a 

reference to Exchange rules in proposed 

NYSE Rule 3110.18(c)(4), proposed 

NYSE Rule 3110.18(c) is substantially 

the same as FINRA Rule 3110.18(c). 

Proposed NYSE Rule 3110.18(d) 

(Effective Supervisory System) 

Proposed NYSE Rule 3110.18(d) 

would provide that the requirement to 

conduct inspections of offices and 

locations is one part of the member 

organization’s overall obligation to have 

an effective supervisory system and 

therefore the member organization must 

maintain its ongoing review of the 

activities and functions occurring at all 

offices and locations, whether or not the 

member organization conducts 

inspections remotely. 

Further, a member organization’s use 

of a remote inspection of an office or 

location will be held to the same 

standards for review as set forth under 

NYSE Rule 3110.12. Where a member 

organization’s remote inspection of an 

office or location identifies any ‘‘red 

flags,’’ the member organization may 

need to impose additional supervisory 

procedures for that office or location or 

may need to provide for more frequent 

monitoring of that office or location, 

including potentially a subsequent onsite visit on an announced or 

unannounced basis. 

With the exception of conforming and 

technical changes, proposed NYSE Rule 

3110.18(d) is substantially the same as 

FINRA Rule 3110.18(d). 

Proposed NYSE Rule 3110.18(e) 

(Documentation Requirement) 

Proposed NYSE Rule 3110.18(e) 

would set forth documentation 

requirements for a member 

organization’s participating in the 

FINRA Pilot Program. In particular, 

proposed NYSE Rule 3110.18(e) would 

require member organizations to 

maintain and preserve a centralized 

record for each of the Pilot Years 

specified in this FINRA Pilot Program 

that separately identifies all offices or 

locations that were inspected 

remotely.29 In addition, proposed NYSE 

Rule 3110.18(e) would require 

documentation of the results of a remote 

inspection for any offices or locations 

for which the member organization 

determined to impose additional 

supervisory procedures or more 

frequent monitoring, as provided in 

proposed NYSE Rule 3110.18(d). 

Further, a member organization’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, including whether an on-site 

inspection was conducted at such office 

or location.30

With the exception of conforming and 

technical changes, proposed NYSE Rule 

3110.18(e) is substantially the same as 

FINRA Rule 3110.18(e). 

Proposed NYSE Rule 3110.18(f) (Firm 

Level Requirements) 

Proposed NYSE Rule 3110.18(f)(1) 

would set forth certain firm level 

ineligibility conditions for further 

participation in the FINRA Pilot 

Program. As proposed, a member 

organization would be ineligible to 

conduct remote inspections of any of its 

offices or locations under the FINRA 

Pilot Program if at any time during the 

Pilot Period that member organization: 

• is or becomes designated as a 

Restricted Firm under FINRA Rule 

4111; 31

• is or become designated a taping 

firm under NYSE Rule 3170; 32

• receives a notice pursuant to NYSE 

Rule 9557 regarding capital compliance 

related matters under NYSE Rules 4110 

(Capital Compliance), NYSE 4120 

(Regulatory Notification and Business 

Curtailment) or NYSE Rule 4130 

(Regulation of Activities of Section 15C 

Member Organizations Experiencing 

Financial and/or Operational 

Difficulties); 33

• is or becomes suspended from 

Exchange or FINRA membership; 34

• based on the date in the Central 

Registration Depository (CRD), had its 

FINRA membership become effective 

within the prior 12 months; 35 or 

• is or has been found by the 

Commission, FINRA or the Exchange to 

be in violation of office inspection 

obligations under FINRA or NYSE Rule 

3110(c) within the past three years.36


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37See proposed NYSE Rule 3110.18(f)(2)(A)(i), 

mirroring FINRA Rule 3110.18(f)(2)(A)(i). 

38See proposed NYSE Rule 3110.18(f)(2)(A)(ii), 

mirroring FINRA Rule 3110.18(f)(2)(A)(ii). 

39See proposed NYSE Rule 3110.18(f)(2)(A)(iii), 

mirroring FINRA Rule 3110.18(f)(2)(A)(iii). 

40See proposed NYSE Rule 3110.18(f)(2)(B)(i), 

mirroring FINRA Rule 3110.18(f)(2)(B)(i). 

41See proposed NYSE Rule 3110.18(f)(2)(B)(ii), 

mirroring FINRA Rule 3110.18(f)(2)(B)(ii). 

42See proposed NYSE Rule 3110.18(f)(2)(B)(iii), 

mirroring FINRA Rule 3110.18(f)(2)(B)(iii). 

43See proposed NYSE Rule 3110.18(g)(1)(A), 

mirroring FINRA Rule 3110.18(g)(1)(A). 

44See proposed NYSE Rule 3110.18(g)(1)(B), 

mirroring FINRA Rule 3110.18(g)(1)(B). 

45See proposed NYSE Rule 3110.18g)(1)(C), 

mirroring FINRA Rule 3110.18(g)(1)(C). 

46See proposed NYSE Rule 3110.18(g)(1)(D), 

mirroring FINRA Rule 3110.18(g)(1)(D). 

47See proposed NYSE Rule 3110.18(g)(1)(E), 

mirroring FINRA Rule 3110.18(g)(1)(E). 

48See proposed NYSE Rule 3110.18(g)(1)(F), 

mirroring FINRA Rule 3110.18(g)(1)(F). 

49See proposed NYSE Rule 3110.18(g)(1)(G), 

mirroring FINRA Rule 3110.18(g)(1)(G). 

50See proposed NYSE Rule 3110.18(g)(2)(A), 

mirroring FINRA Rule 3110.18(g)(2)(A). 

51See proposed NYSE Rule 3110.18(g)(2)(B), 

mirroring FINRA Rule 3110.18(g)(2)(B). 

52See proposed NYSE Rule 3110.18(g)(2)(C), 

mirroring FINRA Rule 3110.18(g)(2)(C). 

53See FINRA Rule 3110.18(h)(1)(A). 

54See FINRA Rule 3110.18(h)(1)(B). 

Proposed NYSE Rule 3110.18(f)(2) 

would set forth the firm-level conditions 

a member organization must satisfy as 

part of the requirements in NYSE Rule 

3110.18(b) to develop a reasonably 

designed risk-based approach to using 

remote inspections and to conduct and 

document a risk assessment for each 

office or location. Specifically, member 

organizations must have a 

recordkeeping system: 

• to make and keep current, and 

preserve records required to be made 

and kept current, and preserved under 

applicable securities laws and 

regulations, Exchange rules, and the 

member organization’s own written 

supervisory procedures under NYSE 

Rule 3110; 37

• such records are not physically or 

electronically maintained and preserved 

at the office or location subject to the 

remote inspection; 38 and 

• the member organization has 

prompt access to such records.39

In addition, member organizations 

must determine that the surveillance 

and technology tools are appropriate to 

supervise the types of risks presented by 

each such remotely supervised office or 

location. As proposed, these tools may 

include but are not limited to: 

• firm-wide tools such as electronic 

recordkeeping systems; electronic 

surveillance of email and 

correspondence; electronic trade 

blotters; regular activity-based sampling 

reviews; and tools for visual 

inspections; 40

• tools specifically applied to such 

office or location based on the activities 

of associated persons, products offered, 

restrictions on the activity of the office 

or location (including holding out to 

customers and handling of customer 

funds or securities); 41 and 

• system security tools such as secure 

network connections and effective 

cybersecurity protocols.42

With the exception of conforming and 

technical changes and the addition of a 

reference to Exchange rules in proposed 

NYSE Rule 3110.18(f)(2)(A)(i), proposed 

NYSE Rule 3110.18(f)(1) and (2) are 

substantially the same as FINRA Rule 

3110.18(f)(1) and (2). 

Proposed NYSE Rule 3110.18(g) 

(Location Level Requirements) 

Proposed NYSE Rule 3110.18(g) 

would set forth the criteria under the 

FINRA Pilot Program that would render 

a particular office or location ineligible 

for remote office inspection. As 

proposed, NYSE Rule 3110.18(g)(1), 

offices or locations would be ineligible 

for a remote office inspection if at any 

time during the FINRA Pilot Period: 

• one or more associated persons at 

such office or location is or becomes 

subject to a mandatory heightened 

supervisory plan under the rules of the 

SEC, FINRA, the Exchange or a state 

regulatory agency; 43

• one or more associated persons at 

such office or location is or becomes 

statutorily disqualified, unless such 

disqualified person has been approved 

(or is otherwise permitted pursuant to 

FINRA or Exchange rules and the 

federal securities laws) to associate with 

a member organization and is not 

subject to a mandatory heightened 

supervisory plan under paragraph 

(g)(1)(A) of this Supplementary Material 

or otherwise as a condition to approval 

or permission for such association; 44

• the firm is or becomes subject to 

FINRA Rule 1017(a)(7) as a result of one 

or more associated persons at such 

office or location; 45

• one or more associated persons at 

such office or location has an event in 

the prior three years that required a 

‘‘yes’’ response to any item in Questions 

14A(1)(a) and 2(a), 14B(1)(a) and 2(a), 

14C, 14D and 14E on Form U4; 46

• one or more associated persons at 

such office or location is or becomes 

subject to a disciplinary action taken by 

the member organization that is or was 

reportable under NYSE Rule 

4530(a)(2); 47

• one or more associated persons at 

such office or location is engaged in 

proprietary trading, including the 

incidental crossing of customer orders, 

or the direct supervision of such 

activities; 48 or 

• the office or location handles 

customer funds or securities.49

In addition, as part of the requirement 

to develop a reasonably designed riskbased approach to using remote 

inspections, and the requirement to 

conduct and document a risk 

assessment, proposed NYSE Rule 

3110.18(g)(2) would require that a 

specific office or location satisfy the 

following conditions to be eligible for 

remote inspections under the Pilot 

Program: 

• electronic communications (e.g., 

email) are made through the member 

organization’s electronic system; 50

• the associated person’s 

correspondence and communications 

with the public are subject to the firm’s 

supervision in accordance with NYSE 

Rule 3110; 51 and 

• no books or records of the member 

organization required to be made and 

kept current, and preserved under 

applicable securities laws and 

regulations, FINRA and Exchange rules 

and the member organization’s own 

written supervisory procedures under 

NYSE Rule 3110 are physically or 

electronically maintained and preserved 

at such office or location.52

With the exception of conforming and 

technical changes and the inclusion of 

references to Exchange rules in 

proposed NYSE Rule 3110.18(g)(1)(A) 

and (B), proposed NYSE Rule 

3110.18(g)(1) and (2) are substantially 

the same as FINRA Rule 3110.18(g)(1) 

and (2). 

Proposed NYSE Rule 3110.18(h) (Data 

and Information Collection 

Requirement) 

FINRA Rule 3110.18(h) outlines 

requirements for FINRA members that 

elect to participate in the Pilot Program 

to collect specific data and information 

as part of the FINRA Pilot Program. 

Specifically, FINRA Rule 3110.18(h) 

requires firms to collect specific data 

points and to provide such data and 

information to FINRA on a quarterly 

basis, in the manner and format 

determined by FINRA, including: 

• the number of offices and locations 

with an inspection completed during 

each calendar quarter; 53

• the number of those offices or 

locations in each calendar quarter that 

were inspected remotely; 54

• the number of those offices or 

locations in each calendar quarter that 

were the subject of an on-site 

inspection, as well as the number of 


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55See FINRA Rule 3110.18(h)(1)(C) and (D). 

Pursuant to FINRA Rule 3110.18(h)(1), a finding 

means a discovery made during an inspection that 

led to a remedial action or was listed on the 

member’s inspection report. 

56See FINRA Rule 3110.18(h)(1)(E). 

57See FINRA Rule 3110.18(h)(1)(F). 

58See FINRA Rule 3110.18(h)(1)(G). 

59FINRA Rule 3110.18(i) contains provisions for 

firms wishing to opt-in of the FINRA Pilot Program. 

such inspections that were on-site 

because of a finding; 55

• the number of offices and locations 

for which a remote office inspection was 

conducted in the calendar quarter that 

identified a finding, the number of 

findings, a list of the significant 

findings; 56 and 

• the number of locations for which 

an on-site inspection was conducted in 

the calendar quarter that identified a 

finding, the number of findings, and a 

list of the significant findings.57

Moreover, FINRA members are 

required to provide FINRA with their 

written supervisory procedures for 

remote inspections that account for 

escalating significant findings; new 

hires; supervising brokers with a 

significant history of misconduct; and 

outside business activities and ‘‘doing 

business as’’ (or DBA) designations.58 In 

addition, FINRA Rule 3110.18(h)(2) 

outlines requirements for FINRA 

member firms electing to participate in 

the Pilot Program to provide certain data 

and information for Pilot Year 1 if it is 

less than a full calendar year and FINRA 

Rule 3110.18(h)(3) lists additional data 

and information to be provided to 

FINRA for calendar year 2019 for 

member firms electing to participate in 

the FINRA Pilot Program. 

Proposed NYSE Rule 3110.18(h) on 

data and information collection 

requirement would require member 

organizations to comply with the FINRA 

requirements with respect to the 

collection and submission of specified 

data and information, and in the manner 

and format required under the Pilot 

Program. In addition, proposed NYSE 

Rule 3110.18(h) which substantially 

mirrors FINRA Rule 3110.18(h)(4) 

would require member organizations 

that elect to participate in the Pilot 

Program to establish, maintain and 

enforce written policies and procedures 

that are reasonably designed to comply 

with any specified data and information 

collection, and transmission 

requirements prescribed by FINRA. 

Proposed NYSE Rule 3110.18(i) 

(Election To Participate in Pilot 

Program) 

FINRA Rule 3110.18(i) specifies how 

a firm elects to participate in, or 

subsequently withdraws from, the 

FINRA Pilot Program. Specifically, 

FINRA Rule 3110.18(i) states that a firm 

must, at least five calendar days before 

the beginning of a Pilot Year, provide 

FINRA an ‘‘opt-in notice’’ in the manner 

and format determined by FINRA.59

Moreover, FINRA Rule 3110.18(i) 

specifies that a FINRA member that 

elects to withdraw from subsequent 

Pilot Years (i.e., Pilot Year 2, Pilot Year 

3, and Pilot Year 4, if applicable) shall, 

at least five calendar days before the end 

of the then current Pilot Year, provide 

FINRA with an ‘‘opt-out notice’’ in the 

manner and format determined by 

FINRA. 

Proposed NYSE Rule 3110.18(i) 

would govern elections to participate in 

the Pilot Program and would require 

member organizations electing to 

participate in the Pilot Program to make 

their election in the manner and format 

as prescribed, in accordance with 

FINRA Rule 3110.18(i). In addition, the 

proposed rule would require member 

organizations that elect to withdraw 

from the Pilot Program for subsequent 

years to provide such notice in the 

manner and format as prescribed in 

accordance with FINRA Rule 3110.18(i). 

These requirements will ensure that 

member organizations can properly 

elect to participate in, or subsequently 

withdraw from, the Pilot Program. 

Proposed NYSE Rule 3110.18(j) (Failure 

To Satisfy Conditions) 

FINRA Rule 3110.18(j) governs failure 

to satisfy conditions and addresses 

situations in which a member fails to 

satisfy the requirements for 

participating in the FINRA Pilot 

Program. Specifically, FINRA Rule 

3110.18(j) provides that FINRA 

members that fail to satisfy the 

conditions set forth to avail themselves 

of the FINRA Pilot Program, including 

the requirement to timely collect and 

submit the data and information to 

FINRA as set forth under FINRA Rule 

3110.18(h), shall be ineligible to 

participate in the FINRA Pilot Program. 

Such FINRA members would be 

required to conduct on-site inspections 

of each office and location on the 

required cycle in accordance with 

FINRA Rule 3110(c) on internal 

inspections. 

Consistent with FINRA Rule 

3110.18(j), proposed NYSE Rule 

3110.19(j) on failure to satisfy 

conditions would specify that any 

member organization that fails to satisfy 

the conditions of proposed 

Supplementary Material .18 and of 

FINRA Rule 3110.18, including the 

specified requirement to timely collect 

and submit data, would no longer be 

eligible to participate in the FINRA Pilot 

Program. Such member organizations 

would need to conduct on-site 

inspections of each office and location 

on the required cycle in accordance 

with NYSE Rule 3110(c). 

Proposed NYSE Rule 3110.18(k) 

(Determination of Ineligibility) 

FINRA Rule 3110.18(k) governs 

determinations of ineligibility and 

provides that FINRA may make a 

determination in the public interest and 

for the protection of investors that a 

FINRA member is no longer eligible to 

participate in the FINRA Pilot Program 

if the FINRA member fails to comply 

with the requirements of FINRA Rule 

3110.18. In such instances, FINRA will 

provide written notice to the FINRA 

member of such determination and the 

member would no longer be eligible to 

participate in the FINRA Pilot Program 

and must conduct on-site inspections of 

required offices and locations in 

accordance with FINRA Rule 3110(c). 

Consistent with FINRA Rule 

3110.18(k), proposed NYSE Rule 

3110.18(k) would govern ineligibility 

determinations and provide that FINRA 

or the Exchange may make a 

determination in the public interest and 

for the protection of investors that a 

member organization is no longer 

eligible to participate in the FINRA Pilot 

Program if the member organization 

fails to comply with the requirements of 

FINRA or NYSE Rule 3110.18. The 

proposed rule would further provide 

that, in such instances, FINRA or the 

Exchange will provide written notice to 

the member organization of such 

determination and the member 

organization would no longer be eligible 

to participate in the FINRA Pilot 

Program and must conduct on-site 

inspections of required offices and 

locations in accordance with FINRA or 

NYSE Rule 3110(c). With the exception 

of conforming and technical changes, 

proposed NYSE Rule 3110.18(k) is 

substantially the same as FINRA Rule 

3110.18(k). 

Proposed NYSE Rule 3110.18(l) 

(Definitions) 

The Exchange proposes to adopt 

FINRA Rule 3110.18(l) setting forth 

definitions applicable to Supplementary 

Material .18 verbatim. As proposed, 

NYSE Rule 3110.18(l) would provide 

that for purposes of the Supplementary 

Material, the term ‘‘Pilot Year’’ shall 

mean the following: 

• Pilot Year 1 is the period beginning 

on July 1, 2024 and ending on December 

31 of the same year; 

• Pilot Year 2 means the calendar 

year period following Pilot Year 1, 


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60See proposed NYSE Rule 3110.19(a)(1), 

mirroring FINRA Rule 3110.19(a)(1). 

61See proposed NYSE Rule 3110.19(a)(2), 

mirroring FINRA Rule 3110.19(a)(2). 

62See proposed NYSE Rule 3110.19(a)(3), 

mirroring FINRA Rule 3110.19(a)(3). 

63See proposed NYSE Rule 3110.19(a)(4), 

mirroring FINRA Rule 3110.19(a)(4). 

64See proposed NYSE Rule 3110.19(a)(5), 

mirroring FINRA Rule 3110.19(a)(5). 

65See proposed NYSE Rule 3110.19(a)(6), 

mirroring FINRA Rule 3110.19(a)(6). 

66See proposed NYSE Rule 3110.19(a)(7), 

mirroring FINRA Rule 3110.19(a)(7). 

67See proposed NYSE Rule 3110.19(a)(8), 

mirroring FINRA Rule 3110.19(a)(8). 

68See proposed NYSE Rule 3110.19(a)(9), 

mirroring FINRA Rule 3110.19(a)(9). 

69See proposed NYSE Rule 3110.19(a)(10), 

mirroring FINRA Rule 3110.19(a)(10). 

70See proposed NYSE Rule 3110.19(b)(1), 

mirroring FINRA Rule 3110.19(b)(1). 

71See proposed NYSE Rule 3110.19(b)(2), 

mirroring FINRA Rule 3110.19(b)(2). 

72See proposed NYSE Rule 3110.19(b)(3), 

mirroring FINRA Rule 3110.19(b)(3). 

73See proposed NYSE Rule 3110.19(b)(4), 

mirroring FINRA Rule 3110.19(b)(4). 

74See proposed NYSE Rule 3110.19(b)(5), 

mirroring FINRA Rule 3110.19(b)(5). 

75See proposed NYSE Rule 3110.19(b)(6), 

mirroring FINRA Rule 3110.19(b)(6). 

76See proposed NYSE Rule 3110.19(b)(7), 

mirroring FINRA Rule 3110.19(b)(7). 

beginning on January 1 and ending on 

December 31; 

• Pilot Year 3 means the calendar 

year period following Pilot Year 2, 

beginning on January 1 and ending on 

December 31; and 

• If applicable, where Pilot Year 1 

covers a period that is less than a full 

calendar year, then Pilot Year 4 means 

the period following Pilot Year 3, 

beginning on January 1 and ending on 

June 30, 2027. 

Finally, FINRA also adopted FINRA 

Rule 3110.18(m) describing the sunset 

of FINRA Rule 3110.17, which the 

Exchange has not adopted. The 

Exchange accordingly does not propose 

to incorporate a provision similar to 

FINRA Rule 3110.18(m). 

NYSE Rule 3110, Supplementary 

Material .19 

NYSE Rule 3110.19(a) (Conditions for 

Designation as a Residential 

Supervisory Location (RSL) 

FINRA Rule 3110.19(a) lists the 

conditions for FINRA members to 

designate an office or location as an 

RSL. Proposed NYSE Rule 3110.19(a) 

would set forth the conditions for 

designation as an RSL that would mirror 

the conditions set forth in FINRA Rule 

3110.19(a) for member organizations to 

designate a location that is the 

associated person’s private residence 

where specified supervisory activities 

are conducted as an RSL. 

As proposed, NYSE Rule 3110.19 

would provide that, notwithstanding 

any other provisions of NYSE Rule 

3110(e) and subject to paragraphs (b) 

through (d) of the proposed 

Supplementary Material, a location that 

is the associated person’s private 

residence where supervisory activities 

are conducted, including those 

described in NYSE Rule 3110(e)(1)(D) 

through (G) or in NYSE Rule 

3110(e)(2)(B), shall be considered for 

those activities a non-branch location, 

provided that: 

• only one associated person, or 

multiple associated persons who reside 

at that location and are members of the 

same immediate family, conduct 

business at the location; 60

• the location is not held out to the 

public as an office; 61

• the associated person does not meet 

with customers or prospective 

customers at the location; 62

• any sales activity that takes place at 

the location complies with the 

conditions set forth under NYSE Rule 

3110(e)(2)(A)(ii) or (iii); 63

• neither customer funds nor 

securities are handled at that location; 64

• the associated person is assigned to 

a designated branch office, and such 

designated branch office is reflected on 

all business cards, stationery, retail 

communications and other 

communications to the public by such 

associated person; 65

• the associated persons 

correspondence and communications 

with the public are subject to the firm’s 

supervision in accordance with this 

Rule; 66

• the associated persons electronic 

communications (e.g., email) are made 

through the member organization’s 

electronic system; 67

• (A) the member organization must 

have a recordkeeping system to make 

and keep current, and preserve records 

required to be made and kept current, 

and preserved under applicable 

securities laws and regulations, 

Exchange rules, and the member 

organization’s own written supervisory 

procedures under NYSE Rule 3110; (B) 

such records are not physically or 

electronically maintained and preserved 

at the office or location; and (C) the 

member organization has prompt access 

to such records; 68 and 

• the member organization must 

determine that its surveillance and 

technology tools are appropriate to 

supervise the types of risks presented by 

each Residential Supervisory Location, 

and these tools may include but are not 

limited to: (A) firm-wide tools such as, 

electronic recordkeeping system; 

electronic surveillance of email and 

correspondence; electronic trade 

blotters; regular activity-based sampling 

reviews; and tools for visual 

inspections; (B) tools specific to the RSL 

based on the activities of associated 

person assigned to the location, 

products offered, restrictions on the 

activity of the RSL; and (C) system tools 

such as secure network connections and 

effective cybersecurity protocols.69

With the exception of conforming and 

technical changes, proposed Rule NYSE 

3110.19(a) is substantially the same as 

FINRA Rule 3110.19(a). 

NYSE Rule 3110.19(b) (Member 

Organization Ineligibility Criteria) 

FINRA Rule 3110.19(b) outlines the 

conditions that would render its 

members ineligible from designating an 

office as an RSL. As proposed, NYSE 

Rule 3110.19(b) would mirror these 

criteria and provide that a member 

organization is ineligible from 

designating an office or location as an 

RSL if the member organization: 

• is currently designated as a 

restricted firm under FINRA Rule 

4111; 70

• is currently designated as a taping 

firm under NYSE Rule 3170; 71

• is currently undergoing, or is 

required to undergo, a review under 

FINRA Rule 1017(a)(7) as a result of one 

or more associated persons at such 

location; 72

• receives a notice pursuant to NYSE 

Rule 9557, regarding capital compliance 

related matters under NYSE Rules 4110, 

4120 and 4130, unless the Exchange has 

otherwise permitted such activities in 

writing pursuant to such rule; 73

• is or becomes suspended by the 

Exchange or FINRA; 74

• based on the date in the Central 

Registration Depository (CRD), had its 

FINRA membership become effective 

within the prior 12 months; 75 or 

• is or has been found to be in 

violation of office inspection obligations 

under NYSE or FINRA Rule 3110(c) 

within the past three years.76

With the exception of conforming and 

technical changes, proposed NYSE Rule 

3110.19(b) is substantially the same as 

FINRA Rule 3110.19(b). 

NYSE Rule 3110.19(c) (Location 

Ineligibility Criteria) 

FINRA Rule 3110.19(c) sets forth the 

criteria that would render a particular 

office or location that is an associated 

person’s private residence where 

specified supervisory activities are 

conducted ineligible for an RSL 

designation. Proposed NYSE Rule 

3110.19(c) would mirror these criteria. 

As proposed, NYSE Rule 3110.19(c) 


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77See proposed NYSE Rule 3110.19(c)(1), 

mirroring FINRA Rule 3110.19(c)(1). 

78See proposed NYSE Rule 3110.19(c)(2), 

mirroring FINRA Rule 3110.19(c)(2). 

79See proposed NYSE Rule 3110.19(c)(3), 

mirroring FINRA Rule 3110.19(c)(3). 

80See proposed NYSE Rule 3110.19(c)(4), 

mirroring FINRA Rule 3110.19(c)(4). 

81See proposed NYSE Rule 3110.19(c)(5), 

mirroring FINRA Rule 3110.19(c)(5). 

82See proposed NYSE Rule 3110.19(c)(6), 

mirroring FINRA Rule 3110.19(c)(6). 

83Pursuant to Rule 0, reference to Exchange staff 

or Exchange departments in the NYSE rules should 

be understood as also referring to FINRA staff and 

FINRA departments acting on behalf of the 

Exchange. 

84See proposed NYSE Rule 3110.19(e)(1), 

mirroring FINRA Rule 3110.19(e)(1). 

85See proposed NYSE Rule 3110.19(e)(2), 

mirroring FINRA Rule 3110.19(e)(2). 

86See proposed NYSE Rule 3110.19(e)(3), 

mirroring FINRA Rule 3110.19(e)(3). 

87See proposed NYSE Rule 3110.19(e)(4), 

mirroring FINRA Rule 3110.19(e)(4). 

would make an office ineligible for the 

RSL designation if one or more 

associated persons at such office or 

location: 

• is a designated supervisor who has 

less than one year of direct supervisory 

experience with the member 

organization, or an affiliate or subsidiary 

of the member organization that is 

registered as a broker-dealer or 

investment adviser; 77

• is functioning as a principal for a 

limited period in accordance with NYSE 

Rule 1210.03; 78

• is subject to a mandatory 

heightened supervisory plan under the 

rules of the SEC, FINRA, the Exchange 

or state regulatory agency; 79

• is statutorily disqualified, unless 

such disqualified person has been 

approved (or is otherwise permitted 

pursuant to FINRA or Exchange rules 

and the federal securities laws) to 

associate with a member organization 

and is not subject to a mandatory 

heightened supervisory plan under 

paragraph (c)(3) of this Supplementary 

Material or otherwise as a condition to 

approval or permission for such 

association; 80

• has an event in the prior three years 

that required a ‘‘yes’’ response to any 

item in Questions 14A(1)(a) and 2(a), 

14B(1)(a) and 2(a), 14C, 14D and 14E on 

Form U4; 81 or 

• has been notified in writing that 

such associated person is now subject 

to, any Investigation or Proceeding, as 

such terms are defined in the 

Explanation of Terms for the Form U4 

(Uniform Application for Securities 

Industry Registration or Transfer), by 

the SEC, a self-regulatory organization, 

including the Exchange, or state 

securities commission (or agency or 

office performing like functions) (each, 

a ‘‘Regulator’’) expressly alleging they 

have failed reasonably to supervise 

another person subject to their 

supervision, with a view to preventing 

the violation of any provision of the 

Securities Act, the Act, the Investment 

Advisers Act, the Investment Company 

Act, the Commodity Exchange Act, any 

state law pertaining to the regulation of 

securities or any rule or regulation 

under any of such Acts or laws, or any 

of the rules of the Exchange or other 

self-regulatory organization, including 

the Exchange; provided, however, such 

office or location may be designated or 

redesignated as an RSL subject to the 

requirements of this Supplementary 

Material upon the earlier of: (i) the 

member organization’s receipt of written 

notification from the applicable 

Regulator that such Investigation has 

concluded without further action; or (ii) 

one year from the date of the last 

communication from such Regulator 

relating to such Investigation.82

With the exception of conforming and 

technical changes, proposed NYSE Rule 

3110.19(c) is substantially the same as 

FINRA Rule 3110.19(c). 

NYSE Rule 3110.19(d) (Obligation To 

Provide List of RSLs) 

Proposed NYSE Rule 3110.19(d) 

setting forth the obligations to provide 

RSL list would fully mirror the 

provisions of FINRA Rule 3110.19(d) 

and would require member 

organizations electing to designate any 

office or location of that member 

organization as an RSL to provide a 

current list of all offices or locations 

designated as RSLs by the 15th day of 

the month following each calendar 

quarter to FINRA in the manner and 

format as FINRA may prescribe.83

With the exception of conforming and 

technical changes, proposed NYSE Rule 

3110.19(d) is substantially the same as 

FINRA Rule 3110.19(d). 

NYSE Rule 3110.19(e) (Risk 

Assessment) 

FINRA Rule 3110.19(e) requires its 

members, prior to designating an office 

or location as an RSL, to develop a 

reasonable risk-based approach to 

designating such office or location as an 

RSL, and conduct and document a risk 

assessment for the associated person 

assigned to that office or location. 

Proposed NYSE Rule 3110.19(e) would 

mirror the provisions of FINRA Rule 

3110.19(e). Specifically, a member 

organization would be required, prior to 

designating an office or location as an 

RSL, to develop a reasonable risk-based 

approach to designating such office or 

location as an RSL and conduct and 

document a risk assessment for the 

associated person(s) assigned to that 

office or location. In line with FINRA 

Rule 3110.19(e), the proposed rule 

would list certain factors, among others, 

that member organizations must 

consider in the risk assessment that 

include whether each associated person 

at such office or location is subject to: 

• customer complaints, taking into 

account the volume and nature of the 

complaints; 84

• heightened supervision other than 

where such office or location is 

ineligible for RSL designation under 

paragraph (c)(3) of this Supplementary 

Material; 85

• any failure to comply with the 

member organization’s written 

supervisory procedures; 86

• any recordkeeping violation; 87 and 

• any regulatory communications 

from a Regulator, indicating that the 

associated person at such office or 

location failed reasonably to supervise 

another person subject to their 

supervision, including but not limited 

to, subpoenas, preliminary or routine 

regulatory inquiries or requests for 

information, deficiency letters, ‘‘blue 

sheet’’ requests or other trading 

questionnaires, or examinations. The 

member organization must take into 

account any higher risk activities that 

take place or a higher risk associated 

person that is assigned to that office or 

location. Consistent with its obligation 

under NYSE Rule 3110(a), the member 

organization’s supervisory system must 

take into consideration any indicators of 

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

flags’’) when designating an office or 


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88See proposed NYSE Rule 3110.19(e)(5), 

mirroring FINRA Rule 3110.19(e)(5). 89 15 U.S.C. 78f(b). 90 15 U.S.C. 78f(b)(5). 91See Securities Exchange Act Release No. 97398 

(November 17, 2023), 88 FR 28620, 28635 (May 4, 

2023) (SR–FINRA–2023–007) (Notice of Filing of a 

Proposed Rule Change To Adopt Supplementary 

Material .18 (Remote Inspections Pilot Program) 

Under FINRA Rule 3110 (Supervision)); Securities 

Exchange Act Release No. 97237 (March 31, 2023), 

88 FR 20568 (April 6, 2023) (SR–FINRA–2023–006) 

(Notice of Filing of a Proposed Rule Change To 

Adopt Supplementary Material .19 (Residential 

Supervisory Location) Under FINRA Rule 3110 

(Supervision)). 

92 15 U.S.C. 78s(b)(3)(A)(iii). 93 17 CFR 240.19b–4(f)(6). 94 17 CFR 240.19b–4(f)(6)(iii). 95 17 CFR 240.19b–4(f)(6). 96 17 CFR 240.19b–4(f)(6)(iii). 

location as an RSL. Red flags should 

also be reviewed in determining 

whether it is reasonable to maintain the 

RSL designation of such office or 

location in accordance with the 

requirements of this Supplementary 

Material and the member organization 

should consider evidencing steps taken 

to address those red flags where 

appropriate.88

With the exception of conforming and 

technical changes, proposed NYSE Rule 

3110.19(e) is substantially the same as 

FINRA Rule 3110.19(e). 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) of the 

Act,89 in general, and furthers the 

objectives of Section 6(b)(5),90 in 

particular, because it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, to remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

The Exchange believes that the 

proposed rule change furthers the 

objectives of the Act by permitting 

member organizations that are FINRA 

members to participate in the FINRA 

Pilot Program and for all member 

organizations to utilize the RSL 

designation in order to continue to meet 

the core regulatory obligation to 

establish and maintain a supervisory 

system reasonably designed to achieve 

compliance with applicable securities 

laws and regulations and applicable 

Exchange rules that directly serve 

investor protection. The Exchange 

believes that the proposed changes, 

taken together, reasonably account for 

evolving work models while 

maintaining effective supervision. The 

Exchange believes that the proposed 

safeguards and controls built into both 

the remote inspection program and the 

RSL designation will, as FINRA noted,91

provide member organizations with 

greater flexibility to adapt to changing 

work conditions without compromising 

investor protection. The robust nature of 

the criteria that must be satisfied and 

circumstances that would make a 

location ineligible for remote office 

inspections, as well as requirements for 

supplemental written supervisory 

procedures related to remote 

inspections, documentation 

requirements, and obligations to share 

data with FINRA to allow for 

assessment of the pilot program, serve 

an important role in reducing the 

potential for fraud and manipulative 

acts. Similarly, important safeguards 

such as requiring risk assessments in 

connection with the RSL designation in 

addition to delineating specific criteria 

for locations that would be ineligible for 

designation as an RSL furthers the 

prevention of manipulative acts and 

practices and the protection of investors 

and the public interest. 

As discussed in the Purpose section, 

because proposed Supplementary 

Material .18 to NYSE Rule 3110 and 

proposed Supplementary Material .19 to 

NYSE Rule 3110 are substantially 

similar to FINRA Rule 3110.18 and 

FINRA Rule 3110.19, respectively, this 

rule change enables NYSE Rule 3110 to 

continue to be incorporated into the 

17d–2 Agreement, resulting in less 

burdensome and more efficient 

regulatory compliance. Specifically, the 

proposed change will conform the 

Exchange’s rules to changes made to 

corresponding FINRA rules insofar as a 

member organization’s compliance with 

FINRA Rules 3110.18 and 3110.19 shall 

mean the member organization is also in 

compliance with proposed 

Supplementary Material.18 to NYSE 

Rule 3110 and proposed Supplementary 

Material .19 to NYSE Rule 3110, thus 

promoting the application of consistent 

regulatory standards with respect to 

rules that FINRA enforces pursuant to 

the 17d–2 Agreement. As previously 

noted, except for conforming and 

technical changes, the proposed text of 

proposed Supplementary Material .18 

and .19 to NYSE Rule 3110 is 

substantially the same as the text of 

FINRA Supplementary Material .18 and 

.19, respectively, to FINRA Rule 3110. 

As such, the proposed rule change 

would facilitate rule harmonization 

among self-regulatory organizations 

with respect to inspection of member 

organizations and a consistent and 

uniform regulatory framework for which 

member organizations can avail 

themselves of the RSL designation, 

thereby fostering cooperation and 

coordination with persons engaged in 

facilitating transactions in securities and 

will remove impediments to and perfect 

the mechanism of a free and open 

market and a national market system. 

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 

proposed rule change is not intended to 

address competitive issues but rather is 

intended solely to reduce potential 

compliance burdens on member 

organizations by aligning NYSE Rule 

3110 with FINRA Rule 3110, resulting 

in less burdensome and more efficient 

regulatory compliance for common 

members and facilitating FINRA’s 

performance under the 17d–2 

Agreement. 

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 Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 92 and Rule 

19b–4(f)(6) thereunder.93 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 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

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

of the Act and Rule 19b–4(f)(6)(iii) 

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.94

A proposed rule change filed under 

Rule 19b–4(f)(6) 95 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b4(f)(6)(iii),96 the Commission 


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Federal Register / Vol. 89, No. 203 / Monday, October 21, 2024 / Notices 84229 

97For 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). 

98 15 U.S.C. 78s(b)(2)(B). 99 17 CFR 200.30–3(a)(12). 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. The 

Exchange has asked the Commission to 

waive the 30-day operative delay so that 

the proposal may become operative 

immediately upon filing. 

The Exchange stated that this 

proposed rule change is noncontroversial because it does not present 

any new or novel issues. In particular, 

NYSE is harmonizing its supervision 

rules with those of FINRA, on which 

they are based and which have been 

previously approved by the 

Commission. By conforming the 

Exchange’s rules to FINRA’s, the 

proposed rule change would promote 

the application of consistent regulatory 

standards with respect to rules that 

FINRA enforces pursuant to the 17d–2 

Agreement. As such, the Exchange 

believes that the proposed rule change 

would foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities and 

would remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system in accordance with Exchange 

Act Section 6(b)(5). Further, the 

Exchange stated that waiver of the 

operative delay should reduce any 

potential confusion that may otherwise 

occur on the part of joint members of 

the Exchange and FINRA as to the 

applicable rules governing inspections 

of branch offices and other locations. 

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.97

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) 98 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– 

NYSE–2024–64 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–2024–64. 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 

a.m. and 3 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–NYSE–2024–64 and should be 

submitted on or before November 12, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.99

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–24201 Filed 10–18–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 1:00 p.m. on Thursday, 

October 24, 2024. 

PLACE: The meeting will be held via 

remote means and/or at the 

Commission’s headquarters, 100 F 

Street NE, Washington, DC 20549. 

STATUS: This meeting will be closed to 

the public. 

MATTERS TO BE CONSIDERED: 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

In the event that the time, date, or 

location of this meeting changes, an 

announcement of the change, along with 

the new time, date, and/or place of the 

meeting will be posted on the 

Commission’s website at https://

www.sec.gov. 

The General Counsel of the 

Commission, or her designee, has 

certified that, in her opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) 

and (10) and 17 CFR 200.402(a)(3), 

(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and 

(a)(10), permit consideration of the 

scheduled matters at the closed meeting. 

The subject matter of the closed 

meeting will consist of the following 

topics: 

Institution and settlement of injunctive 

actions; 

Institution and settlement of administrative 

proceedings; 

Resolution of litigation claims; and 

Other matters relating to examinations and 

enforcement proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting agenda items that 

may consist of adjudicatory, 

examination, litigation, or regulatory 

matters. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information, please contact 

Vanessa A. Countryman from the Office 

of the Secretary at (202) 551–5400. 

(Authority: 5 U.S.C. 552b) 


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