97664 Federal Register / Vol. 89, No. 236 / Monday, December 9, 2024 / Notices 

24 15 U.S.C. 78s(b)(2)(B). 

25 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Member’’ means an individual or 

organization approved to exercise the trading rights 

associated with a Trading Permit. Members are 

deemed ‘‘members’’ under the Exchange Act. See 

Exchange Rule 100. 

4See 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). 

5Currently, all Exchange Members are also 

FINRA members. 

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) 24 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– 

PEARL–2024–55 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–PEARL–2024–55. 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–PEARL–2024–55 and should be 

submitted on or before December 30, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–28762 Filed 12–6–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101803; File No. SR–MIAX– 

2024–44] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Exchange Rule 

1306 (Branch Offices) and Exchange 

Rule 1308 (Supervision of Accounts) 

To Harmonize With FINRA Rules 

December 3, 2024. 

Pursuant to the provisions of Section 

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

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on November 25, 2024, Miami 

International Securities Exchange, LLC 

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

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

as described in Items I and II below, 

which Items have been prepared by the 

Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to: (i) amend 

Rule 1306 (Branch Offices) to adopt the 

definition used by Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) of 

Office of Supervisory Jurisdiction 

(‘‘OSJ’’); (ii) amend Rule 1308 

(Supervision of Accounts) to adopt 

FINRA’s inspection requirement for 

non-branch location; (iii) harmonize 

Rule 1308 (Supervision of Accounts) 

with certain changes by FINRA to 

FINRA Rule 3110 to permit eligible 

Members 3 to participate in FINRA’s 

remote inspections program (‘‘FINRA 

Pilot Program’’); 4 and (iv) adopt 

FINRA’s Residential Supervisory 

Location (‘‘RSL’’) classification. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-options/miax-options/rule-filings, at 

MIAX’s principal office, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to (i) amend 

Rule 1306 to adopt FINRA’s definition 

of OSJ; (ii) amend Rule 1308 to adopt 

FINRA’s inspection requirement for 

non-branch location; (iii) harmonize 

Rule 1308 with certain changes by 

FINRA to FINRA Rule 3110 to permit 

eligible Members to participate in 

FINRA’s Remote Inspections Pilot 

Program; and (iv) adopt FINRA’s RSL 

classification. The proposed changes 

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 resulting in less 

burdensome and more efficient 

regulatory compliance for common 

members.5 Additionally, the proposed 

changes would allow Members who 

participate in FINRA’s Remote 

Inspections Pilot Program to also satisfy 

the equivalent internal inspections 

requirements set out in Rule 1308. The 


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6See Securities Exchange Act Release No. 68363 

(December 5, 2012), 77 FR 73711 (December 11, 

2012) (File No. S7–966). The 17d–2 Agreement 

includes a certification by the Exchange 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. 

7See Exchange Rule 1308(d)(1). 

8See Exchange Rule 1308(d)(2). 9See supra note 6. 

Exchange notes that Exchange Rules 

1306 and 1308 as proposed to be 

amended by this filing, are incorporated 

by reference into the rulebooks of the 

Exchange’s affiliate MIAX PEARL, LLC 

(‘‘MIAX Pearl’’), MIAX Emerald, LLC 

(‘‘MIAX Emerald’’), and MIAX 

Sapphire, LLC (‘‘MIAX Sapphire’’). As 

such, the amendment to Exchange Rules 

1306 and 1308 proposed herein will 

also apply to MIAX Pearl, MIAX 

Emerald, and MIAX Sapphire members. 

Proposal To Adopt FINRA’s Definition 

of OSJ 

The Exchange proposes to adopt 

paragraph (j) of Rule 1306 to adopt 

FINRA’s definition of OSJ. Currently, 

Exchange Rule 1306(a) only requires 

Members to file with the Exchange and 

keep current a list of each of its branch 

offices showing the location of each 

such office and the name of the manager 

of each such office. FINRA Rule 3110.01 

provides that a member’s main office 

location is required to be registered and 

designated as a branch office or OSJ if 

it meets the definitions of a ‘‘branch 

office’’ or ‘‘office of supervisory 

jurisdiction’’ as set forth in FINRA Rule 

3110(f). The purpose of the proposed 

change is to harmonize Exchange Rule 

1306 with FINRA Rule 3110.01 to 

provide that both branch offices and 

OSJs will be subject to the office 

registration requirements set forth in 

Exchange Rule 1306(a). The proposed 

Exchange Rule 1306(j) is substantively 

identical to FINRA Rule 3110(f)(1). The 

proposed definition of OSJ defined in 

Rule 1306(j) will read as follows: 

‘‘Office of Supervisory Jurisdiction’’ means 

any office of a member at which any one or 

more of the following functions take place: 

(1) order execution or market making; (2) 

structuring of public offerings or private 

placements; (3) maintaining custody of 

customers’ funds or securities; (4) final 

acceptance (approval) of new accounts on 

behalf of the Member; (5) review and 

endorsement of customer orders; (6) final 

approval of retail communications for use by 

persons associated with the Member, 

pursuant to FINRA Rule 2210(b)(1), except 

for an office that solely conducts final 

approval of research reports; or (7) 

responsibility for supervising the activities of 

persons associated with the Member at one 

or more other branch offices of the Member. 

The Exchange proposes to add 

‘‘offices of supervisory jurisdictions’’ to 

Exchange Rule 1306(a) as follows: 

Every Member approved to do options 

business with the public under this Chapter 

shall file with the Exchange and keep current 

a list of each of its branch offices and offices 

of supervisory jurisdictions showing the 

location of each such office and the name of 

the manager of each such office. 

Additionally, the Exchange proposes 

to add ‘‘OSJ’’ to Exchange Rule 

1308(d)(1) and its subparagraph (i) to 

provide that both branch offices and 

OSJs that supervise one or more nonbranch locations must be inspected no 

less than once each calendar year. In the 

event that it has been demonstrated to 

the satisfaction of the Exchange that 

because of proximity, special reporting 

or supervisory practice, other 

arrangements may satisfy this Rule’s 

requirements for a particular branch 

office or OSJ, the Member does not have 

inspect such office no less than once 

every calendar year. The proposed Rule 

1308(d)(1) is substantively identical to 

FINRA Rule 3110(c)(1)(A). The purpose 

of the proposed change is to harmonize 

Exchange Rule 1308(d) with FINRA 

Rule 3110(c), resulting in less 

burdensome and more efficient 

regulatory compliance for common 

members. The proposed rule change 

would enable Exchange Rule 1308 to 

continue to be incorporated into the 

agreement between the Exchange and 

FINRA to allocate regulatory 

responsibility for common rules (the 

‘‘17d–2 Agreement’’), thereby 

facilitating FINRA’s performance of its 

regulatory performance on the 17d–2 

Agreement.6

Proposal To Adopt FINRA’s Inspection 

Requirement for Non-Branch Location 

Next, the Exchange propose to amend 

Rule 1308(d)(3) to adopt FINRA’s 

inspection requirement for non-branch 

location. Exchange Rule 1308 sets forth 

the main requirements for inspections. 

An inspection of an office or location 

must occur on a designated frequency. 

The periodicity of the required 

inspection varies depending on the 

classification of the location or the 

nature of the activities that take place. 

Currently, Exchange Rule 1308(d) 

provides that each branch office that 

supervises one or more non-branch 

locations must be inspected no less 

often than once each calendar year; 7

and every branch office, without 

exception, must be inspected at least 

once every three calendar-years.8 The 

Exchange proposes to amend Rule 

1308(d)(3) to provide that each nonbranch office should be inspected on a 

regular periodic schedule. The Member 

shall consider the nature and 

complexity of the securities activities 

for which the location is responsible 

and the nature and extent of contact 

with customers when establishing the 

schedule. In addition, the Member 

should have written supervisory and 

inspection procedures to set forth the 

schedule and an explanation regarding 

how the Member determined the 

frequency of the examination. FINRA 

Rule 3110(c) requires Members to 

inspect every branch office that 

supervises one or more non-branch 

locations at least annually, every branch 

office that does not supervise one or 

more non-branch locations at least every 

three years, and every non-branch 

location on a regular periodic schedule. 

The proposed Exchange Rule 1308(d)(3) 

is substantively identical to FINRA Rule 

3110(c)(1)(C). The purpose of the 

proposed change is to harmonize 

Exchange Rule 1308(d) with FINRA 

Rule 3110(c), resulting in less 

burdensome and more efficient 

regulatory compliance for common 

members and facilitating FINRA’s 

performance of its regulatory 

performance on the 17d–2 Agreement.9

The proposed Exchange Rule 1308(d)(3) 

will read as follows: 

Each Member shall inspect on a regular 

periodic schedule every non-branch location. 

In establishing such schedule, the Member 

shall consider the nature and complexity of 

the securities activities for which the location 

is responsible and the nature and extent of 

contact with customers. The Member’s 

written supervisory and inspection 

procedures shall set forth the schedule and 

an explanation regarding how the Member 

determined the frequency of the examination. 

The Exchange proposes to amend the 

hierarchical headings in Exchange Rule 

1308 so that subparagraphs (d)(3)–(5) 

will be renumbered as (d)(4)–(6). In 

addition, the Exchange proposes to 

amend proposed renumbered 

subparagraph (d)(6) of Rule 1308 to 

replace certain internal cross references 

to other paragraphs of Rule 1308 in light 

of the hierarchical heading changes 

described above. In particular, the 

Exchange propose to amend the cross 

references contained in proposed 

renumbered subparagraph (d)(6) of Rule 

1308 that are to subparagraphs (d)(4) 

and (d)(5), to now to be subparagraphs 

(d)(5) and (d)(6), respectively. The 

Exchange proposes to add the reference 

to subparagraph (d)(3) in the sentence 

describing Member complying with the 

requirements of the New York Stock 

Exchange or FINRA in proposed 

renumbered Rule 1308(d)(4). With the 

proposed changes, proposed 


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10See FINRA Rule 3110.18. 

11See Exchange Rule 1306(c). 

12See Exchange Rule 1308(d)(5) (to be 

renumbered as Rule 1308(d)(6)) (Temporary Relief 

to Allow Remote Inspections for Calendar Years 

2021, 2022, 2023, and Through the Earlier of the 

Effective Date of the Remote Inspections Pilot 

Program or June 30, 2024). 

13See Id. The equivalent temporary relief offered 

by FINRA also sunset on June 30, 2024. See FINRA 

Rule 3110.17 

14See supra note 6. 

15See generally SEC Division of Market 

Regulation, Staff Legal Bulletin No. 17: Remote 

Office Supervision (March 19, 2004) (‘‘SLB 17’’) 

(SEC guidance on remote office supervision), 

available at https://www.sec.gov/interps/legal/ 

mrslb17.htm; and Regulatory Notice 11–54 

(November 2011) (‘‘Notice 11–54’’) (joint SEC and 

FINRA guidance on effective policies and 

procedures for broker-dealer branch inspections). 

16See Exchange Rule 1308(d). 

17See Exchange Rule 1308(d)(1). 

18See Exchange Rule 1308(d)(2). 

19 Id. 

20 Id. 

21See SLB 17 and Notice 11–54, supra note 15. 

22See Remote Inspections Pilot Program 

Proposal, supra note 4. 

23See Id. 

renumbered Rule 1308(d)(4) will 

provide that a Member that complies 

with requirements of the New York 

Stock Exchange or FINRA that are 

substantially similar to the requirements 

in paragraphs (d)(1), (d)(2), and (d)(3) of 

Rule 1308 as well as other related 

requirements in paragraphs (e) and (f) of 

Rule 1308 will be deemed to have met 

inspection requirements set forth in 

Rule 1308. 

Proposal To Adopt FINRA Remote 

Inspections Pilot Program 

The Exchange proposes to adopt 

subparagraph (d)(7) of Rule 1308, which 

would provide that any Member that 

participates in the FINRA Remote 

Inspections Pilot Program, 10 thereby 

satisfying the internal inspections 

requirements in FINRA Rule 3110(c), 

would also satisfy the equivalent annual 

branch office inspections requirements 

in Exchange Rule 1308(d). This 

proposed rule change would supplant 

Rule 1308(d)(5) (to be renumbered as 

Rule 1308(d)(6)), which allowed 

Members to fulfill any calendar year 

2024 internal inspection obligations set 

forth in Rule 1308(d)(5) (to be 

renumbered as Rule 1308(d)(6)) by 

conducting remote inspections of the 

applicable branch offices 11 or nonbranch locations.12 This temporary 

relief, which was analogous to relief that 

FINRA provided for, automatically 

sunset on June 30, 2024.13 As described 

below, adding proposed subparagraph 

(d)(7) of Rule 1308 would harmonize the 

Exchange’s annual branch office 

inspections obligations for its Members 

with FINRA’s comparable obligations 

for its members, thereby avoiding 

confusion to Members with respect to 

the applicability of participation in the 

FINRA Remote Inspections Pilot 

Program and compliance with Exchange 

Rule 1308. Additionally, because the 

proposed subparagraph (d)(7) of Rule 

1308 would incorporate by reference 

FINRA Rule 3110.18, this rule change 

would enable Exchange Rule 1308 to 

continue to be incorporated into the 

17d–2 Agreement.14

Standards for Supervision of Remote 

Offices 

The responsibility of firms to 

supervise their associated persons is a 

critical component of broker-dealer 

regulation.15 Members must supervise 

all of their associated persons, 

regardless of their location, 

compensation or employment 

arrangement, or registration status. 

Exchange Rule 1308(d), which is 

substantially identical to FINRA Rule 

3110(c), requires any Member, 

regardless of size or type, to have a 

supervisory system for the activities of 

its associated persons that is reasonably 

designed to achieve compliance with 

the applicable securities laws and 

regulations and Exchange rules, and that 

sets forth the minimum requirements for 

such supervisory system.16 The internal 

inspection obligation under Exchange 

Rule 1308(d) and FINRA Rule 3110(c) is 

one component of such system. 

Exchange Rule 1308(d), as amended 

herein, sets forth three main 

requirements for inspections. First, an 

inspection of an office or location must 

occur on a designated frequency. The 

periodicity of the required inspection 

varies depending on the classification of 

the location or the nature of the 

activities that take place: each branch 

office that supervises one or more nonbranch locations must be inspected no 

less often than once each calendar 

year; 17 and every branch office, without 

exception, must be inspected at least 

once every three calendar-years.18

Second, written reports reflecting the 

results of such inspections are to be 

maintained with the Member for the 

longer of three years or until the next 

branch office inspection.19 Third, to 

prevent compromising the effectiveness 

of inspections due to conflicts of 

interest, the rule requires a Member to 

ensure that the person conducting the 

inspection is independent of the direct 

supervision and control of the branch 

office in question (i.e., not the branch 

office manager, or any person who 

directly or indirectly reports to such 

manager, or any person to whom such 

manager directly reports).20

Further, Rule 1306(i) sets out factors 

that should be considered when 

developing risk-based sampling 

techniques to determine the 

appropriateness of on-site for cause 

reviews of selected residences and other 

remote locations shall include, but not 

be limited to, the following: (1) the 

firm’s size; (2) the firm’s organizational 

structure; (3) the scope of business 

activities; (4) the number and location of 

offices; (5) the number of associated 

persons assigned to a location; (6) the 

nature and complexity of products and 

services offered; (7) the volume of 

business done; (8) whether the location 

has a Series 9/10-qualified person onsite; (9) the disciplinary history of the 

registered persons or associated persons, 

including a review of such person’s 

customer complaints and Forms U4 and 

U5; and (10) the nature and extent of a 

registered person’s or associated 

person’s outside business activities, 

whether or not related to the securities 

business. Rule 1306(h) further states 

that the written supervisory procedures 

pertaining to supervision of sales 

activities conducted at the associated 

person’s primary residence and other 

remote locations must be designed to 

assure compliance with applicable 

securities laws and regulations and with 

Exchange Rules. 

Notably, all of the above requirements 

about supervision and inspections of 

branch offices reflected a business 

environment in which Members 

conducted in-person inspections of all 

of their offices.21

FINRA’s Recent Attempts To Change the 

In-Person Inspection Requirements of 

Offices of Supervisory Jurisdiction, 

Branch Offices, and Non-Branch 

Locations 

In the Remote Inspections Pilot 

Program Proposal, FINRA described its 

efforts during the past several years to 

offer its members the option of remotely 

conducting internal inspections of their 

OSJs, branch offices, and non-branch 

locations.22 As stated therein, FINRA 

believed that as more recordkeeping 

moved from paper to electronic records, 

and as more meetings were conducted 

virtually using platforms such as Zoom 

and WebEx, the burden on FINRA 

members of conducting in-person 

inspections for all their remote office 

locations became harder to justify.23

Thus, when the COVID–19 pandemic 

required many securities industry 

professionals to work from home, 


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24See Id. 

25See Remote Inspections Pilot Program 

Approval Order, supra note 4. 

26See FINRA Regulatory Notice 24–02. 

27See Remote Inspections Pilot Program 

Proposal, supra note 4. 

28See Id. 

29See FINRA Rule 3110.18(b). 

30See FINRA Rule 3110.18(c). 

31See FINRA Rule 3110.18(d). 

32See FINRA Rule 3110.18(e). 

33See FINRA Rule 3110.18(f). 

34See FINRA Rule 3110.18(g). 

35See FINRA Rule 3110.18(h). 

36See FINRA Rule 3110.18(i). 

FINRA implemented several forms of 

regulatory relief to its members, 

including introducing FINRA Rule 

3110.17, which the Exchange also 

introduced as subparagraph (d)(5) of 

Exchange Rule 1308 (to be renumbered 

as Rule 1308(d)(6)), to permit remote 

internal inspections of their branch 

offices. 

The pandemic accelerated the 

industry’s adoption of a broad remote 

work environment and the Exchange 

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 Remote Inspections Pilot 

Program Proposal with the Securities 

and Exchange Commission (‘‘SEC’’) 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.24 The SEC 

approved the FINRA Remote Inspection 

Pilot Program Proposal in November 

2023, 25 and FINRA commenced the 

pilot program on July 1, 2024.26

FINRA’s Remote Inspections Pilot 

Program 

FINRA’s Remote Inspection Pilot 

Program builds on the terms of the 

temporary relief in FINRA Rule 3110.17, 

while requiring members to provide 

even more information about their 

remote inspections to allow FINRA to 

assess the overall impact and 

effectiveness of remote inspections.27

The pilot program is designed to 

provide broader systemized information 

to supplement the information obtained 

through the FINRA examination process 

in an environment where offices and 

locations were closed. The information 

firms would be required to produce as 

a pilot program participant will help 

FINRA more accurately assess the 

overall impact and effectiveness of 

remote inspections.28

FINRA’s Remote Inspection Pilot 

Program includes, among other things, 

the following requirements for 

participating firms: 

• Risk Assessment. Prior to electing a 

remote inspection for an office or 

location, participating firms must 

develop a reasonable risk-based 

approach to using remote inspections 

and conduct and document a risk 

assessment for that office or location.29

• Written Supervisory Procedures for 

Remote Inspections. Participating firms 

must establish, maintain, and enforce 

written procedures that are reasonably 

designed for conducting remote 

inspections and reasonably designed to 

achieve compliance with applicable 

securities laws and regulations.30

• Effective Supervisory System. 

Participating firms must have an 

effective supervisory system for remote 

inspections that will be held to the same 

standards of review (set forth under 

FINRA Rule 3110.12). Where a 

member’s remote inspection of an office 

or location identifies any ‘‘red flags,’’ 

the member 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 on-site visit on 

an announced or unannounced basis.31

• Documentation Requirement. 

Participating firms must maintain and 

preserve a centralized record for each of 

the Pilot Years specified in the pilot 

program that separately identifies: (1) all 

offices or locations that were inspected 

remotely; and (2) any offices or 

locations for which the member 

determined to impose additional 

supervisory procedures or more 

frequent monitoring, as provided in 

FINRA Rule 3110.18(d). A member’s 

documentation of the results of a remote 

inspection for an office or location must 

identify any additional supervisory 

procedures or more frequent monitoring 

for that office or location that were 

imposed as a result of the remote 

inspection, including whether an on-site 

inspection was conducted at such office 

or location.32

• Firm Level Requirements. 

Participating firms must meet certain 

firm- level eligibility requirements to 

participate in the program set forth in 

FINRA Rule 3110.18(f)(1). For example, 

a firm cannot participate if it is 

designated as: (i) Restricted Firm under 

FINRA Rule 4111 or (ii) a Taping Firm 

under FINRA Rule 3170. Additionally, 

firms with suspended or new (effective 

less than 12 months) FINRA 

memberships or that have been found 

by the SEC or FINRA to have violated 

FINRA Rule 3110(c) are ineligible to 

participate. Participating firms must 

also comply with firm- level conditions 

to participate in the program. For 

example, a firm must have a 

recordkeeping system that keeps records 

current and promptly accessible, and 

that does not maintain physical or 

electronic records at the location subject 

to remote inspection. Additionally, 

participating firms must have firm-wide 

tools such as electronic recordkeeping 

systems, system security tools such as 

secure network connections and 

effective cybersecurity protocols, and 

tools specifically applied to each office 

or location based on the activities of 

associated persons, products offered, or 

any restrictions on the activity of the 

office or location.33

• Location Level Requirements. 

Participating firms must exclude from 

participating in the program any 

locations that do not meet the location 

level eligibility criteria set forth in 

FINRA Rule 3110.18(g)(1) (e.g., the 

location includes: (i) persons subject to 

a disciplinary action, a statutory 

disqualification, or a mandated 

heightened supervisory plan; (ii) 

persons engaged in proprietary trading; 

or (iii) the handling of customer funds 

or securities). Additionally, eligible 

locations must use the firm’s electronic 

communication system and may not 

maintain any original copies of books or 

records at the location.34

• Data and Information Collection 

Requirement. Participating firms must 

collect and on a quarterly basis produce 

to FINRA data consisting of separate 

counts for OSJs, supervisory branch 

offices, non-supervisory branch offices, 

and non-branch locations. This data 

must include information about the 

number of remote inspections 

conducted and any significant findings. 

Firms shall establish, maintain, and 

enforce written policies and procedures 

that are reasonably designed to comply 

with the data collection and 

transmission requirements.35

• Election to Participate in Remote 

Inspections Pilot Program. Participating 

firms must opt-in to the pilot program 

in a manner specified by FINRA.36

• Failure to Satisfy Conditions and 

Determination of Ineligibility. 

Participating firms that fail to satisfy 

terms of the Remote Inspections Pilot 

Program will be ineligible to participate 

in the pilot program and return to 


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37See FINRA Rule 3110.18(j). 

38See FINRA Rule 3110.18(k). 

39See FINRA Rule 3110.18(l). 

40Proposed Exchange Rule 1308(d)(6). 

41Pursuant to this proposed rule change, 

Members will be required to collect and on a 

quarterly basis produce to FINRA data regarding its 

participation in the Remote Inspections Pilot 

Program. See FINRA Rule 3110.18(h). But Members 

will not be required to produce that information 

directly to the Exchange. 

42See supra note 6. 

43The Exchange notes that any inspections 

conducted by its Members in the brief period 

between July 1, 2024 and the effective date of this 

filing will not satisfy Exchange Rule 1308(d), but 

believes this will not be an issue for its Members 

because the remote inspections process outlined in 

the pilot program is an ongoing process that cannot 

be completed in the few days between the start of 

the FINRA’s pilot program and the effectiveness of 

this rule filing. 

44Those standards provide, in part that based on 

the factors set forth under Exchange Rule 

1308(d)(6)(ii), Members ‘‘may need to provide for 

more frequent monitoring or oversight of that office 

or location.’’ 

45See Exchange Rules 1306(d) and 1308(d)(1). 

46The Exchange notes that all Members are 

currently FINRA members. 

47See supra note 6. 

48Among the temporary regulatory relief 

provided, FINRA adopted relief pertaining to 

branch office registration requirements through 

Form BR (Uniform Branch Office Registration Form) 

and FINRA Rule 3110(c) inspection requirements. 

Specifically, FINRA temporarily suspended the 

requirement for member firms to submit branch 

office applications on Form BR for any newly 

opened temporary office locations or space-sharing 

arrangements established as a result of the 

pandemic. See Regulatory Notice 20–08 (March 

2020). With respect to inspection obligations, 

FINRA adopted temporary Rule 3110.16 that 

provided additional time for member firms to 

complete their calendar year 2020 inspection 

obligations. See Securities Exchange Act Release 

No. 89188 (June 30, 2020), 85 FR 40713 (July 7, 

2020) (SR–FINRA–2020–019). 

49See Securities Exchange Act Release No. 90454 

(November 18, 2020), 85 FR 75097 (November 24, 

2020) (SR–FINRA–2020–040). 

50See Securities Exchange Act Release No. 96241 

(November 4, 2022), 87 FR 67969 (November 10, 

2022) (SR–FINRA–2022–030); Securities Exchange 

Act Release No. 93002 (September 15, 2021), 86 FR 

52508 (September 21, 2021) (SR–FINRA–2021–023); 

Securities Exchange Act Release No. 94018 (January 

20, 2022), 87 FR 4072 (January 26, 2022) (SR– 

FINRA–2022–001); and Securities Exchange Act 

Release No. 98560 (September 27, 2023), 88 FR 

68258 (October 3, 2023) (SR–FINRA–2023–012). 

51See Securities Exchange Act Release Nos. 

90937 (January 15, 2021), 86 FR 6944 (January 25, 

2021) (SR–MIAX–2021–01) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Amend Exchange Rule 1308, Supervision of 

Accounts, To Adopt Temporary Rules To Extend 

the Time by Which Members Must Complete Their 

Branch Office Inspections for the Calendar Year 

2020 and To Provide Temporary Remote Inspection 

Relief for Their Office Inspections for Calendar 

conducting only on-site inspections.37

FINRA may also make a determination 

to revoke a member’s eligibility to 

participate if FINRA finds it to be in the 

public interest.38

• Definitions of Pilot Year periods. 

Includes clarifications that Pilot Year 1 

is the second half of 2024, and Pilot 

Year 4 is the first half of 2027.39

Proposal 

The Exchange now proposes to adopt 

subparagraph (d)(7) of Exchange Rule 

1308. This proposed new paragraph 

reads as follows: 

Members that are obligated to conduct an 

inspection of an office of supervisory 

jurisdiction, branch office or non-branch 

location pursuant to, as applicable, Rule 

1308(d)(1), (2), and (3) may satisfy such 

obligation by participating in the FINRA 

Remote Inspections Pilot Program, as set 

forth in FINRA Rule 3110.18. The FINRA 

Remote Inspections Pilot Program shall cover 

required inspections of such offices or 

locations for a period of three years starting 

on [effective date] (‘‘pilot period’’), and such 

pilot period shall expire on July 1, 2027. If 

the pilot period is not extended, this 

subparagraph will automatically sunset on 

July 1, 2027. Members will not be able to 

participate in the FINRA Remote Inspections 

Pilot Program after such date.40

As stated in proposed new Exchange 

Rule 1308(d)(7), any Member that 

participates in the FINRA Remote 

Inspections Pilot Program, thereby 

satisfying the annual branch office 

inspections requirements in FINRA Rule 

3110(c), will satisfy the equivalent 

annual branch office inspections 

requirements in Exchange Rule 1308(d). 

The Exchange is not proposing to add 

the entire FINRA Remote Inspections 

Pilot Program to its rules, because it 

would be unnecessarily duplicative and 

burdensome for Members to submit the 

data and information required as part of 

the Remote Inspections Pilot Program to 

both the Exchange and FINRA.41 The 

Exchange understands that adopting 

proposed paragraph (d)(7) of Exchange 

Rule 1308 would update Rule 1308 so 

that it remains substantially similar to 

FINRA Rule 3110, such that they remain 

common rules subject to the 17d–2 

Agreement.42 As a result, regulatory 

responsibility for Exchange Rule 

1308(d) would continue to be allocated 

to FINRA. 

As noted above, all Members were 

temporarily eligible to conduct remote 

office inspections until June 30, 2024. 

This proposed rule change would allow 

those Members who have enrolled in 

FINRA’s Remote Inspections Pilot 

Program to continue to use remote 

inspections as part of an effective 

supervisory system.43 The Exchange 

believes this Remote Inspections Pilot 

Program is a reasonable alternative for 

firms to fulfill their Rule 1308(d) 

obligations while permitting FINRA to 

collect data as the regulatory authority 

in this area under the 17d–2 Agreement 

to assess the efficacy and long-term 

viability of a permanent remote office 

inspections program. The Exchange 

emphasizes that the inspection 

requirement is one aspect of a firm’s 

overall supervisory system, and that the 

inspection, whether done in accordance 

with the FINRA Remote Inspections 

Pilot Program, or on-site, would be held 

to the existing standards of review 

under Exchange Rule 1308(d).44

Adopt FINRA’s RSL Classification 

The Exchange proposes to adopt 

paragraph (d)(8) of Rule 1308, which 

would allow a location that is the 

private residence of a person associated 

with a Member where supervisory 

activities are conducted, including those 

described in proposed Rule 1306(j)(4) 

through (7) or Rule 1306(c)(2), that 

satisfies the conditions for designation 

as RSL set forth in FINRA Rule 3110.19 

to also be considered a non-branch 

location (i.e., an unregistered office) for 

those activities under the Exchange 

rules. Without this proposed rule 

change, any private residence at which 

a person associated with a member 

conducts supervisory activities is 

subject to registration, an annual 

inspection and, in some cases, 

additional licensing requirements.45 As 

described below, adding proposed 

paragraph (d)(8) of Rule 1308 would 

harmonize the Exchange’s internal 

inspections obligations for its Members 

with FINRA’s comparable obligations 

for its members, thereby avoiding 

confusion to Members with respect to 

the applicability of FINRA’s new RSL 

designation with respect to compliance 

with Rule 1308(d).46 Additionally, 

because proposed paragraph (d)(8) of 

Rule 1308 would incorporate by 

reference FINRA Rule 3110.19, this rule 

change would enable Exchange Rule 

1308 to continue to be incorporated into 

the 17d–2 agreement.47

Background 

Early in 2020, the COVID–19 

pandemic prompted FINRA to provide 

temporary relief to member firms from 

certain regulatory requirements to 

address the public health crisis.48 As 

mentioned above, FINRA subsequently 

adopted temporary relief to allow 

remote inspections of an OSJ, branch 

office, or non-branch location for 

calendar years 2020 and 2021; 49 FINRA 

extended the temporary relief several 

times to include calendar years 2022, 

2023, and the first half of 2024.50 The 

Exchange, following FINRA, offered its 

Members the same temporary relief to 

allow remote inspections of OSJs, 

branch offices, and non-branch 

locations for calendar years 2021, 2022, 

2023, and until June 30, 2024.51 FINRA 


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Years 2020 and 2021); 94251 (February 15, 2022), 

87 FR 9764 (February 22, 2022) (SR–MIAX–2022– 

09) (Notice of Filing and Immediate Effectiveness of 

a Proposed Rule Change by Miami International 

Securities Exchange, LLC To Amend Exchange Rule 

1308, Supervision of Accounts); 96867 (February 9, 

2023), 88 FR 9919 (February 15, 2023) (SR–MIAX– 

2023–04) (Notice of Filing and Immediate 

Effectiveness of a Proposed Rule Change To Amend 

Exchange Rule 1308, Supervision of Accounts); and 

99548 (February 15, 2024), 89 FR 13386 (February 

22, 2024) (SR–MIAX–2024–10) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

To Amend Exchange Rule1308 To Extend the 

Temporary Remote Inspection Relief for Members 

Through June 30, 2024). 

52See FINRA Rule 3110.18. 

53See Securities Exchange Act Release No. 97237 

(March 31, 2023), 88 FR 20568 n. 8 (April 6, 2023) 

(SR–FINRA–2023–006) (‘‘FINRA RSL Proposal’’) 

(describing FINRA’s ‘‘practice of periodically 

reviewing its rules to ensure they continue to 

promote their intended investor protection 

objectives in a manner that is effective and efficient, 

without imposing undue burdens, particularly in 

light of technological, industry and market 

changes.’’) 

54See proposed Exchange Rules 1308(d)(1), (2), 

and proposed paragraph (3). 

55See Exchange Rule 1306(a). 

56See Exchange Rule 1306(c). 

57See Exchange Rule 1306(d). 

58See Exchange Rule 1306(a). 

59See proposed Exchange Rules 1308(d)(1) and 

(2). 

60See proposed Exchange Rules 1306 (j)(1)–(7). 

61See proposed Exchange Rule 1308(d)(1). 

62See generally Rule 1306(c)(1) and Rule 

1306(c)(4) (7) which, in addition to the primary 

residence and the non-primary residence exclusions 

that are further described, excludes the following 

from the definition of ‘‘branch office’’: (1) any 

location that is established solely for customer 

service or back office type functions where no sales 

activities are conducted and that is not held out to 

the public as a branch office; (2) any office of 

convenience, where associated persons occasionally 

and exclusively by appointment meet with 

customers, which is not held out to the public as 

an office; (3) any location that is used primarily to 

engage in non-securities activities and from which 

the associated person(s) effects no more than 25 

securities transactions in any one calendar year; 

provided that any retail communication identifying 

such location also sets forth the address and 

telephone number of the location from which the 

associated person(s) conducting business at the 

non-branch locations are directly supervised; (4) the 

Floor of a registered national securities exchange 

where a member conducts a direct access business 

with public customers; or (5) a temporary location 

established in response to the implementation of a 

business continuity plan. 

replaced the temporary remote 

inspections relief with the Remote 

Inspections Pilot Program 52 that 

impacts the internal inspections 

requirements of FINRA Rule 3110(c); 

the Exchange proposes to amend its 

supervision rules such that any Member 

that participates in the FINRA pilot 

shall be deemed to satisfy the equivalent 

internal inspection requirements in 

Exchange Rule 1308(d) as above. 

In response to the pandemic, many 

private and government employers 

closed their offices and their employees 

continued with their work from 

alternative locations such as private 

residences. The Exchange, like FINRA, 

believes this model will endure, 

irrespective of the state of the pandemic. 

The pandemic accelerated reliance on 

technological advances in surveillance 

and monitoring capabilities and 

prompted significant changes in 

lifestyles and work habits, including the 

growing expectation for workplace 

flexibility. Moreover, the technology 

advancements that facilitated the 

transition to working outside the 

conventional office setting on a broad 

scale have not only effected a profound 

change in lifestyle and workplace 

practices for member firms, but 

provided SROs such as FINRA and the 

Exchange an opportunity to consider 

aspects of their supervision rules that 

may benefit from modernization.53 As 

such, the Exchange, like FINRA, 

believes measured changes to its 

regulatory approach would allow firms 

to effectively and more efficiently carry 

out their supervisory responsibilities to 

review the activities of each office or 

location while preserving investor 

protections. 

Requirements To Register and Inspect 

Offices 

Exchange Rule 1308 requires a 

Member, regardless of size or type, to 

have a supervisory system for the 

activities of its associated persons. 

Proposed Exchange Rule 1306(a) would 

set forth the minimum requirements of 

a Member’s supervisory system that 

includes registering a location as an OSJ 

or branch office that meets the 

definitions under paragraph (c) and 

proposed paragraph (j) of Exchange Rule 

1306. Proposed Exchange Rule 1308(d) 

would require Members to inspect all 

offices and locations. The proposed rule 

would categorize offices or locations as 

an OSJ or supervisory branch office, a 

non-supervisory branch office, or a nonbranch location.54 The requirements to 

register, inspect and have a principal 

on-site vary based on the categorization. 

Specifically, proposed Rule 1306(a) 

would require the registration as an OSJ 

or branch office of each location, that 

meets their respective definition under 

paragraph (c) and proposed paragraph 

(j) of Exchange Rule 1306, as described 

in more detail below.55

An OSJ is a type of branch office. The 

Exchange defines a ‘‘branch office’’ as 

‘‘any location where one or more 

associated persons of a Member 

regularly conduct the business of 

effecting any transactions in, or 

inducing or attempting to induce the 

purchase or sale of any security, or is 

held out as such[.]’’ 56 In addition, any 

location that is responsible for 

supervising the activities of persons 

associated with a Member at one or 

more non-branch locations of such 

Member is considered to be a branch 

office.57 A location registered as a 

branch office must file with the 

Exchange and keep current a list of each 

of its branch offices showing the 

location of each such office and the 

name of the manager of each such 

office,58 and is subject to an inspection 

at least every three years, unless it is a 

supervisory branch office in which case 

it is subject to at least an annual 

inspection.59

Depending upon the functions 

occurring at a branch office, it may be 

further classified as an OSJ. As 

described above, proposed paragraph (j) 

of Rule 1306 would define as any office 

of a member at which any one or more 

of the following functions take place: (1) 

order execution or market making; (2) 

structuring of public offerings or private 

placements; (3) maintaining custody of 

customers’ funds or securities; (4) final 

acceptance (approval) of new accounts 

on behalf of the Member; (5) review and 

endorsement of customer orders; (6) 

final approval of retail communications 

for use by persons associated with the 

Member, pursuant to FINRA Rule 

2210(b)(1), except for an office that 

solely conducts final approval of 

research reports; or (7) responsibility for 

supervising the activities of persons 

associated with the Member at one or 

more other branch offices of the 

Member.60 Under the proposed rule 

change, each OSJ would need to be 

inspected at least annually.61

However, subject to specified 

conditions, an office or location may be 

deemed a ‘‘non-branch location,’’ and 

excluded from registration as a branch 

office. Currently, Exchange Rule 1306(c) 

sets forth seven exclusions—often 

referred to as unregistered offices or 

non-branch locations—of which two 

pertain to residential locations.62 One 

such exclusion appears under Exchange 

Rule 1306(c)(2) and exempts from 

registration as a branch office an 

associated person’s primary residence 

subject to the following express 

conditions: (1) 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; (2) the 

location is not held out to the public as 

an office and the associated person does 

not meet with customers at the location; 

(3) neither customer funds nor securities 

are handled at that location; (4) the 

associated person is assigned to a 


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63See Exchange Rule 1306(c)(2)(i)–(ix). The 

primary residence exclusion is also set forth in 

FINRA Rule 3110(f)(2)(A)(ii). 

64See Exchange Rule 1306(c)(3). 

65See NASD [FINRA] Notice to Members 06–12 

(March 2006). 

66See proposed Exchange Rule 1308(d)(3). 

67See generally Exchange Rule 1306(c)(1) and 

Exchange Rules 1306(c)(4)–(7). 

68See proposed Exchange Rules 1306(j)(4)–(7). 

69See proposed Exchange Rule 1308(d)(1) and 

Exchange Rule 1306(d). 

70See FINRA Regulatory Notice 24–02. 

71See Securities Exchange Act Release No. 97237 

(March 31, 2023), 88 FR 20568 n. 8 (April 6, 2023) 

(SR–FINRA–2023–006) (‘‘FINRA RSL Proposal’’). 

72See proposed Exchange Rule 1308(d)(3). 

73See FINRA Rule 3110(f)(2)(A)(ii)a., b., c., d., e., 

f., and i. 

74See, e.g., NASD [FINRA] Notice to Members 

06–12 (March 2006). 

75See FINRA Rule 3110.19(a). 

76See FINRA Rule 3110.19(a)(1). 

77See FINRA Rule 3110.19(a)(2). 

78See FINRA Rule 3110.19(a)(3). 

79See Exchange Rule 1306(c)(2)(i)–(ix). 

80See Exchange Rule 1306(c)(3). 

81See FINRA Rule 3110.19(a)(4). 

82See FINRA Rule 3110.19(a)(5). 

83See FINRA Rule 3110.19(a)(6). 

84See FINRA Rule 3110.19(a)(7). 

85See FINRA Rule 3110.19(a)(8). 

86See FINRA Rule 3110.19(a)(9). 

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; (5) the associated 

person’s correspondence and 

communications with the public are 

subject to all supervisory provisions of 

the Exchange’s Rules; (6) electronic 

communications (e.g., email) are made 

through the Member’s electronic system; 

(7) all orders are entered through the 

designated branch office or an electronic 

system established by the Member that 

is reviewable at the branch office; (8) 

written supervisory procedures 

pertaining to supervision of sales 

activities conducted at the residence are 

maintained by the Member; and (9) a list 

of the residence locations is maintained 

by the Member (‘‘primary residence 

exclusion’’).63 The second exclusion 

that pertains to a residential location 

appears under Rule 1306(c)(3) is any 

location, other than a primary residence, 

that is used for securities business for 

less than 30 business days in any one 

calendar year, provided that the 

Member complies with the provisions of 

(ii) through (viii) of Exchange Rule 

1306(c) (2) (‘‘non-primary residence 

exclusion’’).64 In general, the nonprimary residence exclusion typically 

refers to a vacation or second home.65

Under the proposed rule change, a nonbranch location would need to be 

inspected on a periodic schedule, 

presumed to be at least every three 

years.66

Notwithstanding either of these two 

residential exclusions or the other 

exclusions listed under Exchange Rule 

1306(c)(1),67 a primary or non-primary 

residence location that is responsible for 

either the supervisory activities set forth 

in the OSJ definition or for supervising 

the activities of persons associated with 

the Member at one or more non-branch 

locations of the Member is considered 

an OSJ or (supervisory) branch office, 

respectively.68 Consequently, such 

residential supervisory offices would be 

subject to registration, an annual 

inspection and, in some cases, 

additional licensing requirements.69

FINRA Residential Supervisory 

Location Rule 

Effective June 1, 2024, FINRA 

implemented a rule change that 

establishes a new RSL designation for a 

private residence at which an associated 

person engages in specified supervisory 

activities, subject to specified investor 

protection safeguards and limitations.70

This new non-branch location 

designation targets the subset of 

residential locations that have many of 

the attributes contained in the primary 

residence exclusion, but must be 

registered as an OSJ or branch office 

because of the supervisory functions 

taking place there. 

As described in the FINRA RSL 

Proposal,71 the definition of an RSL is 

based largely on several existing aspects 

of FINRA Rule 3110(f) (and therefore on 

the functionally identical to Exchange 

Rule 1306). In particular, the RSL 

definition incorporates the existing 

supervisory functions appearing in the 

OSJ definition (FINRA Rule 3110(f)(1)) 

and branch office definition (FINRA 

Rule 3110(f)(2)(A)) with the existing 

residential exclusions set forth in the 

branch office definition to classify an 

RSL as a non-branch location. Under 

current Exchange rules, a private 

residence at which these supervisory 

functions occur must be registered as a 

branch office under Exchange Rule 

1306(d), and inspected at least annually 

under proposed Exchange Rule 

1308(d)(1). By treating such location as 

a non-branch location, the private 

residence would become subject to 

inspections on a regular periodic 

schedule under proposed Exchange 

Rule 1308(d)(3).72

FINRA Rule 3110.19 incorporates 

some existing safeguards and limitations 

members must already satisfy to rely on 

the primary residence exclusion.73 As 

described in the FINRA RSL Proposal, 

FINRA intends for the terms underlying 

the RSL designation to be interpreted 

consistently with their meaning in 

FINRA Rule 3110(f) and existing related 

guidance.74 The requirements for 

designation of a location as an RSL, 

which are set forth in FINRA Rule 

3110.19, include the following key 

elements: 

• A location where supervisory 

activities are conducted shall be 

considered for those activities a nonbranch location provided that: 75

Æ only one associated person (or 

members of the same immediate family) 

may conduct business at the location; 76

Æ the location is not held out to the 

public as an office: 77

Æ the associated person does not meet 

with customers or prospective 

customers at the location; 78

Æ any sales activity that takes place at 

the location complies with the 

conditions set forth under FINRA Rule 

3110(f)(2)(A)(ii) (the primary residence 

exclusion 79) or FINRA Rule 

3110(f)(2)(A)(iii) (the non-primary 

residence exclusion; 80) 81

Æ neither customer funds nor 

securities are handled at that location; 82

Æ 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; 83

Æ the associated person’s 

correspondence and communications 

with the public are subject to the firm’s 

supervision in accordance with FINRA’s 

supervision rule; 84

Æ the associated person’s electronic 

communications are made through the 

member’s electronic system; 85

Æ the member 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, FINRA rules, and 

the member’s own written supervisory 

procedures under Rule 3110; such 

records are not physically or 

electronically maintained and preserved 

at the office or location; and the member 

has prompt access to such records; 86

and 

Æ the member 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: firmwide tools such as, electronic 

recordkeeping system; electronic 

surveillance of email and 

correspondence; electronic trade 


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87See FINRA Rule 3110.19(a)(10). 

88See FINRA Rule 3110.19(b). 

89See FINRA Rule 3110.19(c). 

90See FINRA Rule 3110.19(c)(1). 

91See FINRA Rule 3110.19(c)(2). 

92See FINRA Rule 3110.19(c)(3). 

93See FINRA Rule 3110.19(c)(4). 

94See FINRA Rule 3110.19(c)(5). 

95See FINRA Rule 3110.19(c)(6). 

96See FINRA Rule 3110.19(d). 

97See FINRA Rule 3110.19(e). 

98See proposed paragraph (d)(8) of Rule 1308. 

blotters; regular activity-based sampling 

reviews; and tools for visual 

inspections; 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 system tools 

such as secure network connections and 

effective cybersecurity protocols.87

• FINRA members shall not be 

eligible to designate an office or location 

as an RSL if, among other things, the 

FINRA member is designated as: (i) 

Restricted Firm under FINRA Rule 4111 

or (ii) a Taping Firm under FINRA Rule 

3170. Additionally, firms with 

suspended or new (effective less than 12 

months) FINRA memberships or that 

have been found within the past three 

years by the SEC or FINRA to have 

violated FINRA Rule 3110(c) are 

ineligible to participate.88

• An office or location shall not be 

eligible for designation as an RSL if one 

or more associated persons at such 

office or location: 89

Æ is a designated supervisor who has 

less than one year of direct supervisory 

experience with the member, or an 

affiliate or subsidiary of the member 

that is registered as a broker-dealer or 

investment adviser; 90

Æ is functioning as a principal for a 

limited period in accordance with 

FINRA Rule 1210.04; 91

Æ is subject to a mandatory 

heightened supervisory plan under the 

rules of the SEC, FINRA or state 

regulatory agency; 92

Æ is statutorily disqualified, unless 

such disqualified person has been 

approved (or is otherwise permitted 

pursuant to FINRA rules and the federal 

securities laws) to associate with a 

member and is not subject to a 

mandatory heightened supervisory plan 

under FINRA Rule 3110.19(c)(3) or 

otherwise as a condition to approval or 

permission for such association; 93

Æ 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; 94 or 

Æ 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, an SRO, including FINRA, 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 Exchange 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 MSRB or other self-regulatory 

organization, including FINRA; 

provided, however, such office or 

location may be designated or 

redesignated as an RSL subject to the 

requirements of FINRA Rule 3110.19 

upon the earlier of: (i) the member’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.95

• FINRA members that elect to 

designate an office or location of the 

member as an RSL shall provide FINRA 

with a current list of all locations 

designated as RSLs by the 15th day of 

the month following each calendar 

quarter in the manner and format as 

FINRA may prescribe.96

• FINRA members must conduct a 

risk assessment prior to designating an 

office or location as an RSL. 

Specifically, the FINRA member must 

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. The assessment must 

document the factors considered, 

including among others, whether the 

associated person at such office or 

location is now subject to: (1) customer 

complaints, taking into account the 

volume and nature of the complaints; 

(2) heightened supervision other than 

where such office or location is 

ineligible for RSL designation under 

FINRA Rule 3110.19(c)(3); (3) any 

failure to comply with the member’s 

written supervisory procedures; (4) any 

recordkeeping violation; and (5) 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 FINRA member 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 FINRA Rule 3110(a), 

the member’s supervisory system must 

take into consideration any indicators of 

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

flags’’) when designating an office or 

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 FINRA Rule 3110.19 

and the member should consider 

evidencing steps taken to address those 

red flags where appropriate.97

Proposal 

The Exchange proposes to adopt 

subparagraph (d)(8) of Exchange Rule 

1308. This proposed new paragraph 

reads as follows: 

Residential Supervisory Location. A 

location that is the private residence of a 

person associated with a Member where 

supervisory activities are conducted, 

including those described in Rule 1306(j)(4) 

through (7) or Rule 1306(c)(2), which satisfies 

the conditions for designation as a 

Residential Supervisory Location set forth in 

FINRA Rule 3110.19 shall also be considered 

a non-branch location for those activities 

pursuant to the Exchange Rules.98

As stated in proposed new paragraph 

(d)(8) of Rule 1308, any location that a 

Member designates as an RSL pursuant 

to FINRA Rule 3110.19 shall also be 

considered a non-branch location for 

those activities pursuant to Exchange 

rules. 

Pursuant to this proposed rule 

change, Members will be required to 

share information about designated 

RSLs with FINRA on a quarterly basis. 

The Exchange is not proposing to add 

the entire FINRA Residential 

Supervisory Location designation rule 

to its rules, because it would be 

unnecessarily duplicative and 

burdensome for Members to share the 

same quarterly RSL designation 

information with the Exchange. The 

Exchange understands that adopting 

paragraph (d)(8) of Rule 1308 would 

update Exchange Rule 1308 so that it 

remains substantially similar to FINRA 

Rule 3110, such that they remain 

common rules subject to the 17d–2 


ddrumheller on DSK120RN23PROD with NOTICES1
97672 Federal Register / Vol. 89, No. 236 / Monday, December 9, 2024 / Notices 

99See FINRA Rule 3110.12. 

100See 15 U.S.C. 78o(b)(4)(E) and 15 U.S.C. 

78o(b)(6)(A). 

101 15 U.S.C. 78f(b). 

102 15 U.S.C. 78f(b)(5). 103 15 U.S.C. 78f(b)(5). 

104 15 U.S.C. 78s(b)(3)(A). 

105 17 CFR 240.19b–4(f)(6). 

106 17 CFR 240.19b–4(f)(6)(iii). 

107 17 CFR 240.19b–4(f)(6). 

108 17 CFR 240.19b–4(f)(6)(iii). 

Agreement. As a result, regulatory 

responsibility for Exchange Rule 1308 

would continue to be allocated to 

FINRA. 

The Exchange, like FINRA, believes 

that the current work environment 

merits a reevaluation of the regulatory 

benefit of requiring firms to designate a 

private residence, at which specified 

supervisory functions occur, as an OSJ 

or branch office. The Exchange’s 

proposal to incorporate by reference 

FINRA’s RSL designation is intended to 

reflect a pragmatic balance between the 

hybrid workforce model and the 

parameters that should ensure that all 

locations, including residential 

locations, are appropriately supervised. 

Separate and apart from the 

classification of the office or location 

and the attendant inspection 

obligations, Members will continue to 

have an ongoing obligation to supervise 

the activities of each associated person 

in a manner reasonably designed to 

achieve compliance with applicable 

securities laws and regulations, and 

with applicable the Exchange and 

FINRA rules.99 The Exchange, like 

FINRA, emphasizes that Members have 

a statutory duty to supervise their 

associated persons, regardless of their 

location, compensation or employment 

arrangement, or registration status, in 

accordance with the Exchange and 

FINRA rules.100

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6(b) 101 of the 

Act in general, and furthers the 

objectives of Section 6(b)(5) of the 

Act 102 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 the Exchange’s supervision 

rules, specifically with respect to the 

definition of OSJ, the requirements for 

inspections of Members’ all offices and 

locations, and designation of certain 

non-branch offices as RSL, with those of 

FINRA, on which they are based. As 

discussed in the Purpose section, 

because proposed Exchange Rules 

1308(d)(7) and (8) would incorporate by 

reference FINRA Rule 3110.18 and 

3110.19, the proposed rule changes 

would enable Exchange Rule 1308 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’s compliance with FINRA Rule 

3110.18 and 3110.19 shall mean the 

Member would be also in compliance 

with Exchange Rule 1308, thus 

promoting the application of consistent 

regulatory standards with respect to 

rules that FINRA enforces. Adopting the 

definition of OSJ is to harmonize 

Exchange Rule 1306 with FINRA Rule 

3110.01 to provide that both branch 

offices and OSJs will be subject to the 

office registration requirements set forth 

in Exchange Rule 1306(a). Adopting 

FINRA’s inspection requirement for 

non-branch locations is to harmonize 

Exchange Rule 1308(d) with FINRA 

Rule 3110(c) so that a Member’s 

compliance with FINRA Rule 3110(c) 

shall mean the Member would be also 

in compliance with Exchange Rule 

1308(d). As such, the proposed rule 

changes 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 Section 

6(b)(5) of the Act.103

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule changes will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule changes are not designed 

to address any competitive issue but 

rather to provide greater harmonization 

among the Exchange and FINRA rules of 

similar purpose, resulting in less 

burdensome and more efficient 

regulatory compliance for common 

members and facilitating FINRA’s 

performance of its regulatory 

performance. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

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) of the Act 104 and Rule 19b– 

4(f)(6) 105 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, 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.106

A proposed rule change filed under 

Rule 19b–4(f)(6) 107 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b4(f)(6)(iii),108 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the 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, 

MIAX is harmonizing the Exchange’s 

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 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 236 / Monday, December 9, 2024 / Notices 97673 

109For 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). 

110 15 U.S.C. 78s(b)(2)(B). 111 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

system in accordance with Exchange 

Act Section 6(b)(5). 

Further, the Exchange stated that 

waiver of the operative delay would be 

consistent with the protection of 

investors and the public interest 

because such waiver would allow the 

Exchange to immediately harmonize its 

supervision rule with the FINRA rule on 

which it is based without delay, thereby 

eliminating the possibility of a 

significant regulatory gap between the 

FINRA and Exchange rules, providing 

more uniform inspection standards 

across the securities industry, and 

helping to avoid confusion for Exchange 

Members that are also FINRA members. 

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.109

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) 110 of the Act 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

MIAX–2024–44 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–MIAX–2024–44. 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–MIAX–2024–44 and should 

be submitted on or before December 30, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.111

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–28769 Filed 12–6–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 2:00 p.m. on Thursday, 

December 12, 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. 

Dated: December 5, 2024. 

J. Matthew DeLesDernier, 

Deputy Secretary. 

[FR Doc. 2024–28987 Filed 12–5–24; 4:15 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101802; File No. SR– 

CboeBZX–2024–115] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend its 

Fee Schedule Relating to Fee Codes 

and Volume Tiers 

December 3, 2024. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2


ddrumheller on DSK120RN23PROD with NOTICES1