49394 Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices 

3See Securities Exchange Act Release Nos. 91217 

(February 26, 2021), 86 FR 12715 (March 4, 2021) 

(SR–NYSE–2021–14); 91218 (February 26, 2021), 86 

FR 12744 (March 4, 2021) (SR–NYSEAMER–2021– 

10); 91216 (February 26, 2021), 86 FR 12735 (March 

4, 2021) (SR–NYSEArca–2021–13); 91219 (February 

26, 2021), 86 FR 12724 (March 4, 2021) (SR– 

NYSECHX–2021–03); and 91215 (February 26, 

2021), 86 FR 12752 (March 4, 2021) (SR– 

NYSENAT–2021–04) (collectively, the ‘‘Notices’’). 

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

5See Securities Exchange Act Release No. 91490 

(April 7, 2021), 86 FR 19313 (April 13, 2021). The 

Commission designated June 2, 2021, as the date by 

which it should approve, disapprove, or institute 

proceedings to determine whether to approve or 

disapprove the proposed rule changes. 

6See Securities Exchange Act Release No. 92033 

(May 26, 2021), 86 FR 29601 (June 2, 2021). 

7Comments received on the Notices are available 

on the Commission’s website at: https://

www.sec.gov/comments/sr-nyse-2021-14/ 

srnyse202114.htm. 

8 15 U.S.C. 78s(b)(2). 

9See Notices, supra note 3. 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(31). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4The MAP rules consist of Rules 1011 through 

1019, which reside under the Rule 1000 Series 

(Member Application and Associated Person 

Registration). 

5See Securities Exchange Act Release No. 90635 

(December 10, 2020), 85 FR 81540 (December 16, 

2020) (Order Approving File No. SR–FINRA–2020– 

011, as Modified by Amendment No. 1) (‘‘SEC 

Order’’). See also Regulatory Notice 21–09 (March 

2021) (announcing September 1, 2021, as the 

effective date of the amendments to the MAP rules, 

and different effective dates of the amendments to 

other FINRA rules to address brokers with a 

significant history of misconduct). 

6FINRA is separately developing comprehensive 

changes to the MAP rules in connection with the 

retrospective review of this rule set, which will also 

require conforming amendments to the 

standardized forms. See Regulatory Notice 18–23 

(July 2018) (requesting comment on a proposal 

regarding the MAP rules). 

7See Rule 1017(b)(2). 

proposed rule changes were published 

for comment in the Federal Register on 

March 4, 2021.3 On April 7, 2021, 

pursuant to Section 19(b)(2) of the Act,4

the Commission designated a longer 

period within which to either approve 

the proposed rule changes, disapprove 

the proposed rule changes, or institute 

proceedings to determine whether to 

approve or disapprove the proposed 

rule changes.5 On May 26, 2021, the 

Commission instituted proceedings to 

determine whether to approve or 

disapprove the proposed rule changes.6

The Commission has received comment 

letters on the proposed rule changes.7

Section 19(b)(2) of the Act 8 provides 

that, after initiating proceedings, the 

Commission shall issue an order 

approving or disapproving the proposed 

rule change not later than 180 days after 

the date of publication of notice of filing 

of the proposed rule change. The 

Commission may extend the period for 

issuing an order approving or 

disapproving the proposed rule change, 

however, by not more than 60 days if 

the Commission determines that a 

longer period is appropriate and 

publishes the reasons for such 

determination. The proposed rule 

changes were published for notice and 

comment in the Federal Register on 

March 4, 2021.9 August 31, 2021 is 180 

days from that date, and October 30, 

2021 is 240 days from that date. 

The Commission finds it appropriate 

to designate a longer period within 

which to issue an order approving or 

disapproving the proposed rule changes 

so that it has sufficient time to consider 

the proposed rule changes, the issues 

raised in the comment letter that has 

been submitted in connection therewith, 

and the Exchanges’ response to the 

comment letter. Accordingly, the 

Commission, pursuant to Section 

19(b)(2) of the Act,10 designates October 

30, 2021 as the date by which the 

Commission should either approve or 

disapprove the proposed rule changes 

(File Nos. SR–NYSE–2021–14, SR– 

NYSEAMER–2021–10, SR–NYSEArca– 

2021–13, SR–NYSECHX–2021–03, SR– 

NYSENAT–2021–04). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–18946 Filed 9–1–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92793; File No. SR-FINRA– 

2021–020] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Form CMA 

(Continuing Membership Application 

Form) 

August 27, 2021. 

Pursuant to 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 August 

20, 2021, the Financial Industry 

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

filed with the Securities and Exchange 

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

the proposed rule change as described 

in Items I and II below, which Items 

have been prepared by FINRA. FINRA 

has designated the proposed rule change 

as constituting a ‘‘non-controversial’’ 

rule change under paragraph (f)(6) of 

Rule 19b–4 under the Act,3 which 

renders the proposal effective upon 

receipt of this filing by the Commission. 

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 

FINRA is proposing to (1) amend 

Form CMA (Continuing Membership 

Application Form) required under Rule 

1017 (Application for Approval of 

Change in Ownership, Control, or 

Business Operations) to conform to 

amendments to the Membership 

Application Program (‘‘MAP’’) rules 4 as 

described in File No. SR–FINRA–2020– 

011, which become effective on 

September 1, 2021; 5 and (2) make nonsubstantive and technical changes to 

Form CMA.6 The proposed rule change 

does not make any changes to the text 

of FINRA rules. 

The text of the proposed rule change 

is available on FINRA’s website at 

http://www.finra.org, at the principal 

office of FINRA 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, 

FINRA 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. FINRA 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 

Background 

The MAP rules require an applicant 

for continuing membership to file an 

application that includes a Form CMA.7

Form CMA is organized into sections 

that align with the standards for 

admission set forth in Rule 1014(a) 

(Standards for Admission). Each section 

begins with a description of the 

applicable standard in Rule 1014(a), 

followed by a series of questions related 

to that standard that are intended to 

help the applicant provide the 

responses needed to demonstrate that it 


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8The sections of Form CMA that are marked with 

a red asterisk require the applicant to provide a 

response. 

9See supra note 5. 

10For purposes of Rule 1017(a)(7) only, the term 

‘‘owner’’ has the same meaning as ‘‘direct owner’’ 

and ‘‘indirect owner’’ on the Uniform Application 

for Broker-Dealer Registration (‘‘Form BD’’) 

Schedules A and B, as amended from time to time. 

See Rule 1017(a)(7). 

11For purposes of Rule 1017(a)(7), the term 

‘‘control person’’ means a person who would have 

‘‘control’’ as defined on Form BD, as amended from 

time to time. See Rule 1017(a)(7). 

12See paragraph (h) under Rule 1011 (defining 

‘‘final criminal matter’’) as amended by SR–FINRA– 

2020–011, supra note 5. 

13See paragraph (p) under Rule 1011 (defining 

‘‘specified risk event’’) as amended by SR–FINRA– 

2020–011, supra note 5. See also Securities 

Exchange Act Release No. 92710 (August 19, 2021) 

(Order Approving File No. SR–FINRA–2021–011) 

(amendment to the ‘‘specified risk event’’ 

definition). 

14Relatedly, new IM–1011–3 (Business 

Expansions and Persons with Specified Risk 

Events) provides that IM–1011–1 is not available to 

any member that is seeking to add a natural person 

who has, in the prior five years, one or more final 

criminal matters or two or more specified risk 

events and seeks to become an owner, control 

person, principal, or registered person of the 

member. In general, IM–1011–1 creates a safe 

harbor for specified categories of business 

expansions, subject to certain thresholds, that a 

member may undergo without filing a CMA. 

15See supra note 8. 

16Rule 1017(a)(5) provides that a member shall 

file a CMA for approval of a ‘‘material change in 

business operations,’’ which is defined in Rule 

1011(m). Currently on Form CMA, the ‘‘Change(s) 

in business operations’’ category lists five options 

that an applicant may select to further identify the 

type of material change involved. Three of those 

options correspond to changes that are set forth in 

subparagraphs (1), (2) and (3) under the definition 

of ‘‘material change in business operations’’ in Rule 

1011(m). A fourth option describes an expansion of 

Associated Persons, offices, or number of markets 

made. A fifth ‘‘other’’ option also is included 

because the definition of ‘‘material change in 

business operations’’ is not exhaustive. See 

generally paragraph (m) under Rule 1011 as 

amended by SR–FINRA–2020–011 (renumbering 

from paragraph (l) to paragraph (m)), supra note 5; 

IM–1011–1; Rule 1017(b)(2)(C). 

17For example, Rule 1017(a)(1) provides that a 

CMA is required for ‘‘a merger of the member with 

another member, unless both are members of the 

New York Stock Exchange, Inc. or the surviving 

entity will continue to be a member of the New 

York Stock Exchange, Inc[.]’’ Form CMA, in the 

Type of Continuing Membership Application 

section, summarizes this event as ‘‘Merger of the 

member with another member.’’ In another 

example, while Rule 1017(a)(2) states that a CMA 

is required for ‘‘a direct or indirect acquisition by 

the member of another member, unless the 

acquiring member is a member of the New York 

Stock Exchange, Inc.[,]’’ Form CMA summarizes 

such event as a ‘‘[d]irect or indirect acquisition by 

the member of another member.’’ Except for one 

technical change pertaining to the event that 

corresponds to Rule 1017(a)(3), FINRA is not 

proposing to change the descriptions of Rule 

1017(a)(1) through Rule 1017(a)(5) as they currently 

appear in Form CMA. 

18FINRA recently made changes to Form CMA to 

account for Rule 1017(a)(6). See Securities 

Exchange Act Release No. 89867 (September 15, 

2020), 85 FR 58404 (September 18, 2020) (Notice of 

Filing and Immediate Effectiveness of File No. SR– 

FINRA–2020–028). 

can meet each of the standards 

described under Rule 1014(a), and to 

facilitate FINRA’s review of the 

application.8 An applicant is able to 

provide its documents and information 

by attaching files in various formats 

(e.g., .docx, .pdf, .xlsx) or by entering 

free form text in text boxes, and making 

selections through screen components 

such as drop-down menus and radio 

buttons, among others. 

Recent Amendments to the MAP Rules 

On December 10, 2020, FINRA 

amended the MAP rules, among other 

FINRA rules, to address the issue of 

persons with a significant history of 

misconduct and the member firms that 

employ them.9 As amended, Rule 1017 

includes new paragraph (a)(7), which 

requires a member to file a continuing 

member application (‘‘CMA’’) whenever 

a natural person seeking to become an 

owner,10 control person,11 principal or 

registered person of a member has, in 

the prior five years, one or more ‘‘final 

criminal matters’’ (as defined in new 

Rule 1011(h) 12) or two or more 

‘‘specified risk events’’ (as defined in 

new Rule 1011(p) 13), and the member is 

not otherwise required to file a Form 

CMA in accordance with Rule 1017, 

unless the member has submitted a 

written request to FINRA seeking a 

materiality consultation for such 

contemplated activity. As part of the 

materiality consultation, Rule 1017(a)(7) 

also provides that FINRA will determine 

in the public interest and the protection 

of investors that either the member is 

not required to file a Form CMA and 

may effect the contemplated activity, or 

the member is required to file a Form 

CMA in accordance with Rule 1017 and 

the member may not effect the 

contemplated activity unless FINRA 

approves the Form CMA. In addition, 

Rule 1017(a)(7) provides that 

Interpretative Material (‘‘IM’’)–1011–1 

(Safe Harbor for Business Expansions) is 

not available to the member when a 

materiality consultation is required 

under Rule 1017(a)(7).14

Proposed Conforming Amendments to 

Form CMA 

As a result of the recent amendments 

to the MAP rules, FINRA is proposing 

to amend Form CMA to: (1) List in the 

section of the form entitled ‘‘Type of 

Continuing Membership Application’’ 

all of the events under Rule 1017(a) that 

require a member to file Form CMA; (2) 

incorporate questions into Form CMA 

that relate specifically to Rule 

1017(a)(7); and (3) make other nonsubstantive and technical changes in the 

form for clarity and consistency, and to 

promote efficiency. FINRA believes that 

these proposed conforming changes to 

Form CMA and the non-substantive and 

technical changes will help guide an 

applicant to provide the responses 

needed to demonstrate that it can meet 

the standards set forth under Rule 

1014(a), and to facilitate FINRA’s review 

of the application in light of the recent 

admendments to the MAP rules. 

A. Amend Form CMA’s ‘‘Type of 

Continuing Membership Application’’ 

Section To List All of the Events 

Specified in Paragraphs (a)(1) Through 

(a)(7) Under Rule 1017 

As noted above, Form CMA is 

organized into sections that correspond 

to the standards for admission set forth 

in Rule 1014(a), with each section 

containing its own set of questions, 

some of which are mandatory, related to 

that particular standard for admission.15

But before an applicant proceeds with 

completing those sections, Form CMA 

requests the applicant to identify all 

applicable types of changes in 

ownership, control, or business 

operations in the section titled, ‘‘Type of 

Continuing Membership Application.’’ 

This section currently bears two headers 

that categorize some Rule 1017(a) events 

as either ‘‘Ownership of asset transfer 

changes,’’ covering the events described 

under Rule 1017(a)(1) through Rule 

1017(a)(4), or ‘‘Change(s) in business 

operations,’’ covering the events 

described under Rule 1017(a)(5).16

Currently, Form CMA’s ‘‘Type of 

Continuing Membership Application’’ 

section presents the events under Rule 

1017(a)(1) through Rule 1017(a)(5), 

some of which appear in a summary 

fashion, without rule references.17

FINRA is proposing to amend this 

section of Form CMA so that all the 

events described under Rule 1017(a), 

including those set forth in paragraphs 

(a)(6) and (a)(7), and their respective 

rule references would be listed in the 

form. In addition, FINRA is proposing to 

delete the two headers—‘‘Ownership of 

asset transfer changes’’ and ‘‘Change(s) 

in business operations’’—for clarity and 

to facilitate presenting the events under 

Rule 1017(a)(1) through 1017(a)(7) 

sequentially. 

Specifically, the proposed changes to 

Form CMA’s ‘‘Type of Continuing 

Membership Application’’ section 

would add the following three types of 

changes in ownership, control, or 

business operations that an applicant 

may select, as applicable, with 

references to the corresponding 

provisions in Rule 1017(a)(6) 18 and 

(a)(7): 


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19See generally Exhibit 3 (Form CMA, Standard 

1, Questions 1, 2, and 3, within the category titled 

‘‘Overview of the proposed change’’). 

20See Exhibit 3 (Form CMA, Standard 1, chart 

accompanying Proposed Question 5.a., within the 

category titled ‘‘Overview of the proposed change’’). 

This proposed chart would be similar to how 

members, when submitting a request for a 

materiality consultation pursuant to Rule 

1017(a)(7), would need to provide information 

about individuals’ ‘‘final criminal matters’’ and 

‘‘specified risk events.’’ See Rule 1017(a)(7) 

(providing that the member’s written request for a 

materiality consultation ‘‘must address the issues 

that are central to the materiality consultation’’); 

Securities Exchange Act Release No. 88600 (April 

8, 2020), 85 FR 20745, 20753 (April 14, 2020) 

(Notice of Filing of File No. SR–FINRA–2020–011) 

(explaining that a member submitting a request for 

a materiality consultation would need to provide 

information relating to the individuals’ ‘‘final 

criminal matters’’ and ‘‘specified risk events’’). 

21The following quoted material includes 

references to the Uniform Application for Securities 

Industry Registration or Transfer (‘‘Form U4’’), the 

Uniform Termination Notice for Securities Industry 

Registration (‘‘Form U5’’), the Uniform Disciplinary 

Action Reporting Form (‘‘Form U6’’), and the 

Central Registration Depository (‘‘CRD’’). 

b Any direct or indirect acquisition or 

transfer of a member’s assets or any asset, 

business or line of operation where the 

transferring member or an Associated Person 

of the transferring member has a ‘‘covered 

pending arbitration claim,’’ an unpaid 

arbitration award or an unpaid settlement 

related to an arbitration (FINRA Rule 

1017(a)(6)(A)) 

b Business expansion to add one or more 

Associated Persons involved in sales and one 

or more of those Associated Persons has a 

‘‘covered pending arbitration claim,’’ an 

unpaid arbitration award or an unpaid 

settlement related to an arbitration (FINRA 

Rule 1017(a)(6)(B)) 

b Natural person seeks to become an 

owner, control person, principal or registered 

person of a member and has, in the prior five 

years, one or more ‘‘final criminal matters’’ 

or two or more ‘‘specified risk events’’ 

(FINRA Rule 1017(a)(7)) 

These proposed conforming changes 

to this section of Form CMA will list all 

of the events under Rule 1017(a). 

Additionally, the specific references on 

Form CMA to the applicable subsections 

of Rule 1017 will give applicants clarity 

about which events require them to 

submit Form CMA to FINRA for 

approval. 

B. Incorporate Questions To Conform 

Form CMA to Rule 1017(a)(7) 

Rule 1017(i) provides that in 

rendering a decision on a CMA, FINRA 

must consider whether the applicant 

and its associated persons meet each of 

the standards in Rule 1014(a). FINRA is 

proposing to amend two sections in 

Form CMA, which are ‘‘Standard 1: 

Overview of the Applicants,’’ 

corresponding to Rule 1014(a)(1) 

(‘‘Standard 1’’), and ‘‘Standard 3: 

Compliance with securities laws, just 

and equitable principles of trade,’’ 

corresponding to Rule 1014(a)(3) 

(‘‘Standard 3’’). FINRA believes that 

these proposed changes would conform 

Form CMA to, and are necessary to 

effectively account for, Rule 1017(a)(7). 

The proposed amendments to Form 

CMA are described in further detail 

below. 

1. Form CMA’s ‘‘Standard 1: Overview 

of the Applicants’’ Section 

Standard 1 requires FINRA to 

determine whether the application and 

all supporting documents are complete 

and accurate. Form CMA’s Standard 1 

section has several questions that, in 

general, focus on understanding the 

circumstances surrounding the 

contemplated change or event set forth 

under Rule 1017(a), and are intended to 

elicit from the applicant the information 

necessary for FINRA to assess whether 

Standard 1 is met. For example, the 

applicant is required to provide a 

complete description of the 

contemplated change, the persons or 

entities that will become associated or 

affiliated with the applicant as a result 

of the contemplated change, and to the 

extent applicable, a description of the 

liabilities that will not be included in a 

transfer of assets or a line of business.19

FINRA is proposing to add several 

new questions to this section that would 

require the applicant to provide 

information necessary to support 

compliance with Rule 1017(a)(7). These 

proposed questions are intended to 

collect the necessary information in an 

efficient manner, as further explained 

below. 

Proposed new Question 5 would 

require, as marked by the asterisk, the 

applicant to provide a ‘‘yes’’ or ‘‘no’’ 

answer to the following question: 

5. Is this application required because the 

Applicant seeks to add a natural person as an 

owner, control person, principal or registered 

person who, in the prior five years, has one 

or more ‘‘final criminal matters’’ or two or 

more ‘‘specified risk events’’ (as defined in 

FINRA Rule 1011)?* (As Rule 1017(a)(7) 

provides, the term ‘‘owner’’ has the same 

meaning as ‘‘direct owner’’ and ‘‘indirect 

owner’’ on Form BD Schedules A and B, as 

amended from time to time, and the term 

‘‘control person’’ means a person who would 

have ‘‘control’’ as defined on Form BD, as 

amended from time to time.) 

If the applicant’s answer to proposed 

Question 5 is ‘‘yes,’’ proposed Question 

5.a. would prompt the applicant to 

identify in a chart, for each ‘‘final 

criminal matter’’ or ‘‘specified risk 

event,’’ the subject party, that person’s 

CRD number, and, if the matter or event 

has not been reported on a Uniform 

Registration Form, a description of the 

nature of the activity, any findings, any 

fine or other dispositions.20

Specifically, proposed Question 5.a. 

would ask: 21

a. If the answer to Question 5 is ‘‘yes,’’ for 

each ‘‘final criminal matter’’ or ‘‘specified 

risk event,’’ if the matter or event has been 

reported on a Uniform Registration Form 

(i.e., Forms U4, U5, U6, BD), please provide 

the subject party and that person’s CRD 

number. If the matter or event has not been 

reported on a Uniform Registration Form, 

please also provide a description of the 

nature of the activity, any findings, any fine 

or other dispositions. 

If the applicant’s answer to proposed 

Question 5 is ‘‘no,’’ the applicant would 

not be prompted to answer proposed 

Question 5.a. 

The proposed conforming changes to 

Standard 1 of Form CMA are intended 

to collect necessary information 

efficiently. Proposed Question 5.a. 

would reduce the burden on firms to 

provide FINRA with duplicate 

information by not requiring applicants 

to describe each ‘‘final criminal matter’’ 

or ‘‘specified risk event’’ that was 

already described on a Uniform 

Registration Form. Thus, if the matter or 

event has already been reported on a 

Uniform Registration Form, the 

applicant would only need to provide 

the subject party and that person’s CRD 

number. If the matter or event has not 

been reported on a Uniform Registration 

Form, the applicant also would be 

required to provide a description of the 

nature of the activity, any findings, any 

fine or other dispositions, to support 

compliance with Rule 1017(a)(7). 

Further, requiring firms to provide the 

subject party’s CRD number would 

facilitate FINRA’s coordination of 

information entered on Form CMA with 

information that has been entered on a 

Uniform Registration Form or provided 

in a related materiality consultation, 

and thus enable FINRA to more 

efficiently monitor for compliance with 

Rule 1017(a)(7). 

Form CMA’s Standard 1 section also 

requests the applicant to provide 

information on contemplated changes in 

direct ownership and indirect 

ownership. For example, the applicant 

is currently prompted to provide, as 

applicable, the proposed direct or 

indirect owner’s CRD number, name, 

roles, the date the role was acquired, the 

person’s ownership percentage, and 

whether the person is a ‘‘control 

person,’’ among other information. Rule 

1017(a)(7) applies when a natural 

person seeking to become an ‘‘owner’’ or 

‘‘control person’’ (among other roles) 

has, in the prior five years, ‘‘one or more 

final criminal matters or two or more 

specified risk events.’’ Rule 1017(a)(7) 

further provides that, for purposes of 


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22Member firms also would identify these direct 

and indirect owners in materiality consultations 

pursuant to Rule 1017(a)(7). See Rule 1017(a)(7) 

(providing that a written request for a materiality 

consultation ‘‘must address the issues that are 

central to the materiality consultation’’); Securities 

Exchange Act Release No. 88600 (April 8, 2020), 85 

FR 20745, 20753 (April 14, 2020) (Notice of Filing 

of File No. SR–FINRA–2020–011) (explaining that 

a member submitting a request for a materiality 

consultation would need to provide information 

relating to the subject person), supra note 20. 

23See Notice to Members 04–10 (February 2004) 

(announcing amendments to Rules 1011, 1014, and 

1017); and Rule 1017(i) (setting forth the events that 

create a rebuttable presumption to deny a CMA). 

24See generally Form CMA, Standard 3, 

Questions 1, 2, 3, and 4 (within the category titled 

‘‘Explain how this Standard is met.’’). In 2020, some 

questions in Form CMA’s Standard 3 section 

underwent adjustments to align with the 

arbitration-related amendments to the MAP rules as 

described in File No. SR–FINRA–2019–030. See 

supra note 18. 

25Rule 1017(a)(7) requires a member to file a 

CMA only when ‘‘the member is not otherwise 

required to file a Form CMA in accordance with 

Rule 1017.’’ 

26See Exhibit 3 (Form CMA, Standard 3, chart 

accompanying Proposed Question 5.b., within the 

category titled ‘‘Explain how this Standard is met’’). 

27See paragraph (r) under Rule 1011 (defining 

‘‘Uniform Registration Forms’’) as amended by SR– 

FINRA–2020–011, supra note 5. 

Rule 1017(a)(7), the term ‘‘owner’’ has 

the same meaning as ‘‘direct owner’’ 

and ‘‘indirect owner’’ on Form BD 

Schedules A and B, as amended from 

time to time. To conform with Rule 

1017(a)(7), FINRA is proposing to add a 

question about whether the 

contemplated direct or indirect owner of 

the applicant is a ‘‘FINRA Rule 

1017(a)(7) Person (i.e. , whether such 

person has one or more ‘final criminal 

matters’ or two or more ‘specified risk 

events’ in the prior five years).’’ 22

2. Form CMA’s ‘‘Standard 3: 

Compliance with securities laws, just 

and equitable principles of trade’’ 

Section 

Standard 3 requires FINRA to 

determine whether an applicant and its 

associated persons ‘‘are capable of 

complying with’’ the applicable 

securities laws and regulations, and 

with applicable FINRA rules. Standard 

3 sets forth several factors, including 

past and current disciplinary actions 

and customer claims, that FINRA must 

consider in making that determination. 

The existence of certain factors that 

‘‘[raise] a question of capacity to comply 

with the federal securities laws and the 

rules of [FINRA]’’ results in a rebuttable 

presumption to deny the application.23

In general, Form CMA’s Standard 3 

section currently includes questions 

that require an applicant to indicate 

whether it or any of its associated 

persons are subject to any of the 

specified factors described in Standard 

3, direct the applicant to provide 

additional information about those 

factors, require the applicant to explain, 

even with the existence of the specified 

factors, how it will be able to comply 

with applicable securities laws and 

regulations and with applicable FINRA 

rules, ask arbitration-related questions, 

and prompt the applicant to provide 

supporting documents.24

FINRA is proposing to add new 

questions to Form CMA’s Standard 3 

section for the same reason that FINRA 

is proposing new questions to Form 

CMA’s Standard 1 section, which is to 

require the applicant to provide 

information necessary to support 

compliance with Rule 1017(a)(7). These 

proposed questions are intended to 

collect the necessary information in an 

efficient manner, as further explained 

below. 

FINRA is proposing to add new 

Question 5 to Form CMA’s Standard 3 

section, using language similar to 

proposed Question 5 in Form CMA’s 

Standard 1 section. A similar question 

in Form CMA’s Standard 3 section is 

needed because information concerning 

a person described in Rule 1017(a)(7) 

would be relevant to a CMA filed 

pursuant to other subparagraphs of Rule 

1017(a).25 Specifically, proposed 

Question 5 would require the applicant 

to provide a ‘‘yes’’ or ‘‘no’’ answer to the 

following: 

5. Does this application propose to add a 

natural person as an owner, control person, 

principal or registered person who, in the 

prior five years, has one or more ‘‘final 

criminal matters’’ or two or more ‘‘specified 

risk events’’?* See FINRA Rule 1017(a)(7). 

(For purposes of Rule 1017(a)(7), the term 

‘‘owner’’ has the same meaning as ‘‘direct 

owner’’ and ‘‘indirect owner’’ on Form BD 

Schedules A and B, as amended from time 

to time, and the term ‘‘control person’’ means 

a person who would have ‘‘control’’ as 

defined on Form BD, as amended from time 

to time.) 

If the applicant answers ‘‘yes,’’ the 

applicant would then be asked in 

proposed Question 5.a. whether the 

information was provided above in the 

section concerning Standard 1, Question 

5.a. If the answer to Standard 3, 

Question 5.a. is ‘‘yes,’’ then the 

applicant would not be required to 

complete Question 5.b. If the answer to 

Standard 3, Question 5.a. is ‘‘no,’’ then 

the applicant would be required to 

respond to proposed Question 5.b.: 

b. If the answer to Question 5.a. is ‘‘no,’’ 

for each ‘‘final criminal matter’’ or ‘‘specified 

risk event,’’ if the matter or event has been 

reported on a Uniform Registration Form 

(i.e., Forms U4, U5, U6, BD), please provide 

the subject party and that person’s CRD 

number. If the matter or event has not been 

reported on a Uniform Registration Form, 

please also provide a description of the 

nature of the activity, any findings, any fine 

or other dispositions. 

The applicant would be able to provide 

the information requested in proposed 

Question 5.b. in a chart identical to the 

chart proposed to follow Question 5.a. 

in Form CMA’s Standard 1 section.26

The proposed conforming changes to 

Standard 3 of Form CMA are intended 

to collect necessary information 

efficiently. Proposed Questions 5.a. and 

5.b. and the accompanying chart to 

Form CMA’s Standard 3 section would 

reduce the burden on firms to provide 

FINRA with duplicate information 

already provided earlier on Form CMA 

or separately in a Uniform Registration 

Form. If the matter or event has already 

been described in Form CMA’s Standard 

1 section, the applicant would be able 

to cross-reference that description. If the 

matter or event was not already 

described in Form CMA’s Standard 1 

section but was already reported on a 

Uniform Registration Form, the 

applicant would only need to provide 

the subject party and that person’s CRD 

number. If the matter or event has not 

been reported in Form CMA’s Standard 

1 section or on a Uniform Registration 

Form, the applicant would also be 

required to provide a description of the 

nature of the activity, any findings, any 

fine or other dispositions, to support 

compliance with Rule 1017(a)(7). 

Further, requiring firms to provide a 

CRD number would enable FINRA to 

facilitate FINRA’s coordination of 

information entered on Form CMA with 

information that has been entered on a 

Uniform Registration Form or provided 

in a related materiality consultation, 

and therefore enable FINRA to more 

efficiently gather relevant information. 

C. Other Proposed Non-Substantive, 

Technical Amendments to Form CMA 

FINRA is also proposing several nonsubstantive, technical changes to Form 

CMA. First, FINRA is proposing to 

include in Form CMA’s Standard 1 

section and Standard 3 section a 

reminder to the applicant that, ‘‘[e]very 

Form U4 shall be kept current at all 

times by supplementary amendments to 

the original Form U4. See FINRA ByLaws, Art. V, Sec. 2(c).’’ Form U4 is one 

of the ‘‘Uniform Registration Forms,’’ as 

defined by amendments to the MAP 

rules.27 Second, FINRA is proposing to 

amend Form CMA’s ‘‘Type of 

Continuing Membership Application’’ 

section to change ‘‘comprising’’ to 


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28See Rule 1017(a)(3) (requiring, in pertinent 

part, a member to file an application for approval 

of ‘‘direct or indirect acquisitions or transfers of 25 

percent or more in the aggregate of the member’s 

assets or any asset, business or line of operation that 

generates revenues composing 25 percent or more 

in the aggregate of the member’s earnings measured 

on a rolling 36-month basis’’) (Emphasis added). 

29See generally Exhibit 3 (Form CMA, Standard 

1, proposed Questions 4, 4.a., 4.b., 4.c. and 

accompanying chart, within the category titled 

‘‘Overview of the proposed change’’). 

30The requested information is similar to the 

information that member firms would provide in a 

materiality consultation pursuant to Rule 

1017(a)(6). See Rule 1017(a)(6)(A) and (B) 

(providing that the written request for a materiality 

consultation ‘‘must address the issues that are 

central to the materiality consultation’’); see also 

Checklist for Mandatory Materiality Consultations 

Under Rule 1017(a)(6), https://www.finra.org/rulesguidance/guidance/materiality-consultationprocess/checklist-under-rule-1017a6 (providing 

guidance to firms to provide, among other things, 

the name, title and CRD number of associated 

persons with a covered pending arbitration claim, 

unpaid arbitration award or unpaid settlement 

related to an arbitration). 

31FINRA notes that the proposed rule change 

would impact all members, including members that 

have elected to be treated as capital acquisition 

brokers (‘‘CABs’’), given that CAB Rule 116 

(Application for Approval of Change in Ownership, 

Control, or Business Operations) incorporates, by 

reference, Rule 1017, which requires that a 

member’s application for approval of changes to its 

ownership, control, or business operations include 

a Form CMA. See Rule 1017(b)(2). 

32 15 U.S.C. 78o–3(b)(6). 

33See Securities Exchange Act Release No. 88600 

(April 8, 2020), 85 FR 20745, 20755–62 (April 14, 

2020) (Notice of Filing of File No. SR–FINRA– 

2020–011). 

34 15 U.S.C. 78s(b)(3)(A). 

35 17 CFR 240.19b–4(f)(6). 

36 17 CFR 240.19b–4(f)(6)(iii). 

‘‘composing’’ to match the language 

used in Rule 1017(a)(3).28

Finally, FINRA is proposing to add 

within Form CMA’s Standard 1 section 

new Questions 4.a., 4.b. and 4.c that 

would efficiently collect the information 

needed to monitor for compliance with 

Rule 1017(a)(6). Proposed Questions 4.a. 

and 4.b. would ask the applicant to 

indicate whether the CMA is required 

under Rule 1017(a)(6)(A) or Rule 

1017(a)(6)(B), respectively.29 If the 

applicant answers ‘‘yes’’ to either 

question, then proposed Question 4.c. 

would prompt the applicant to list, for 

each covered pending arbitration claim, 

unpaid arbitration award, or unpaid 

settlement related to an arbitration, the 

subject party and that person’s CRD 

number in a chart. FINRA believes that 

adding these proposed questions and 

the accompanying chart to Form CMA’s 

Standard 1 section would efficiently 

collect the information needed to 

monitor for compliance with Rule 

1017(a)(6).30 The proposed questions 

would also achieve parity with the 

manner FINRA is proposing to elicit 

information needed to monitor for 

compliance with Rule 1017(a)(7). 

Additionally, proposed Question 4 

would allow FINRA to readily 

coordinate information entered on Form 

CMA with information that may have 

been entered on a Uniform Registration 

Form or provided in a materiality 

consultation. 

FINRA has filed the proposed rule 

change for immediate effectiveness and 

has requested that the SEC waive the 

requirement that the proposed rule 

change not become operative for 30 days 

after the date of the filing, so FINRA can 

implement the proposed rule change on 

September 1, 2021, to coincide with the 

effective date of the amendments to the 

MAP rules as announced in Regulatory 

Notice 21–09.31 The proposed changes 

to Form CMA conform to the recently 

amended MAP rules. To facilitate 

member firm compliance with the 

amended rules on the date they become 

effective, it is necessary for the 

amendments to Form CMA to become 

effective on the same date. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,32 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. 

The proposed changes to Form CMA 

will conform the form to the 

amendments to Rule 1017(a)(7), as 

described in the SEC Order. The 

proposed changes to Form CMA will 

also help ensure that applicants for 

continuing membership provide the 

information and documentation to 

produce a complete application package 

for FINRA’s review. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. FINRA’s 

recent amendments to the MAP rules, 

which specify additional events that 

require a CMA for FINRA’s approval, 

necessitate conforming changes to the 

sections of Form CMA pertaining to the 

type of CMA, Standard 1 and Standard 

3. The proposed conforming changes— 

i.e., listing in Form CMA’s ‘‘Type of 

Continuing Membership Application’’ 

section all of the events under Rule 

1017(a) that require a member to file 

Form CMA, and incorporating in Form 

CMA’s Standard 1 and Standard 3 

sections questions that would require 

the applicant to provide information 

about an individual’s ‘‘final criminal 

matters’’ and ‘‘specified risk events’’ 

that is necessary to support compliance 

with Rule 1017(a)(7)—are derived from, 

and effectuate, recent amendments to 

the MAP rules concerning persons with 

a significant history of misconduct and 

the broker-dealers that employ them, as 

described in the SEC Order. In addition, 

the proposed changes to Form CMA’s 

Standard 1 section pertaining to Rule 

1017(a)(6) would efficiently collect the 

information needed to monitor for 

compliance with that rule in the same 

manner that FINRA proposes to collect 

information needed to monitor for 

compliance with Rule 1017(a)(7). 

FINRA considered and discussed the 

potential economic impact of the recent 

amendments in File No. SR–FINRA– 

2020–011, including the burden 

imposed on some applicants to seek a 

materiality consultation with FINRA, 

and noted the potential requirement to 

file a Form CMA and certain associated 

costs.33 FINRA believes that the 

proposed conforming changes to Form 

CMA and the proposed technical 

changes described herein would not 

result in new material economic effects. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 34 and Rule 19b– 

4(f)(6) thereunder.35

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),36 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. FINRA has requested that the 

Commission waive the 30-day operative 

delay requirement so that the proposed 

rule change may become operative on 

September 1, 2021. The Commission 

hereby grants the request. The 


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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices 49399 

37See supra note 5. 

38 Id. 

39Similarly, the Commission finds that the nonsubstantive and technical changes to Form CMA are 

consistent with the protection of investors and the 

public interest. 40 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Trading Permit’’ means a permit 

issued by the Exchange that confers the ability to 

transact on the Exchange. See Notice, infra note 5, 

at 37379. The term ‘‘Member’’ means an individual 

or organization that is registered with the Exchange 

pursuant to Chapter II of Exchange Rules for 

purposes of trading on the Exchange as an 

‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’ 

Members are deemed ‘‘members’’ under the 

Exchange Act. See id. 

4 15 U.S.C. 78s(b)(3)(A). A proposed rule change 

may take effect upon filing with the Commission if 

it is designated by the exchange as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization on any person, whether 

or not the person is a member of the self-regulatory 

organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii). 

5See Securities Exchange Act Release No. 92366 

(July 9, 2021), 86 FR 37379 (‘‘Notice’’). 

6 15 U.S.C. 78s(b)(3)(C). 

7See Notice, supra note 5, at 37379–80. 

Commission finds that the proposed 

changes to Form CMA conform to the 

recently amended MAP rules.37 The 

Commission therefore finds that the 

proposed rule change is consistent with 

the goals set forth by the Commission 

when it approved amendments to the 

MAP rules as described in File No. SR– 

FINRA–2020–011, which become 

effective on September 1, 2021.38 The 

Commission finds that waiving the 30- 

day operative delay would facilitate 

firm compliance with the amended 

MAP rules on the date they become 

effective.39 Therefore, the Commission 

believes it is consistent with the 

protection of investors and the public 

interest to waive the 30-day operative 

delay requirement. Therefore the 

Commission designates the proposed 

rule change as operative on September 

1, 2021. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rulecomments@sec.gov. Please include File 

Number SR–FINRA–2021–020 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–FINRA–2021–020. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of 

FINRA. All comments received will be 

posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. 

All submissions should refer to File 

Number SR–FINRA–2021–020 and 

should be submitted on or before 

August 23, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.40

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–18945 Filed 9–1–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92797; File No. SR– 

PEARL–2021–32] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Suspension of and Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove 

Proposed Rule Changes To Amend the 

MIAX Pearl Options Fee Schedule To 

Remove Certain Credits and Increase 

Trading Permit Fees 

August 27, 2021. 

I. Introduction 

On July 1, 2021, MIAX PEARL, LLC 

(‘‘MIAX Pearl’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Exchange Act’’ 

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

a proposed rule change (File Number 

SR–PEARL–2021–32) to amend the 

MIAX Pearl Options Fee Schedule (‘‘Fee 

Schedule’’) to remove certain credits 

and increase monthly Trading Permit 

fees for Exchange Members.3 The 

proposed rule change was immediately 

effective upon filing with the 

Commission pursuant to Section 

19(b)(3)(A) of the Act.4 The proposed 

rule change was published for comment 

in the Federal Register on July 15, 

2021.5 The Commission has received no 

comment letters on the proposed rule 

change. Under Section 19(b)(3)(C) of the 

Act,6 the Commission is hereby: (i) 

Temporarily suspending File Number 

SR–PEARL–2021–32; and (ii) instituting 

proceedings to determine whether to 

approve or disapprove File Number SR– 

PEARL–2021–32. 

II. Description of the Proposed Rule 

Change 

The Exchange proposes to amend its 

Fee Schedule to: (1) Delete the 

definition of and remove the credits 

applicable to the Monthly Volume 

Credit for Members; (2) and; (3) amend 

Section (3)(b) of the Fee Schedule to 

increase the amount of monthly Trading 

Permit Fees. 

Remove ‘‘Monthly Volume Credit’’ 

The Exchange proposes to amend the 

Definitions section of its Fee Schedule 

to delete the definition of ‘‘Monthly 

Volume Credit’’ and remove the credits 

applicable to the Monthly Volume 

Credit for Members.7 The Exchange 

states that the Monthly Volume Credit 

was established in 2018 to encourage 

Members to send increased Priority 


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