Document ID: SEC-2021-0607-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Exchange, LLC
Posted Date: 2021-05-03T04:00Z

[Federal Register Volume 86, Number 83 (Monday, May 3, 2021)]
[Notices]
[Pages 23475-23478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09131]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91688; File No. SR-BOX-2021-09]

Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Extend the 
Effective Date of the Temporary Amendment set Forth in SR-BOX-2021-02 
From April 30, 2021, to June 30, 2021

April 27, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on April 20, 2021, BOX Exchange LLC (the 
``Exchange'' or ``BOX'') 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 
the self-regulatory organization. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the expiration date of the 
temporary amendment set forth in SR-BOX-2021-02 (``Temporary 
Qualification Examination Relief Filing'') from April 30, 2021, to June 
30, 2021. The Exchange does not anticipate providing any further 
extensions to the temporary amendment identified in this proposed rule 
change beyond June 30, 2021. The text of the proposed rule change is 
available from the principal office of the Exchange, at the 
Commission's Public Reference Room and also on the Exchange's internet 
website at http://boxoptions.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to extend the expiration 
date of the temporary amendment set forth in the Temporary 
Qualification Examination Relief Filing.\3\ The proposed rule change 
would extend the 120-day period that certain individuals on the 
Exchange can function as a principal without having successfully passed 
an applicable qualification examination through June 30, 2021, and 
would apply only to those individuals who were designated to function 
as a principal prior to March 3, 2021. This proposed rule change is 
based on a filing recently submitted by the Financial Industry 
Regulatory Authority, Inc. (``FINRA'') \4\ and is intended to harmonize 
the Exchange's registration rules with those of FINRA so as to promote 
uniform standards across the securities industry.
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    \3\ See Exchange Act Release No. 34-90973 (January 22, 2021), 86 
FR 7437 (January 28, 2021) (SR-BOX-2021-02).
    \4\ See Exchange Act Release No. 34-91506 (April 8, 2021), 86 FR 
19671 (April 14, 2021) (SR-FINRA-2021-005) (the ``FINRA Filing''). 
The Exchange notes that the FINRA Filing also provides temporary 
relief to individuals registered with FINRA as Operations 
Professionals under FINRA Rule 1220. The Exchange does not have a 
registration category for Operations Professionals and therefore, 
the Exchange is not proposing to adopt that aspect of the FINRA 
Filing.
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    In response to COVID-19 global pandemic, last year FINRA began 
providing temporary relief by way of frequently asked questions 
(``FAQs'') \5\ to address disruptions to the administration of FINRA 
qualification examinations caused by the pandemic that have 
significantly limited the

[[Page 23476]]

ability of individuals to sit for examinations due to Prometric test 
center capacity issues.\6\
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    \5\ See https://www.finra.org/rules-guidance/key-topics/covid-19/faq#qe.
    \6\ At the outset of the COVID-19 pandemic, all FINRA 
qualification examinations were administered at test centers 
operated by Prometric. Based on the health and welfare concerns 
resulting from COVID-19, in March 2020 Prometric closed all of its 
test centers in the United States and Canada and began to slowly 
reopen some of them at limited capacity in May. Currently, Prometric 
has resumed testing in many of its United States and Canada test 
centers, at either full or limited occupancy, based on local and 
government mandates.
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    FINRA published the first FAQ on March 20, 2020, providing that 
individuals who were designated to function as principals under FINRA 
Rule 1210.04 \7\ prior to February 2, 2020, would be given until May 
31, 2020, to pass the appropriate principal qualification 
examination.\8\ FINRA revised the FAQ to extend the expiration of the 
temporary relief to pass the appropriate principal examination until 
June 30, 2020, and then until August 31, 2020.
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    \7\ BOX Rule 2020(d) is similar to FINRA Rule 1210.04.
    \8\ FINRA Rule 1210.04 (Requirements for Registered Persons 
Functioning as Principals for a Limited Period) allows a member firm 
to designate certain individuals to function in a principal capacity 
for 120 calendar days before having to pass an appropriate principal 
qualification examination. BOX Rule 2020(d) provides the same 
allowance to Participants.
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    On January 12, 2021, BOX filed with the Commission a proposed rule 
change for immediate effectiveness to extend the temporary relief 
provided via the FAQ by adopting temporary IM-2020-1 (Temporary 
Extension for Representatives to Function as Principals) under BOX Rule 
2020 (Participant Eligibility and Registration).\9\ Pursuant to this 
rule filing, individuals who were designated prior to January 1, 2021, 
to function as a principal under BOX Rule 2020(d) had until April 30, 
2021, to pass the appropriate qualification examination.
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    \9\ See Exchange Act Release No. 34-90973 (January 22, 2021), 86 
FR 7437 (January 28, 2021) (Notice of Filing and Immediate 
Effectiveness of SR-BOX-2021-02).
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    As mentioned in the Temporary Qualification Examination Relief 
Filing, FINRA began providing, and then extended, temporary relief to 
address the interruptions in the administration of FINRA qualification 
examinations at Prometric test centers and the limited ability of 
individuals to sit for the examinations caused by the COVID-19 
pandemic.\10\ The Temporary Qualification Examination Relief Filing 
also noted that the pandemic could result in firms potentially 
experiencing significant disruptions to their normal business 
operations that may be exacerbated by being unable to keep principal 
positions filled. Specifically, the limitation of in-person activities 
and staff absenteeism as a result of the health and welfare concerns 
stemming from COVID-19 could result in firms having difficulty finding 
other qualified individuals to transition into those roles or requiring 
them to reallocate employee time and resources away from other critical 
responsibilities at the firm.
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    \10\ Information about the continued impact of COVID-19 on 
FINRA-administered examinations is available at https://www.finra.org/rules-guidance/key-topics/covid-19/exams.
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    While there are signs of improvement, the COVID-19 conditions 
necessitating the temporary relief persist and the Exchange has 
determined that there is a continued need for this temporary relief 
beyond April 30, 2021. Although Prometric has resumed testing in many 
of its U.S. test centers, Prometric's safety practices mean that 
currently not all test centers are open, some of the open test centers 
are at limited capacity, and some open test centers are delivering only 
certain examinations that have been deemed essential by the local 
government.\11\ In addition, while certain states have started to ease 
COVID-19 restrictions on businesses and social activities, public 
health officials continue to emphasize the importance for individuals 
to keep taking numerous steps to protect themselves and help slow the 
spread of the disease.\12\
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    \11\ Information from Prometric about its safety practices and 
the impact of COVID19 on its operations is available at https://www.prometric.com/covid-19-update/corona-virus-update. See also 
supra note 10.
    \12\ See, e.g., Centers for Disease Control and Prevention, How 
to Protect Yourself & Others, https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/prevention.html.
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    Although the COVID-19 conditions necessitating the temporary relief 
persist, in the FINRA Filing, FINRA stated that an extension of the 
relief is necessary only until June 30, 2021, because FINRA recently 
expanded the availability of online examinations. Prior to this 
expansion, the ongoing effects of the pandemic made it impracticable 
for FINRA members to ensure that the individuals who they had 
designated to function in a principal capacity, as set forth in FINRA 
Rule 1210.04, could successfully sit for and pass an appropriate 
qualification examination within the 120-calendar day period required 
under the rule.\13\ Specifically, if the individual wanted to take a 
qualifying examination, they were required to accept the health risks 
associated with taking an in-person examination because the examination 
was not available online. On February 24, 2021, however, FINRA adopted 
an interim accommodation request process to allow candidates to take 
additional FINRA examinations online, including the General Securities 
Principal (``Series 24'') Examination.\14\ Because the qualifying 
examination has been made available online only recently, FINRA is 
concerned that individuals who have been designated to function in a 
principal capacity may not have sufficient time to schedule, study for, 
and take the applicable examination before April 30, 2021, the date the 
temporary amendments are set to expire.
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    \13\ See supra note 10.
    \14\ See id.
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    These ongoing circumstances make it impracticable for Participants 
to ensure that the individuals whom they have designated to function in 
a principal capacity, as set forth in BOX Rule 2020(d), are able to 
successfully sit for and pass an appropriate qualification examination 
within the 120-calendar day period required under the rule, or to find 
other qualified staff to fill this position. Therefore, the Exchange is 
proposing to extend the expiration date of the temporary amendment set 
forth in the Temporary Qualification Examination Relief Filing until 
June 30, 2021. The proposed rule change would apply only to those 
individuals who have been designated to function as a principal prior 
to March 3, 2021. As noted above, the Exchange does not anticipate 
providing any further extensions to the temporary amendments and any 
individuals designated to function as a principal on or after March 3, 
2021, would need to successfully pass an appropriate qualification 
examination within 120-calendar days.
    The Exchange believes that this proposed continued extension of 
time is tailored to address the needs and constraints on a firm's 
operations during the COVID-19 pandemic, without significantly 
compromising critical investor protection. The proposed extension of 
time will help to minimize the impact of COVID-19 on firms by providing 
continued flexibility so that firms can ensure that principal positions 
remain filled. The potential risks from the proposed extension of the 
120-day period are mitigated by a firm's continued requirement to 
supervise the activities of these designated individuals and ensure 
compliance with federal securities laws and regulations, as well as BOX 
rules.
    As noted in Item 2 of this filing, the Exchange has filed the 
proposed rule change for immediate effectiveness and has requested that 
the SEC waive the requirement that the proposed rule

[[Page 23477]]

change not become operative for 30 days after the date of the filing, 
so that the Exchange can implement the proposed rule change 
immediately.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\15\ in general, and Section 
6(b)(5) of the Act,\16\ in particular, because it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to, and perfect the mechanism of, a 
free and open market and a national market system and, in general, to 
protect investors and the public interest.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change is intended to minimize the impact of 
COVID-19 on firm operations by further extending the 120-day period 
certain individuals may function as a principal without having 
successfully passed an appropriate qualification examination under BOX 
Rule 2020(d) until June 30, 2021. The proposed rule change does not 
relieve firms from maintaining, under the circumstances, a reasonably 
designed system to supervise the activities of their associated persons 
to achieve compliance with applicable securities laws and regulations, 
and with applicable BOX rules that directly serve investor protection. 
In a time when faced with unique challenges resulting from the COVID-19 
pandemic, the Exchange believes that the proposed rule change is a 
sensible accommodation that will continue to afford firms the ability 
to ensure that critical positions are filled and client services 
maintained, while continuing to serve and promote the protection of 
investors and the public interest in this unique environment.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. As set forth in the 
Temporary Qualification Examination Relief Filing, the proposed rule 
change is intended solely to extend temporary relief necessitated by 
the continued impacts of the COVID-19 outbreak and the related health 
and safety risks of conducting in-person activities. In its filing, 
FINRA noted that the proposed rule change is necessary to temporarily 
rebalance the attendant benefits and costs of the obligations under 
FINRA Rule 1210 in response to the impacts of the COVID-19 pandemic 
that would otherwise result if the temporary relief was to expire on 
April 30, 2021. The Exchange accordingly incorporates FINRA's 
abbreviated economic impact assessment by reference.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

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 \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
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 of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
pursuant to Rule 19b-4(f)(6)(iii), 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 proposed 
rule change may become operative immediately upon filing. As noted 
above, the Exchange stated that the conditions necessitating the 
temporary relief continue to exist and the proposed extension of time 
will help minimize the impact of the COVID-19 outbreak on Participants' 
operations by allowing them to keep principal positions filled and 
minimizing disruptions to client services and other critical 
responsibilities. Despite signs of improvement, the Exchange further 
stated that the ongoing extenuating circumstances of the COVID-19 
pandemic make it impractical to ensure that individuals designated to 
act in these capacities are able to take and pass the appropriate 
qualification examination during the 120-calendar day period required 
under the rules.
    The Exchange observed that, following a nationwide closure of all 
test centers earlier in the year, some test centers have re-opened, but 
are operating at limited capacity or are only delivering certain 
examinations that have been deemed essential by the local 
government.\19\ However, on February 24, 2021, FINRA began providing 
the General Securities Principal (Series 24) Examination online through 
an interim accommodation request process.\20\ Prior to this change, if 
individuals wanted to take this qualifying examination, they were 
required to accept the health risks associated with taking an in-person 
examination. Even with the expansion of online qualifications 
examinations, the Exchange stated that extending the expiration date of 
the relief set forth in the SR-BOX-2021-02 until June 30, 2021 is still 
needed. The Exchange stated that this temporary relief will provide 
flexibility to allow individuals who have been designated to function 
in a principal capacity sufficient time to schedule, study for and take 
the applicable examination before the temporary relief expires. 
Notably, the Exchange stated that it does not anticipate providing any 
further extensions to the temporary amendments and that any individuals 
designated to function as a principal on or after March 3, 2021 will 
need to successfully pass an appropriate qualification examination 
within 120 days.
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    \19\ See supra notes 10 and 11. The Exchange notes that 
Prometric has also had to close some reopened test centers due to 
incidents of COVID-19 cases.
    \20\ See supra note 10 (including the February 24, 2021 
announcement of the interim accommodation process for candidates to 
take certain examinations, including the General Securities 
Principal (Series 24) Examination, online).
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    For these reasons, the Commission believes that waiver of the 30-
day operative delay is consistent with the protection of investors and 
the public interest.\21\ Accordingly, the Commission hereby waives the 
30-day operative delay and designates the proposal operative upon 
filing.\22\
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    \21\ As noted by the Exchange, this proposal is an extension of 
temporary relief provided in SR-BOX-2021-02 where BOX also requested 
and the Commission granted a waiver of the 30-day operative delay. 
See SR-BOX-2021-02, 86 FR at 7439.
    \22\ For 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).

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[[Page 23478]]

    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 rule-comments@sec.gov. Please include 
File Number SR-BOX-2021-09 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-BOX-2021-09. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-BOX-2021-09 and should be submitted on 
or before May 24, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09131 Filed 4-30-21; 8:45 am]
BILLING CODE 8011-01-P