Document ID: SEC-2021-0029-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE National, Inc.
Posted Date: 2021-01-06T05:00Z

[Federal Register Volume 86, Number 3 (Wednesday, January 6, 2021)]
[Notices]
[Pages 627-630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29213]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90822; File No. SR-NYSENAT-2020-39]

Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Extending 
the Expiration Date of the Temporary Amendments to Rules 10.9261 and 
10.9830 as Set Forth in SR-NYSENAT-2020-31 From December 31, 2020, to 
April 30, 2021

December 30, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'' or ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ 
notice is hereby given that on December 22, 2020, NYSE National, Inc. 
(``NYSE National'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been prepared by 
the Exchange. 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\ 15 U.S.C. 78a.
    \3\ 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 extending the expiration date of the 
temporary amendments to Rules 10.9261 and 10.9830 as set forth in SR-
NYSENAT-2020-31 from December 31, 2020, to April 30, 2021, in 
conformity with recent changes by the Financial Industry Regulatory 
Authority, Inc. (``FINRA''). The proposed rule change would not make 
any changes to the text of NYSE National Rules 10.9261 and 10.9830. The 
proposed rule change is available on the Exchange's website at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes extending the expiration date of the 
temporary amendments as set forth in SR-NYSENAT-2020-31 \4\ to Rules 
10.9261 (Evidence and Procedure in Hearing) and 10.9830 (Hearing) from 
December 31, 2020, to April 30, 2021 to harmonize with recent changes 
by FINRA to extend the expiration date of the temporary amendments to 
its Rules 9261 and 9830. SR-NYSENAT-2020-31 temporarily granted to the 
Chief or Deputy Chief Hearing Officer the authority to order that 
hearings be conducted by video conference if warranted by public health 
risks posed by in-person hearings during the ongoing COVID-19 pandemic. 
The proposed rule change would not make any changes to the text of 
Exchange Rules 10.9261 and 10.9830.\5\
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    \4\ See Securities Exchange Act Release No. 90137 (October 8, 
2020), 85 FR 65087 (October 14, 2020) (SR-NYSENAT-2020-31) (``SR-
NYSENAT-2020-31'').
    \5\ The Exchange may submit a separate rule filing to extend the 
expiration date of the proposed extension beyond April 30, 2021 if 
the Exchange requires additional temporary relief from the rule 
requirements identified in SR-NYSENAT-2020-31. The amended NYSE 
National rules will revert back to their original state at the 
conclusion of the temporary relief period and any extension thereof.
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Background
    In 2018, NYSE National adopted disciplinary rules that are, with 
certain exceptions, substantially the same as the disciplinary rules of 
its affiliate NYSE American LLC, which are in turn substantially 
similar to the FINRA Rule 8000 Series and Rule 9000 Series, and which 
set forth rules for conducting investigations and enforcement 
actions.\6\
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    \6\ See Securities Exchange Act Release No. 83289 (May 17, 
2018), 83 FR 23968, 23976 (May 23, 2018) (SR-NYSENAT-2018-02) 
(``2018 Approval Order'').
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    In adopting disciplinary rules modeled on FINRA's rules, NYSE 
National adopted the hearing and evidentiary processes set forth in 
Rule 10.9261 and in Rule 10.9830 for hearings in matters involving 
temporary and permanent cease and desist orders

[[Page 628]]

under the Rule 10.9800 Series. As adopted, the text of Rule 10.9261 and 
Rule 10.9830 are substantially the same as the FINRA rules with certain 
modifications.\7\
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    \7\ See id.
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    In response to the spread of COVID-19, on August 31, 2020, FINRA 
filed with the Commission a proposed rule change for immediate 
effectiveness, SR-FINRA-2020-027, to temporarily grant FINRA's Office 
of Hearing Officers (``OHO'') and the National Adjudicatory Council 
(``NAC'') the authority to conduct certain hearings by video 
conference, if warranted by the current COVID-19-related public health 
risks posed by in-person hearings. Among the rules FINRA amended were 
Rules 9261 and 9830.\8\
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    \8\ See Securities Exchange Act Release No. 89737 (September 2, 
2020), 85 FR 55712 (September 9, 2020) (SR-FINRA-2020-027) (the 
``August 31 FINRA Filing'').
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    Given that FINRA and OHO administers disciplinary hearings on the 
Exchange's behalf, and that the public health concerns addressed by 
FINRA's amendments apply equally to Exchange disciplinary hearings, on 
September 29, 2020, the Exchange filed to temporarily amend Rule 
10.9261 and Rule 10.9830 to permit FINRA to conduct virtual hearings on 
its behalf.\9\ The temporary amendments to Rule 10.9261 and Rule 
10.9830, as originally proposed, will expire on December 31, 2020, 
absent another proposed rule change filing by the Exchange.
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    \9\ See supra note 4.
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    The COVID-19 conditions necessitating these temporary amendments 
persist, with cases rapidly escalating nationwide. Based on its 
assessment of current COVID-19 conditions and the lack of certainty as 
to when COVID-19-related health concerns will subside, on December 1, 
2020, FINRA filed to extend the expiration date of the temporary rule 
amendments to, among other rules, FINRA Rule 9261 and 9830 from 
December 31, 2020, to April 30, 2021.\10\
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    \10\ See Securities Exchange Act Release No. 90619 (December 9, 
2020), 85 FR 81250 (December 15, 2020) (SR-FINRA-2020-042) (``SR-
FINRA-2020-042'').
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Proposed Rule Change
    Consistent with FINRA's recent proposal, the Exchange proposes to 
extend the expiration date of the temporary rule amendments to NYSE 
National Rules 10.9261 and 10.9830 as set forth in SR-NYSENAT-2020-31 
from December 31, 2020, to April 30, 2021.
    As set forth in SR-FINRA-2020-042, based on its assessment of 
current COVID-19 conditions, including the recent escalation in COVID-
19 cases nationwide, FINRA does not believe that the COVID-19-related 
health concerns necessitating this relief will subside by December 31, 
2020, and has determined that there will be a continued need for this 
temporary relief for several months beyond December 31, 2020.\11\ FINRA 
accordingly proposed to extend the expiration date of the temporary 
rule amendments in the August 31 FINRA Filing from December 31, 2020, 
to April 30, 2021.
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    \11\ See id.
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    The Exchange proposes to similarly extend the expiration date of 
the temporary rule amendments to NYSE National Rules 10.9261 and 
10.9830 as set forth in SR-NYSENAT-2020-31 from December 31, 2020, to 
April 30, 2021. With COVID-19 cases surging nationwide, the Exchange 
agrees with FINRA that the COVID-19-related public health risks 
necessitating this temporary relief have not yet abated and are 
unlikely to abate by December 31, 2020. The proposed change will permit 
OHO to continue to assess, based on critical COVID-19 data and criteria 
and the guidance of health and security consultants, whether an in-
person hearing would compromise the health and safety of the hearing 
participants such that the hearing should proceed by video conference. 
FINRA has adopted a detailed and thorough protocol to ensure that 
hearings conducted by video conference will maintain fair process for 
the parties.\12\ The Exchange believes that this is a reasonable 
procedure to continue to follow for hearings under Rules 10.9261 and 
10.9830 chaired by a FINRA employee.
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    \12\ See SR-FINRA-2020-042, 85 FR at 81251-52; August 31 FINRA 
Filing, 85 FR at 55713.
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    As noted below, the Exchange 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 the Exchange can implement the 
proposed rule change immediately.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\13\ in general, and furthers the objectives of Section 
6(b)(5),\14\ 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. Additionally, the Exchange believes 
the proposed rule change is designed to provide a fair procedure for 
the disciplining of members and persons associated with members, 
consistent with Sections 6(b)(7) and 6(d) of the Act.\15\
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78f(b)(7) and 78f(d).
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    The Exchange believes that the proposed rule change supports the 
objectives of the Act by providing greater harmonization between 
Exchange rules and FINRA rules of similar purpose, resulting in less 
burdensome and more efficient regulatory compliance. As such, the 
proposed rule change will foster cooperation and coordination with 
persons engaged in facilitating transactions in securities and will 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
    The proposed rule change, which extends the expiration date of the 
temporary amendments to Exchange rules consistent with FINRA's 
extension to its Rules 9261 and 9830 for four months as set forth in 
SR-FINRA-2020-042, will permit the Exchange to continue to effectively 
conduct hearings during the COVID-19 pandemic in situations where in-
person hearings present likely public health risks. The ability to 
conduct hearings by video conference will permit the adjudicatory 
functions of the Exchange's disciplinary rules to continue unabated, 
thereby avoiding protracted delays. The Exchange believes that this is 
especially important in matters where temporary and permanent cease and 
desist orders are sought because the proposed rule change would enable 
those hearings to continue to proceed without delay, thereby enabling 
the Exchange to continue to take immediate action to stop significant, 
ongoing customer harm, to the benefit of the investing public.
    As set forth in detail in SR-NYSENAT-2020-31, the temporary relief 
to permit hearings to be conducted via video conference maintains fair 
process and will continue to provide fair process consistent with 
Sections 6(b)(7) and 6(d) of the Act \16\ while striking an appropriate 
balance between providing fair process and enabling the Exchange to 
fulfill its statutory obligations to protect investors and

[[Page 629]]

maintain fair and orderly markets while accounting for the significant 
health and safety risks of in-person hearings stemming from the 
outbreak of COVID-19. The Exchange notes that this proposal, like SR-
NYSENAT-2020-31, provides only temporary relief. As proposed, the 
changes would be in place through April 30, 2021. As noted in SR-
NYSENAT-2020-31 and above, the amended rules will revert back to their 
original state at the conclusion of the temporary relief period and, if 
applicable, any extension thereof.
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    \16\ 15 U.S.C. 78f(b)(7) and 78f(d).
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    Accordingly, the proposed rule change extending this temporary 
relief is in the public interest and consistent with the Act's purpose.

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

    The Exchange does not believe that the proposed temporary rule 
change will impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
rule change is not intended to address competitive issues but is rather 
intended solely to provide continued temporary relief given the impacts 
of the COVID-19 pandemic and the related health and safety risks of 
conducting in-person activities. The Exchange believes that the 
proposed rule change will prevent unnecessary disruptions that would 
otherwise result if the temporary amendments were to expire on December 
31, 2020.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    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) \17\ of the Act 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 requested that the 
Commission waive the 30-day operative delay so that the proposed rule 
change may become operative immediately upon filing. As noted above, 
the Exchange states that the COVID-related health and safety risks of 
conducting in-person activities, which necessitated these temporary 
amendments, persist and that cases are escalating nationwide. Based on 
FINRA's assessment of the current COVID-19 conditions and FINRA's 
determination that there is a continued need for this temporary relief 
for several months beyond December 31, 2020, the Exchange states that 
it agrees with FINRA that the COVID-19-related public health risks 
necessitating this temporary relief have not yet abated and are 
unlikely to abate by December 31, 2020.\19\ Moreover, the Exchange 
states that FINRA has adopted a detailed and thorough protocol to 
ensure that hearings conducted by video conference will provide a fair 
process for all parties and will enable the Exchange to fulfill its 
statutory obligations to protect investors and maintain fair and 
orderly markets.\20\ The Exchange believes that this is a reasonable 
procedure to continue to follow for hearings under Rules 10.9261 and 
10.9830 chaired by a FINRA employee. Accordingly, the Exchange states 
that waiver of the operative delay would prevent unnecessary 
disruptions that would otherwise result if the temporary amendments 
were to expire on December 31, 2020.
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    \19\ See SR-FINRA-2020-042.
    \20\ See id.
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    The Exchange also indicates that this filing is eligible to become 
operative immediately because the proposal would continue to provide 
greater harmonization between the Exchange rules and FINRA rules that 
serve a similar purpose, resulting in less burdensome and more 
efficient regulatory compliance. This proposal would serve to extend 
the expiration date of the temporary amendments to the Exchange rules 
set forth in SR-NYSENAT-2020-31, which is consistent with FINRA's 
extension to its comparable rules, where FINRA requested and the 
Commission granted a waiver of the 30-day operative delay.\21\ The 
Exchange also indicates that this temporary relief is necessary in 
order for the continue performing adjudicatory functions necessary to 
meet its statutory obligations in light of COVID-19 related health and 
safety risks associated with in-person hearings and will only be 
temporary relief, with the rules reverting back to their original state 
at the conclusion of the relief period and any extension thereof.\22\
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    \21\ See supra note 10 (referencing FINRA's proposal to extend 
the expiration date of temporary rule amendments allowing hearings 
to be conducted on a temporary basis by video conference if 
warranted by COVID-19 related health risks).
    \22\ See supra note 5 and accompanying text.
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    The Commission observes that this proposal, like SR-NYSENAT-2020-31 
and FINRA's comparable filing,\23\ provides only temporary relief 
during the period in which the Exchange's operations are impacted by 
COVID-19. As proposed, the changes would be in place through April 30, 
2021. 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. Accordingly, the Commission hereby waives the 30-
day operative delay and designates the proposal operative upon 
filing.\24\
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    \23\ See supra notes 8 and 10 and accompanying text.
    \24\ 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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    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

[[Page 630]]

     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSENAT-2020-39 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-NYSENAT-2020-39. 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, on business days between the 
hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE, 
Washington, DC 20549. 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-NYSENAT-2020-
39 and should be submitted on or before January 27, 2021.
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    \25\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-29213 Filed 1-5-21; 8:45 am]
BILLING CODE 8011-01-P