Document ID: SEC-2021-0650-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2021-05-06T04:00Z

[Federal Register Volume 86, Number 86 (Thursday, May 6, 2021)]
[Notices]
[Pages 24422-24425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09527]

[[Page 24422]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91735; File No. SR-NASDAQ-2021-026]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Extend the Effective Date of the Temporary Amendments Concerning 
Exchange Rule 1210 From April 30, 2021, to June 30, 2021

April 30, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on April 21, 2021, The Nasdaq Stock Market LLC 
(``Nasdaq'' or ``Exchange'') 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 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\ 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 amendments initially set forth in SR-NASDAQ-2020-73 and 
subsequently extended in SR-NASDAQ-2020-091 (collectively, the 
``Temporary Qualification Examination Relief Filings'') from April 30, 
2021 to June 30, 2021. The Exchange does not anticipate providing any 
further extensions to the temporary amendments identified in this 
proposed rule change beyond June 30, 2021.\3\
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    \3\ If due to unforeseen circumstances a further extension is 
necessary, the Exchange will submit a separate rule filing to 
further extend the temporary amendments.
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    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to extend the expiration date of the 
temporary amendments initially set forth in the Temporary Qualification 
Examination Relief Filings from April 30, 2021 to June 30, 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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    \4\ See Exchange Act Release No. 91506 (April 8, 2021), 86 FR 
19671 (April 14, 2021) (SR-FINRA-2021-005) (``FINRA Filing''). See 
also Exchange Act Release Nos. 89732 (September 1, 2020), 85 FR 
55535 (September 8, 2020) (SR-FINRA-2020-026); 90617 (December 9, 
2020), 85 FR 81258 (December 15, 2020) (SR-FINRA-2020-043). The 
Exchange notes that the FINRA Filing also provides temporarily 
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 the 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 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 alal of its 
test centers in the United States and Canada and began to slowly 
reopen some of them at limited capacity in May 2020. 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 
initially until June 30, 2020, and then until August 31, 2020.
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    \7\ Exchange Rule 1210.04 is the corresponding rule 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. Exchange Rule 1210.04 provides the same 
allowance to members.
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    On October 29, 2020, the Exchange filed with the Commission a 
proposed rule change for immediate effectiveness to adopt temporary 
Supplementary Material .13 (Temporary Extension of the Limited Period 
for Registered Persons to Function as Principals) under Exchange Rule 
1210 of General 4 (Registration Requirements).\9\ Pursuant to this rule 
filing, individuals who were designated prior to September 3, 2020, to 
function as a principal under Exchange Rule 1210.04 had until December 
31, 2020, to pass the appropriate qualification examination. The 
Exchange thereafter filed SR-NASDAQ-2020-091 to extend the expiration 
date of the temporary amendments set forth in SR-NASDAQ-2020-076 from 
December 31, 2020, to April 30, 2021.\10\
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    \9\ See Exchange Act Release No. 90359 (November 5, 2020), 85 FR 
71979 (November 12, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-NASDAQ-2020-073).
    \10\ See Exchange Act Release No. 90780 (December 22, 2020), 85 
FR 86600 (December 30, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-NASDAQ-2020-091).
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    As mentioned in the Temporary Qualification Examination Relief 
Filings, the Exchange and 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.\11\ The Exchange also noted in the Temporary 
Qualification Examination Relief Filings that the pandemic could result 
in members 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 members having

[[Page 24423]]

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 member firm.
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    \11\ 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.\12\ 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.\13\
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    \12\ Information from Prometric about its safety practices and 
the impact of COVID- 19 on its operations is available at https://www.prometric.com/corona-virus-update. See also supra note 11.
    \13\ 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, the Exchange believes 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 members to 
ensure that the individuals who they had designated to function in a 
principal capacity, as set forth in Exchange Rule 1210.04, could 
successfully sit for and pass an appropriate qualification examination 
within the 120-calendar day period required under the rule.\14\ 
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.\15\ Because the qualifying 
examination has been made available online only recently, the Exchange 
and FINRA are 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 examination before April 30, 2021, 
the date the temporary amendments are set to expire. Therefore, the 
Exchange is proposing to extend the expiration date of the temporary 
amendments set forth in the Temporary Qualification Examination Relief 
Filings 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, will need to successfully pass an appropriate 
qualification examination within 120 days.
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    \14\ See supra note 11.
    \15\ Id.
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    The Exchange believes that this proposed continued extension of 
time is tailored to address the needs and constraints on a member'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 members by 
providing continued flexibility so that members can ensure that 
principal positions remain filled. The potential risks from the 
proposed extension of the 120-day period are mitigated by a member's 
continued requirement to supervise the activities of these designated 
individuals and ensure compliance with federal securities laws and 
regulations, as well as Exchange rules.
    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 Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\16\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\17\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 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 member operations by further extending the 120-day period 
certain individuals may function as a principal without having 
successfully passed an appropriate qualification examination under 
Exchange Rule 1210.04 until June 30, 2021. The proposed rule change 
does not relieve members 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 Exchange 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 members 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 not necessary or appropriate in 
furtherance of the purposes of the Act. As set forth in the Temporary 
Qualification Examination Relief Filings, 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. The Exchange believes 
that the proposed rule change is necessary to temporarily rebalance the 
attendant benefits and costs of the obligations under Exchange Rule 
1210 in response to the impacts of the COVID- 19 pandemic that would 
otherwise result if the temporary amendments were to expire on April 
30, 2021.\18\
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    \18\ In SR-FINRA-2020-026, FINRA provides an abbreviated 
economic impact assessment maintaining that changes are 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 is equally applicable to the changes the 
Exchange proposes. See Exchange Act Release No. 89732 (September 1, 
2020), 85 FR 55537 (September 8, 2020) (SR-FINRA-2020-026). The 
Exchange accordingly incorporates FINRA's abbreviated economic 
impact assessment by reference.

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[[Page 24424]]

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

    No written comments were either solicited or received.

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

    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 \19\ and Rule 19b-
4(f)(6) thereunder.\20\
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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 members' 
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.\21\ However, on February 24, 2021, FINRA began providing 
the General Securities Principal (Series 24) examination online through 
an interim accommodation request process.\22\ Prior to this change, if 
individuals wanted to take these qualifying examinations, 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 SR-NASDAQ-2020-091 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 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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    \21\ See supra notes 11 and 12. The Exchange states that 
Prometric has also had to close some reopened test centers due to 
incidents of COVID-19 cases.
    \22\ See supra note 11 (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.\23\ Accordingly, the Commission hereby waives the 
30-day operative delay and designates the proposal operative upon 
filing.\24\
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    \23\ As noted above by the Exchange, this proposal is an 
extension of temporary relief provided in SR-NASDAQ-2020-073 and SR-
NASDAQ-2020-091 where the Exchange also requested and the Commission 
granted a waiver of the 30-day operative delay. See SR-NASDAQ-2020-
073, 85 FR at 71981-82 and SR-NASDAQ-2020-091, 85 FR at 86602.
    \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
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2021-026 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-NASDAQ-2021-026. 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-NASDAQ-2021-026 and should be submitted 
on or before May 27, 2021.

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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09527 Filed 5-5-21; 8:45 am]
BILLING CODE 8011-01-P