[Federal Register Volume 86, Number 176 (Wednesday, September 15, 2021)]
[Notices]
[Pages 51424-51427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19853]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92908; File No. SR-NYSENAT-2021-16]


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

September 9, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on August 27, 2021, NYSE National, Inc. (``NYSE National'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``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 August 31, 2021, to December 31, 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 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 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 
August 31, 2021, to December 31, 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 December 31, 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 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 COVID-19 global health crisis and the 
corresponding need to restrict in-person activities, on August 31, 
2020, FINRA filed with the Commission a proposed rule change for 
immediate effectiveness, SR-FINRA-2020-027, which allowed FINRA's 
Office of Hearing Officers (``OHO'') to conduct hearings, on a 
temporary basis, by video conference, if warranted by the current 
COVID-19-related public health risks posed by an in-person hearing. 
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) (``SR-
FINRA-2020-027'').
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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\ In December 2020, FINRA filed a proposed rule change, 
SR-FINRA-2020-042, to extend the expiration date of the temporary 
amendments in SR-FINRA-2020-027 from December 31, 2020, to April 30, 
2021.\10\ On December 22, 2020, the Exchange similarly filed to extend 
the temporary amendments to Rule 10.9261 and Rule 10.9830 to April 30, 
2021.\11\ On April 1, 2021, FINRA filed a proposed rule change, SR-
FINRA-2021-006, to extend the expiration date of the temporary rule 
amendments to,

[[Page 51425]]

among other rules, FINRA Rule 9261 and 9830 from April 30, 2021, to 
August 31, 2021.\12\ On April 20, 2021, the Exchange filed to extend 
the temporary amendments to Rule 10.9261 and Rule 10.9830 to August 31, 
2021, after which the temporary amendments will expire absent another 
proposed rule change filing by the Exchange.\13\
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    \9\ See note 4, supra.
    \10\ See Securities Exchange Act Release No. 90619 (December 9, 
2020), 85 FR 81250 (December 15, 2020) (SR-FINRA-2020-042).
    \11\ See Securities Exchange Act Release No. 90822 (December 30, 
2020), 86 FR 627 (January 6, 2021) (SR-NYSENAT-2020-39).
    \12\ See Securities Exchange Act Release No. 91495 (April 7, 
2021), 86 FR 19306 (April 13, 2021) (SR-FINRA-2021-006).
    \13\ See Securities Exchange Act Release No. 91634 (April 22, 
2021), 86 FR 22477 (April 28, 2021) (SR-NYSENAT-2021-11).
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    As outlined in detail below, while there are signs of improvement, 
based on FINRA's assessment of current COVID-19 conditions and the lack 
of a clear timeframe for a sustained and widespread abatement of COVID-
19-related health concerns and corresponding restrictions, FINRA 
determined that there is a continued need for temporary relief for 
several months beyond August 31, 2021. On August 13, 2021, FINRA 
accordingly filed to extend the expiration date of the temporary rule 
amendments to, among other rules, FINRA Rule 9261 and 9830 from August 
31, 2021, to December 31, 2021.\14\
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    \14\ See Securities Exchange Act Release No. 92685 (August 17, 
2021), 86 FR 47169 (August 23, 2021) (SR-FINRA-2021-019) (``SR-
FINRA-2021-019'').
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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 August 31, 2021, to December 31, 2021.
    As set forth in SR-FINRA 2021-019, while there are signs of 
improvement, much uncertainty remains for the coming months. The 
emergence of the Delta variant, dissimilar vaccination rates throughout 
the United States, and the uptick in transmissions in many locations 
indicate that COVID-19 remains an active and real public health 
concern. Based on FINRA's assessment of current COVID-19 conditions and 
the lack of a clear timeframe for a sustained and widespread abatement 
of COVID-19-related health concerns and corresponding restrictions, 
FINRA has determined that there is a continued need for this temporary 
relief for several months beyond August 31, 2021.\15\ FINRA accordingly 
proposed to extend the expiration date of the temporary rule amendments 
from August 31, 2021, to December 31, 2021.
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    \15\ 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 August 31, 2021, to 
December 31, 2021. The Exchange agrees with FINRA that much uncertainty 
remains for the coming months and that, based on the lack of a clear 
timeframe for a sustained and widespread abatement of COVID-19-related 
health concerns and corresponding restrictions as set forth in SR-
FINRA-2021-019, there is a continued need for temporary relief for 
several months beyond August 31, 2021. The proposed change would 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. 
As noted in SR-FINRA-2021-019, in deciding whether to schedule a 
hearing by video conference, OHO may consider a variety of other 
factors in addition to COVID-19 trends. In SR-FINRA-2020-027, FINRA 
provided a non-exhaustive list of other factors OHO may take into 
consideration, including a hearing participant's individual health 
concerns and access to the connectivity and technology necessary to 
participate in a video conference hearing.\16\ The Exchange believes 
that this is a reasonable procedure to continue to follow for hearings 
under Rules 9261 and 9830 chaired by a FINRA employee.
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    \16\ See SR-FINRA-2020-027, 85 FR at 55715, n. 28; SR-FINRA-
2021-019, 86 FR at 47170, n. 13.
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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,\17\ in general, and furthers the objectives of Section 
6(b)(5),\18\ 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.\19\
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ 15 U.S.C. 78f(b)(7) & 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-2021-019, will permit the Exchange to continue to effectively 
conduct hearings during the COVID-19 pandemic. As noted above and in 
SR-FINRA-2021-019, given the current and frequently changing COVID-19 
conditions and the uncertainty around when those conditions will see 
meaningful, widespread and sustained improvement, without this relief 
allowing OHO to proceed by video conference, some or all hearings may 
have to be postponed. 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 \20\ while

[[Page 51426]]

striking an appropriate balance between providing fair process and 
enabling the Exchange to fulfill its statutory obligations to protect 
investors and maintain fair and orderly markets while avoiding the 
COVID-19-related public health risks for hearing participants. The 
Exchange notes that this proposal, like SR-NYSENAT-2020-31, provides 
only temporary relief. As proposed, the changes would be in place 
through December 31, 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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    \20\ 15 U.S.C. 78f(b)(7) & 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 impediments to critical 
adjudicatory processes and its ability to fulfill its statutory 
obligations to protect investors and maintain fair and orderly markets 
that would otherwise result if the temporary amendments were to expire 
on August 31, 2021.

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)(iii) of the Act \21\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\22\
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    \21\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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) \23\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\24\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange has 
indicated that the proposed rule change to extend the expiration date 
will continue to prevent unnecessary impediments to its operations, 
including its critical adjudicatory processes, and its ability to 
fulfill its statutory obligations to protect investors and maintain 
fair and orderly markets that would otherwise result if the temporary 
amendments were to expire on August 31, 2021.\25\ Importantly, 
extending the relief provided in SR-NYSENAT-2020-31 immediately upon 
filing and without a 30-day operative delay will allow the Exchange to 
continue critical adjudicatory and review processes in a reasonable and 
fair manner and meet its critical investor protection goals, while also 
following best practices with respect to the health and safety of 
hearing participants.\26\ The Commission also notes that this proposal 
extends without change the temporary relief previously provided by SR-
NYSENAT-2020-31.\27\ As proposed, the changes would be in place through 
December 31, 2021 and the amended rules will revert back to their 
original state at the conclusion of the temporary relief period and, if 
applicable, any extension thereof.\28\ For these reasons, the 
Commission believes that waiver of the 30-day operative delay for this 
proposal 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.\29\
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    \23\ 17 CFR 240.19b-4(f)(6).
    \24\ 17 CFR 240.19b-4(f)(6)(iii).
    \25\ See supra Item II.
    \26\ See FINRA Filing, 86 FR at 47171 (noting the same in 
granting FINRA's request to waive the 30-day operative delay so that 
SR-FINRA-2021-019 would become operative immediately upon filing).
    \27\ See supra note 4.
    \28\ See supra note 5. As noted above, the Exchange states that 
if it requires temporary relief from the rule requirements 
identified in this proposal beyond December 31, 2021, it may submit 
a separate rule filing to extend the effectiveness of the temporary 
relief under these rules.
    \29\ 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-NYSENAT-2021-16 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-2021-16. 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

[[Page 51427]]

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 
the filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSENAT-2021-16 and should be submitted on or before 
October 6, 2021.
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    \30\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-19853 Filed 9-14-21; 8:45 am]
BILLING CODE 8011-01-P


