[Federal Register Volume 86, Number 176 (Wednesday, September 15, 2021)]
[Notices]
[Pages 51404-51406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19851]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92906; File No. SR-Phlx-2021-49]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Extend the 
Expiration Date of the Temporary Amendments Concerning Video Conference 
Hearings

September 9, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 31, 2021, Nasdaq PHLX LLC (``Phlx'' 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 Exchange has designated 
the proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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 in SR-Phlx-2020-53 from August 31, 2021, to 
December 31, 2021.\4\ The proposed rule change would not make any 
changes to the text of the Exchange rules.
---------------------------------------------------------------------------

    \4\ If the Exchange seeks to provide additional temporary relief 
from the rule requirements identified in this proposed rule change 
beyond December 31, 2021, the Exchange will submit a separate rule 
filing to further extend the temporary extension of time. The 
amended Exchange rules will revert to their original form at the 
conclusion of the temporary relief period and any extension thereof.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/phlx/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 continue to harmonize Exchange Rule 
General 3, Section 16 with recent changes by the Financial Industry 
Regulatory Authority, Inc. (``FINRA'') to its Rule 1015 in response to 
the COVID-19 global health crisis and the corresponding need to 
restrict in-person activities.\5\ The Exchange originally filed 
proposed rule change SR-Phlx-2020-53, which allows the Exchange Review 
Council (``ERC'') to conduct hearings in connection with appeals of 
Membership Application Program decisions, on a temporary basis, by 
video conference, if warranted by the current COVID-19-related public 
health risks posed by an in-person hearing. In April 2021, the Exchange 
filed a proposed rule change, SR-Phlx-2021-027, to extend the 
expiration date of the temporary amendments in SR-Phlx-2020-53 from 
April 30, 2021, to August 31, 2021.\6\ While there are signs of

[[Page 51405]]

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.\7\ Based on its 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,\8\ 
the Exchange has determined that there is a continued need for 
temporary relief for several months beyond August 31, 2021. 
Accordingly, the Exchange proposes to extend the expiration date of the 
temporary rule amendments in SR-Phlx-2020-53 from August 31, 2021, to 
December 31, 2021.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 92685 (August 17, 
2021), No. 92685 (August 17, 2021), 86 FR 47169 (August 23, 2021) 
(SR-FINRA-2021-019) (``FINRA Filing''). The Exchange notes that the 
FINRA Filing also proposed to temporarily amend FINRA Rules 9261, 
9524, and 9830, which govern hearings in connection with appeals of 
disciplinary actions, eligibility proceedings, and temporary and 
permanent cease and desist orders. The Exchange's Rules 9261, 9524, 
and 9830 incorporate by reference The Nasdaq Stock Market LLC rules, 
which are the subject of a separate filing. See SR-NASDAQ-2021-067 
(August 30, 2021). Therefore, the Exchange is not proposing to adopt 
that aspect of the FINRA Filing.
    \6\ See Securities Exchange Act Release No. 91766 (May 4, 2021), 
86 FR 25014 (May 10, 2021) (Notice of Filing and Immediate 
Effectiveness of File No. SR-Phlx-2021-027); see also Securities 
Exchange Act Release No. 90758 (December 21, 2020), 85 FR 85782 
(December 29, 2020) (Notice of Filing and Immediate Effectiveness of 
File No. SR-Phlx-2020-053).
    \7\ For example, President Joe Biden on July 29, 2021, announced 
several measures to increase the number of people vaccinated against 
COVID-19 and to slow the spread of the Delta variant, including 
strengthening safety protocols for federal government employees and 
contractors. See https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/29/fact-sheet-president-biden-to-announce-new-actions-to-get-more-americans-vaccinated-and-slow-the-spread-of-the-delta-variant/.
    \8\ For instance, the Centers for Disease Control and Prevention 
on July 27, 2021, began recommending that fully vaccinated people 
wear a mask in public indoor settings in areas of substantial or 
high transmission and noted that fully vaccinated people might 
choose to wear a mask regardless of the level of transmission, 
particularly if they are immunocompromised or at increased risk for 
severe disease from COVID-19. See https://www.cdc.gov/coronavirus/2019-ncov/vaccines/fully-vaccinated-guidance.html. Also, several 
cities, including Atlanta, Baltimore, Los Angeles, New Haven and San 
Francisco, have recently reinstated their mask mandates.
---------------------------------------------------------------------------

    As set forth in SR-Phlx-2020-53, the Exchange also relies on COVID-
19 data and criteria to determine whether the current public health 
risks presented by an in-person hearing may warrant a hearing by video 
conference. Based on that data and criteria, the Exchange does not 
believe the COVID-19-related health concerns necessitating this relief 
will meaningfully subside by August 31, 2021, and has determined that 
there will be a continued need for this temporary relief for several 
months beyond that date. Accordingly, the Exchange proposes to extend 
the expiration date of the temporary rule amendments originally set 
forth in SR-Phlx-2020-53 from August 31, 2021, to December 31, 2021. 
The extension of these temporary amendments allowing for specified ERC 
hearings to proceed by video conference will allow the Exchange's 
critical adjudicatory functions to continue to operate effectively in 
these extraordinary circumstances--enabling the Exchange to fulfill its 
statutory obligations to protect investors and maintain fair and 
orderly markets--while also protecting the health and safety of hearing 
participants.
    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,\9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\10\ 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, by providing greater harmonization between the Exchange rules 
and FINRA rules of similar purpose,\11\ resulting in less burdensome 
and more efficient regulatory compliance.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ See supra note 5.
---------------------------------------------------------------------------

    The proposed rule change, which extends the expiration date of the 
temporary amendments to the Exchange rules set forth in SR-Phlx-2020-
53, will continue to aid the Exchange's efforts to timely conduct 
hearings in connection with its core adjudicatory functions. 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 ERC hearings to 
continue to proceed by video conference, the Exchange might be required 
to postpone some or almost all hearings indefinitely. The Exchange must 
be able to perform its critical adjudicatory functions in order to 
fulfill its statutory obligations to protect investors and maintain 
fair and orderly markets. As such, this relief is essential to the 
Exchange's ability to fulfill its statutory obligations and allows 
hearing participants to avoid the serious COVID-19-related health and 
safety risks associated with in-person hearings.
    Among other things, this relief will allow the ERC to timely 
provide members, disqualified individuals and other applicants an 
approval or denial of their applications. As set forth in detail in SR-
Phlx-2020-53, this temporary relief allowing ERC hearings to proceed by 
video conference accounts for fair process considerations and will 
continue to provide fair process while avoiding the COVID-19-related 
public health risks for hearing participants. 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 temporary 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 
SR-Phlx-2020-53, 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 
will 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.

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)(iii) of the Act \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 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.

---------------------------------------------------------------------------

[[Page 51406]]

    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ 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.\16\ Importantly, 
extending the relief provided in SR-Phlx-2020-53 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 its 
employees.\17\ The Commission also notes that this proposal extends 
without change the temporary relief previously provided by SR-Phlx-
2020-53.\18\ 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.\19\ 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.\20\
---------------------------------------------------------------------------

    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra Item II.
    \17\ 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).
    \18\ See supra note 6.
    \19\ See supra note 4. 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.
    \20\ 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).
---------------------------------------------------------------------------

    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-Phlx-2021-49 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-Phlx-2021-49. 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 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-Phlx-2021-49 and should be 
submitted on or before October 6, 2021.
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-19851 Filed 9-14-21; 8:45 am]
BILLING CODE 8011-01-P


