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Federal Register / Vol. 86, No. 17 / Thursday, January 28, 2021 / Notices
2020, FINRA extended the relief to pass the appropriate examination until June 30, 2020. On June 29, 2020, FINRA
again extended the temporary relief providing that individuals who were designated to function as principals under FINRA Rule 1210.04 prior to May 4, 2020, would be given until August 31, 2020, to pass the appropriate principal qualification examination. On August 28, 2020, FINRA again extended the temporary relief to pass the principal qualification examinations until December 31, 2020.9
The COVID19 conditions necessitating the extension of relief provided in the FINRA FAQ continue to persist and in fact appear to be worsening.10 One of the impacts of COVID19 continues to be serious interruptions in the administration of FINRA qualification examinations at Prometric test centers and the limited ability of individuals to sit for the examinations.11 Although Prometric has been reopening its test centers, Prometrics 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
Furthermore, Prometric has had to close some reopened test centers due to incidents of COVID19 cases. The initial nationwide closure in March along with the inability to fully reopen all Prometric test centers due to COVID19
have led to a significant backlog of individuals who are waiting to sit for FINRA examinations that are not available online, including the General Securities Principal Exam Series 24.13
capacity for 120 calendar days before having to pass an appropriate principal qualification examination.
BOX Rule 2020d provides the same allowance to Participants.
9 See Exchange Act Release No. 89732 September 1, 2020, 85 FR 55535 September 8, 2020 SR
FINRA2020026.
10 See, e.g., Meryl Kornfield, Jacqueline Dupree, Marisa Iati, Paulina Villegas, Siobhan OGrady and Hamza Shaban, New daily coronavirus cases in U.S.
rise to 145,000, latest all-time high, Wash. Post, November 11, 2020, https
www.washingtonpost.com/nation/2020/11/11/
coronavirus-covid-live-updates-us/.
11 Information about continued impact of COVID
19 on FINRA-administered examinations is available at https www.finra.org/rules-guidance/
key-topics/covid-19/exams.
12 Information from Prometric about its safety practices and the impact of COVID19 on its operations is available at https
www.prometric.com/corona-virus-update. See also id.
13 Earlier this year, an online test delivery service was launched for candidates seeking to take qualification examination remotely. Only certain qualification examinations are available online. See supra note 11. FINRA is considering making
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In addition, firms are continuing to experience operational challenges with much of their personnel working from home due to shelter-in-place orders, restrictions on businesses and social activity imposed in various states, and adherence to other social distancing guidelines consistent with the recommendations of public health officials.14 As a result, firms continue to face potentially significant disruptions to their normal business operations that may include a limitation of in-person activities and staff absenteeism as a result of the health and welfare concerns stemming from COVID19.
Such potential disruptions may be further exacerbated and may even affect client services if firms cannot continue to keep principal positions filled as they may have difficulty finding other qualified individuals to transition into these roles or may need to reallocate employee time and resources away from other critical responsibilities at the firm.
These ongoing, extenuating 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 2020d, 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. The ongoing circumstances also require individuals to be exposed to the health risks associated with taking an inperson examination, because the General Securities Principal examination is not available online.
Therefore, the Exchange is proposing to continue the temporary relief provided through the FINRA FAQs and FINRAs subsequent rule filings 15 by adopting IM20201 to extend the 120-day period during which an individual can function as a principal before having to pass an applicable qualification examination until April 30, 2021. The proposed rule change would apply only to those individuals who were designated to function as a principal prior to January 1, 2021. Any individuals designated to function as a principal on or after January 1, 2021, would need to successfully pass an appropriate qualification examination within 120 days.
The Exchange believes that this proposed extension of time is tailored to additional qualification examinations available remotely on a limited basis.
14 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.
15 See supra notes 4 and 9.

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address the needs and constraints on a Participants operations during the COVID19 pandemic, without significantly compromising critical investor protection. The proposed extension of time will help to minimize the impact of COVID19 on Participants by providing continued flexibility so that Participants can ensure that principal positions remain filled. The potential risks from the proposed extension of the 120-day period are mitigated by the Participants continued requirement to supervise the activities of these designated individuals and ensure compliance with federal securities laws and regulations, as well as the Exchanges rules.
2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of Section 6b of the Act,16 in general, and Section 6b5 of the Act,17 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.
The proposed rule change is intended to minimize the impact of COVID19 on Participant operations by extending the 120-day period certain individuals may function as a principal without having successfully passed an appropriate qualification examination under BOX
Rule 2020d until April 30, 2021. The proposed rule change does not relieve Participants 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 COVID19 pandemic, the Exchange believes that the proposed rule change is a sensible accommodation that will continue to afford Participants 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.
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