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Federal Register / Vol. 86, No. 151 / Tuesday, August 10, 2021 / Notices rule change provides TPHs, and applicants for membership, with an opportunity to better manage operational challenges. Particularly, the COVID19 pandemic amplified the need to better manage operational challenges like those that arose during the pandemic 9 and that may continue to arise in the future. The proposed rule change would not require the use of a particular type of technology to obtain a valid electronic signature from the associated person. The Exchange believes that some firms may be unable to obtain the manual signature of applicants for registration resulting in a significant operational backlog. By permitting these firms to rely on electronic signatures to satisfy the signature requirements of Exchange Rule 3.34, the proposed rule change may reduce or eliminate this backlog.
For purposes of the proposed rule change, a valid electronic signature would be any electronic mark that clearly identifies the signatory and is otherwise in compliance with the Electronic Signatures in Global and National Commerce Act E-Sign Act and the guidance issued by the Commission relating to the E-Sign Act.10

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2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6b of the Act.11 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6b5 12 requirements that the rules of an exchange be 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 regulating, clearing, settling, processing information with respect to, and 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.
In particular, the Exchange believes the proposed rule change promotes just and equitable principles of trade and 9 See SRFINRA2021003, 86 FR at 13937
noting the same in connection with the FINRA
filing.
10 See accord Securities Exchange Act Release No. 85282 March 11, 2019, 84 FR 9573 March 15, 2019 Order Approving File No. SRFINRA2018
040 discussing valid electronic signatures under existing guidance.
11 15 U.S.C. 78fb.
12 15 U.S.C. 78fb5.

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removes impediments to and perfects the mechanisms of a free and open market and a national market system and, in general, protects investors and the public interest, by amending an incorrect cross-reference in Rule 3.31
and a reference to an obsolete CE
Program to reflect the current CE
Programs administered by FINRA.
Moreover, the proposed rule change updates the Exchange Rules to be consistent with current CE Program requirements and is designed to protect investors by ensuring accuracy and clarity relating to cross references in its rules and regarding CE for TPHs in Rule 3.33. Furthermore, the proposed rule change provides firms with the flexibility to rely on electronic signatures to satisfy the signature requirements of Rule 3.34. Specifically, the Exchange proposes to amend Exchange Rule 3.34, similar to the amendments made by FINRA, to provide the option of filing an initial or a transfer Form U4 based on a manually or an electronically signed copy of the form provided to the TPH, or applicant for membership, by the individual on whose behalf the form is being filed.
Considering the technological advancements that provide for enhanced authentication and security of electronic signatures, the Exchange believes that it is appropriate to amend Rule 3.34 to provide such flexibility.
The proposed rule change also addresses the ongoing public health risks stemming from the outbreak of COVID19 and the operational challenges that firms continue to face as a result of pandemic repercussions.13 By permitting these firms to rely on electronic signatures to satisfy the signature requirements of Rule 3.34, the proposed rule change may reduce or eliminate an operational backlog due to the difficulty firms may have faced in obtaining the manual signature of applicants for registration as a result of the impact of the pandemic on daily work environments.
B. Self-Regulatory Organizations Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act as the proposed rule changes to update an incorrect cross-reference and delete
an obsolete CE Program reference are merely clarifying in nature and are not meant to address any competitive issue.
The proposed change relating to manual signatures is, in all material respects, substantively identical to recent rule changes adopted by FINRA. The Exchange believes the proposed change will reduce a regulatory burden for TPHs by allowing them to rely on Form U4 copies with an electronic signature.
All TPHs will have the option to rely on such forms with an electronic signature or continue to rely on forms with a manual signature. Also, all persons registered only as Investment Company and Variable Contracts Representatives Regulatory Element are already required to complete the S101 CE Program, as FINRA replaced S106 with S101 in 2018; the proposed rule change just updates the Regulatory Element number in the Rules accordingly.
The Exchange does not believe that the proposed rule change will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed rule changes are based upon the same changes recently made to FINRA Rule 1010c and consistent with the current Regulatory Element CE Programs administered by FINRA, as well as updates an incorrect cross-reference in the rules.
C. Self-Regulatory Organizations Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on 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 19b3A of the Act 14 and Rule 19b 4f6 15 thereunder.
A proposed rule change filed under Rule 19b4f6 normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b4f6iii, the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The 14 15

13 See
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supra note 9.

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