FR 2021-01420

This document from the Miami International Securities Exchange (MIAX Options) outlines a proposed temporary change to their Exchange Rule 1308, which governs the supervision of member accounts. The proposal primarily seeks to address challenges that arose due to the COVID-19 pandemic, affecting how member organizations could conduct their required office inspections. These changes, filed with the Securities and Exchange Commission (SEC), aim to extend deadlines for inspections and introduce provisions for remote inspections across the years 2020 and 2021.

General Summary

The primary aim of the proposed rule change is twofold: firstly, to extend the deadline for branch office inspections originally due in 2020 to March 31, 2021, and secondly, to allow remote inspections for both 2020 and 2021. These adjustments are in response to the operational challenges posed by COVID-19, which made in-person inspections challenging and often unsafe. The exchange hopes these temporary measures will help ensure regulatory compliance while adapting to the realities of a global pandemic.

Significant Issues or Concerns

Several issues and concerns stem from the document's content:

• Technical Complexity: The document is filled with technical jargon, extensive legal references, and a multitude of specific regulatory rule citations. This complexity might make the information challenging for a general reader to fully understand, potentially excluding those without a legal or financial background from engaging effectively with the content.

• Fairness and Impact on Member Organizations: While the extension and remote inspection options may provide necessary relief for member organizations, there is a lingering concern on whether these changes might inadvertently favor these organizations by easing regulatory requirements without laying out potential consequences or risks.

• Effectiveness of Remote Inspections: The document suggests remote inspections as a viable alternative to on-site ones, yet it does not comprehensively address how remote inspections will maintain the same level of rigor and investor protection as traditional methods.

Impact on the Public

For the public, these changes should ideally maintain the safety and protection investors have grown to expect. However, there is a chance that the transition to remote inspections may not absolutely match the efficacy of physical inspections, potentially creating vulnerabilities. It is crucial that such regulatory adaptations do not compromise the fiduciary responsibilities that exist to safeguard public interests.

Impact on Stakeholders

• Member Organizations: These organizations receive a practical reprieve from conducting in-person inspections, which could be seen as a necessary flexibility during a pandemic. This should help them continue their operations and comply with regulatory standards without endangering health or safety.

• Regulators and the SEC: The burden on regulators to ensure compliance without physical presence may increase. This highlights a need for innovative methods and possibly more robust technologies to achieve rigorous oversight remotely.

• Investors: While the adjustments aim to continue protecting investors, they should be aware that the different inspection method might inadvertently affect the thoroughness of compliance checks in some cases.

In summary, the modifications proposed by MIAX Options are a reflection of the temporary, adaptive measures many institutions have had to take in response to COVID-19-related disruptions. Though the changes are positioned as temporary, stakeholders must remain vigilant to ensure these alterations do not erode vital investor protection mechanisms or create long-term dependencies on these leniencies.