FR 2021-01837

The document from the Federal Register outlines a proposed rule change filed by the BOX Exchange LLC with the Securities and Exchange Commission (SEC). This change is intended to provide a temporary extension for certain financial professionals, allowing them to perform principal functions without having completed the usual qualification exams due to the disruptions caused by the COVID-19 pandemic. Specifically, the proposal allows those acting as principals before January 1, 2021, to continue in their roles until April 30, 2021, without passing these exams.

General Summary

The SEC's notice allows the BOX Exchange LLC to temporarily extend the timeframe within which certain individuals can act as principals without passing necessary qualification exams. This relief measure responds to the challenges posed by the pandemic, particularly the difficulties candidates face in accessing testing centers. The change aligns with similar actions taken by other financial regulatory bodies to ensure that essential roles in financial operations remain filled, thereby maintaining business continuity.

Significant Issues and Concerns

One of the most significant issues presented in this document is the complex nature of legal and regulatory language used, which may not be easily understood by individuals without a legal or financial background. The frequent references to specific rules, like FINRA Rule 1210.04 or BOX Rule 2020(d), require readers to cross-reference multiple sources to grasp the full context. Additionally, the extension is limited to April 30, 2021, adding a layer of uncertainty, as further extensions may be necessary depending on the circumstances.

Another notable concern is the ongoing issues with Prometric test centers, which are responsible for administering qualification exams. The document highlights a backlog of individuals waiting to complete their exams due to the pandemic's impact. However, it does not provide specific solutions or timelines for resolving these issues, nor does it clarify how prolonged disruptions will be managed.

Impact on the Public

The document's proposed rule change could impact the public by ensuring that financial services and operations remain consistent and uninterrupted during the pandemic. By allowing individuals to serve as principals without immediate examination, the rule helps prevent disruptions that might affect investors and client services.

Impact on Stakeholders

For stakeholders, including financial firms and professionals, this decision provides much-needed flexibility during an unprecedented crisis. Firms can maintain essential roles filled without reassigning personnel or recruiting new staff amidst challenging circumstances. However, the reliance on extended temporary measures may cause uncertainty about career progressions and job security for professionals required to pass these exams.

Moreover, while this temporary relief is poised to maintain operational stability, stakeholders should be aware that the relief is conditionally tied to the ongoing pandemic. The extension mechanism may necessitate future adaptation and planning to mitigate risks associated with fluctuating exam availability and regulatory requirements.

Overall, while the temporary rule change provides a practical solution in an immediate context, it also calls for continuous monitoring and potential adjustments to align long-term regulatory standards with the evolving public health landscape.