March 25, 2020
Director, Division of Trading and Markets
US Securities and Exchange Commission
100 F Street NE
Washington, DC 20549
Re: Request for Regulatory Relief in Connection with COVID-19 Situation
Dear Mr. Redfearn:
The Securities Industry and Financial Markets Association (SIFMA)1 and our member firms greatly appreciate the recent efforts of the Securities and Exchange Commission (the “Commission”) and the Division of Trading and Markets to assist the industry in navigating the COVID-19 crisis and to provide relief from certain regulatory requirements.
Over the last decade, securities market participants have been developing and refining their contingency plans to manage potential disruptions created by epidemics and pandemics. We have been continually reviewing and evaluating these plans in light of COVID-19 events and would like to bring to your attention, for regulatory relief consideration, the following non-exhaustive list of issues raised by industry participants to date:
- Wet Signatures. Given the current operating environment, with many executives and staff working remotely, broker-dealers will face significant challenges in obtaining manual signatures for the FOCUS reports that will need to be filed with the Commission. With month end approaching, we request relief from the requirement to maintain manual signatures for the FOCUS reports and request that firms be permitted to maintain email approvals instead of manual signatures for the March FOCUS reports and any future FOCUS reports as needed. In addition, we request relief from any other manual signature requirement pursuant to the Commission’s rules and regulations (e.g., Form 144, certain ATS forms) to the effect that email approval or an electronic signature can substitute for a manual signature, and we request relief from any notarization requirements (e.g., certain ATS forms).
- DTCC Processing of Physical Securities. DTCC has suspended all physical processing services until, at the earliest, Monday March 30. Impacted firms may require related relief from physical processing timelines, good control location treatment, and regulatory reporting requirements. Broker-dealers are subject to a variety of rules related to defined timeframes associated with the delivery of physical and other securities. These include Rule 15c3-3, Uniform Practice Code Buy-In rules and Regulation T. Broker-dealers are therefore asking for no-action relief during this time period for any failure to comply with physical processing timelines, possession or control, and regulatory reporting requirements related to DTCC’s suspension of physical processing.
- Regulation SHO. In light of DTCC’s suspension of all physical processing services, limited relief with respect to Regulation SHO’s locate and closeout requirements consistent with that granted after Hurricane Sandy in 20124 would be appropriate. We note that just as in 2012, physical certificates are not available and it is unclear when they will be available.
- Brokers Relying on Rule 15c3-3(k)(2). Under this provision, a broker-dealer must forward checks received from its customers by noon the next business day. We understand that a receiving institution’s personnel may be unable to access mail or deliveries at an office location due to the institution’s business continuity plan in response to circumstances related to COVID-19, or due to quarantine of mail or deliveries based on guidance related to the length of time the virus may survive on surfaces. Accordingly, we request flexibility to allow personnel to visit their office locations and process mail or deliveries when advisable and then submit by noon the day following processing.
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1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly one million employees, we advocate for legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. With offices in New York and Washington, DC, SIFMA is the US regional member of the Global Financial Markets Association (GFMA).