80 FR 71873 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Qualification and Registration of Permit Holders
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 221 (November 17, 2015)
Federal Register Volume 80, Issue 221 (November 17, 2015)
| Page Range | 71873-71876 | |
| FR Document | 2015-29224 |
[Federal Register Volume 80, Number 221 (Tuesday, November 17, 2015)] [Notices] [Pages 71873-71876] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-29224] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76408; File No. SR-C2-2015-027] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Qualification and Registration of Permit Holders November 10, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on November 2, 2015, C2 Options Exchange, Incorporated (the ``Exchange'' or ``C2'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Interpretation and Policy .07 to Rule 3.4 (Qualification and Registration) regarding the categories of registration and respective qualification examinations required for individual Permit Holder [sic] and associated persons of Permit Holders that engage in the securities activities of the Permit Holder on the Exchange. Specifically, the Exchange proposes to replace the Proprietary Trader registration category and the Series 56 Proprietary Trader registration qualification examination for Proprietary Traders with the Securities Trader category of registration and the Series 57 Securities Trader registration qualification examination for Securities Traders respectively. The text of the proposed rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Interpretation and Policy .07 to Rule 3.4 (Qualification and Registration) to replace the Proprietary Trader (PT) registration category and qualification examination (Series 56) with the Securities Trader (TD) registration category and qualification examination (Series 57). In addition, the Exchange proposes to replace the Proprietary Trader Principal (TP) registration category with a Securities Trader Principal (TP) registration category for individual TPHs or associated person [sic] who either: (i) Supervise or monitor proprietary trading, market-making and/or brokerage activities for broker-dealers; (ii) supervise or train those engaged in proprietary trading, market-making and/or effecting transactions on behalf of a broker-dealer, with respect to those activities; and/or (iii) are officers, partners or directors of a Permit Holder, as described in paragraph (a)(2) of Interpretation and Policy .07 to Rule 3.4. The Exchange also proposes to replace the Proprietary Trader Compliance Officer (CT) registration category with the Securities Trader Compliance Officer (CT) registration category for Chief Compliance Officers (or individuals performing similar functions) of a TPH or TPH organization. This filing is, in all material respects, based upon SR-FINRA-2015-017, which was recently approved by the Securities and Exchange Commission (``SEC'' or ``Commission'').\3\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 75783 (August 28, 2015) (Order Approving a Proposed Rule Change To Establish the Securities Trader and Securities Trader Principal Registration Categories) (SR-FINRA-2015-017). --------------------------------------------------------------------------- Rule 3.4 sets forth various qualification and registration requirements that individual Permit Holders and associated persons must satisfy in order to transact business on the Exchange. Among the qualification and registration requirements set forth in Rule 3.4, Interpretation and Policy .07 provides that individual Permit Holders and associated persons that engage in proprietary trading, market- making, or effect transactions on behalf of a broker-dealer must register and qualify as a Proprietary Trader (TP) in WebCRD.\4\ To qualify as a Proprietary [[Page 71874]] Trader, individual Permit Holders and associated persons must either pass the Series 56 Proprietary Trader qualification examination \5\ or Series 7 General Securities Representative qualification examination.\6\ Several exchanges, including C2 currently use the Series 56 examination as a qualification standard.\7\ --------------------------------------------------------------------------- \4\ WebCRD is a secure registration and licensing system operated by FINRA and is the central licensing and registration system for the U.S. securities industry and its regulators. The system contains the registration records of more than 6,500 registered broker-dealers, and the qualification, employment and disclosure histories of more than 650,000 active registered individuals. In addition, Web CRD facilitates the processing and payment of FINRA registration-related fees such as form filings, fingerprint submissions, qualification exams and continuing education sessions. \5\ The Series 56 Proprietary Trader Examination is a two hour and thirty minute exam, consisting of 100 scored multiple-choice questions. The Series 56 examination is administered by FINRA, but is not recognized by FINRA as an acceptable qualification examination for associated persons engaged in securities trading. Under FINRA rules, associated persons of FINRA members that engage in over-the-counter securities trading are required to pass the Series 55 Equity Trader Exam. Nevertheless, as FINRA has recognized, because the Series 55 and Series 56 are intended to test the core knowledge required of individuals engaged in trading activities as well as self-regulatory organization (``SRO'') rules, including trading rules that are common across all SROs, there is significant overlap in the content of the Series 55 and Series 56 qualification examinations. See Securities Exchange Act Release No. 75394 (July 8, 2015), 80 FR 41119 (Notice of Filing of a Proposed Rule Change to Establish the Securities Trader and Securities Trader Principal Registration Categories) (SR-FINRA-2015-017). \6\ See Interpretation and Policy .08 to Rule 3.6A. \7\ See, e.g., BATS Exchange, Inc. (``BATS'') Interpretation and Policy .01 to Rule 2.5 (Proficiency Examinations); Miami International Securities Exchange, LLC (``MIAX'') Rule 1302 (Registration of Representatives). See also Interpretation and Policy .07 to Rule 3.4. --------------------------------------------------------------------------- Interpretation and Policy .07 to Rule 3.4 further requires that individual Permit Holders and associated persons with supervisory responsibility over proprietary trading activities or who is [sic] an officer, partner, or director of a Permit Holder or Permit Holder organization qualify and register as a Proprietary Trader Principal. Specifically, under paragraph (a)(2) of Interpretation and Policy .07 to Rule 3.4, an individual Permit Holder or associated person who either: (i) Supervises or monitors proprietary trading, market-making and/or brokerage activities for broker-dealers; (ii) supervises or trains those engaged in proprietary trading, market-making and/or effecting transactions on behalf of a broker-dealer, with respect to those activities; and/or (iii) is an officer, partner or director of a Permit Holder is required register and qualify as a Proprietary Trader Principal (TP) in WebCRD and satisfy prerequisite registration and qualification requirements, including, but not limited to passing the Series 24 General Securities Principal Examination or an acceptable alternative qualification examination.\8\ An individual Permit Holder or associated person who is a Chief Compliance Officer (or performs similar functions) for a Permit Holder that engages in proprietary trading, market-making, or effecting transactions on behalf of a broker-dealer is also required to register and qualify as a Proprietary Trader Compliance Officer (CT) in WebCRD and satisfy the prerequisite registration and qualification requirements, including, but not limited to passing the Series 14 Compliance Official Examination.\9\ --------------------------------------------------------------------------- \8\ Under current Interpretation and Policy .07 to Rule 3.4, the Series 9/10 General Securities Sales Supervisor Examination and Series 23 General Securities Principal Exam--Sales Supervisor Module are acceptable alternative qualification examinations to the Series 24 General Securities Principal Examination. Because the Series 23 is not available in WebCRD, however, each applicant that chooses to take the Series 23 module as an alternative to the Series 24 qualification examination must provide documentation of a valid Series 23 license to the Registration Services Department upon request for proof of licensure. \9\ Under current Interpretation and Policy .07 to Rule 3.4, the Series 24 General Securities Principal Examination is considered an acceptable alternative qualification examination for the Series 14 Compliance Official Examination and registered General Securities Principals may register as Proprietary Trader Compliance Officers subject to applicable provisions under the Rules. See Interpretation and Policy .07(b) to Rule 3.4. --------------------------------------------------------------------------- The Exchange proposes to replace the Series 56 qualification examination with the Series 57 qualification examination for those registration categories where the Series 56 is currently an acceptable qualification standard.\10\ Specifically, with respect to the Proprietary Trader registration categories identified in Interpretation and Policy .07 to Rule 3.4, the Exchange proposes to replace the Proprietary Trader (PT) registration category with the Securities Trader (TD) registration category as well as eliminate the current Series 56 Proprietary Trader Exam prerequisite and, instead, include a Series 57 Securities Trader qualification examination in its place.\11\ The Proprietary Trader Principal (PT) and Proprietary Trader Compliance Officer (CT) registration categories would be replaced with the renamed registration categories of Securities Trader Principal (PT) and Securities Trader Compliance Officer respectively (CT).\12\ --------------------------------------------------------------------------- \10\ See Interpretation and Policy .07 to Rule 3.4. \11\ Neither the Exchange's current Rules nor the proposed rule would require that a Proprietary Trader or Securities Trader work at, or be associated with, a ``proprietary trading firm.'' Rather, both the current Rules and the proposed rule would require that individual Permit Holders and associated persons that engage in proprietary trading, market-making, or effect transactions on behalf of a broker-dealer to [sic] qualify and register as a [sic] Proprietary Trader (or Securities Trader) in WebCRD. Whereas the current rule allows individual Permit Holders and associated persons to qualify and register as a [sic] Proprietary Trader by either passing the Series 56 Proprietary Trader qualification examination or Series 7 General Securities Representative qualification examination, the proposed rule would require individual Permit Holders and associated persons to pass the Series 57 Securities Trader qualification examination in order to qualify as a [sic] Securities Trader after the effective date of the proposed rule change. \12\ As is the case under the current Rules, under the proposed rule, only individuals qualified and registered as a [sic] Proprietary Trader Principal (TP) (Securities Trader Principal TP)) would be permitted to supervise a Proprietary Trader (PT) (Securities Trader (TD)). --------------------------------------------------------------------------- The Exchange will announce the effective date of the proposed rule change in a Regulatory Circular. Currently, the Exchange intends for the effective date to be January 4, 2016. Under the proposed rule, individual Permit Holders and associated persons who have passed the Proprietary Trader (Series 56) qualification examination and who have registered as Proprietary Trader [sic] (PT) in WebCRD on or before the effective date of the proposed rule change and individual Permit Holders and associated persons who have passed the General Securities Representative (Series 7) qualification examination and who have registered as Proprietary Traders (PT) in WebCRD on or before the effective date of the proposed rule change would be grandfathered as Securities Traders (TDs) without having to take any additional examinations and without having to take any other action, provided that the individual TPH's or associated person's registration has not been revoked by the Exchange as a disciplinary sanction and no more than two years have passed between the date that the individual Permit Holder or associated person last registered as a Proprietary Trader (PT) and the effective date. After the effective date, an individual Permit Holder or associated person would need to pass the new Series 57 Securities Trader qualification examination and register as a Securities Trader (TD). In addition, individual Permit Holders and associated persons who have either passed the Proprietary Trader (PT) qualification examination or the General Securities Representative (Series 7) qualification examination and who have registered as Proprietary Traders (PT) in WebCRD on or before the effective date of the proposed rule change and who have also passed the General Securities Principal (Series 24) qualification examination (or have completed any of the alternative acceptable qualifications requirements [[Page 71875]] as defined in current Interpretation and Policy .07(b) to Rule 3.4) and who have also registered as Proprietary Trader Principals (TP) in WebCRD on or before the effective date of the proposed rule change would be eligible to register as Securities Trader Principals (TPs), provided that the individual Permit Holders or associated person's registration has not been revoked by the Exchange as a disciplinary sanction and no more than two years have passed between the date that the individual Permit Holder or associated person last registered as a Proprietary Trader Principal (TP) and the date they [sic] register as a Securities Trader Principal (TP).\13\ After the effective date, a Securities Trader Principal (TP) would need to pass the Securities Trader (Series 57) qualification examination and the General Securities Principal (Series 24) qualification examination (or have completed any of the alternative acceptable qualifications as defined in current Interpretation and Policy .07(b) to Rule 3.4) and be registered as such in order to register as a Securities Trader Principal (TP).\14\ --------------------------------------------------------------------------- \13\ See Rule 3.4(e) (Requirement for Examination on Lapse of Registration). \14\ The Exchange also proposes to add text to Interpretation and Policy .07(b) to Rule 3.4 regarding the supervisory responsibilities of the Securities Trader Principals, which would limit Securities Trader Principals' supervisory responsibilities to supervision of the securities trading functions of Permit Holders as described in paragraph (a)(2) of Interpretation and Policy .07 to Rule 3.4, and the activities of officers, partners, and directors of Permit Holders. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.\15\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \16\ 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. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \17\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f(b). \16\ 15 U.S.C. 78f(b)(5). \17\ Id. --------------------------------------------------------------------------- In particular, the Exchange believes that adoption of the Securities Trader registration category and Series 57 Securities Trader qualification examination registration requirement is consistent with the Act. FINRA has indicated that the Series 57 qualification examination is being developed in an effort to adopt a more tailored examination. The Exchange believes that a more tailored qualification examination for individual Permit Holders and associated persons engaged in trading activities is a measure designed to help ensure professionalism among market participants, prevent fraudulent and manipulative practices, and promote just and equitable principles of trade. The Exchange also believes that it is in the interests of investors and the general public to develop a more tailored qualification examination for proprietary traders and that a more uniform qualification standard may help ensure fair and orderly markets. Furthermore, the Exchange believes that it is in the interests of all market participants to provide consistent qualification and registration requirements across markets. The Exchange believes that harmonizing the Exchange's qualification and registration requirements with those of FINRA and the other national securities exchanges would further such interests. B. Self-Regulatory Organization's 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 believes that the proposed rule change relating to Securities Traders, which is, in all material respects, based upon and substantially similar to, recent rule changes adopted by FINRA and which is being filed in conjunction with similar filings by the other national securities exchanges, will reduce the regulatory burden placed on market participants engaged in trading activities across different markets. The Exchange believes that the harmonization of these registration requirements across the various markets will reduce burdens on competition by removing impediments to participation in the national market system and promoting competition among participants across the multiple national securities exchanges. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received written 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: A. Significantly affect the protection of investors or the public interest; B. impose any significant burden on competition; and C. 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 19(b)(3)(A) of the Act \18\ and Rule 19b-4(f)(6) \19\ thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \18\ 15 U.S.C. 78s(b)(3)(A). \19\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-C2-2015-027 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-C2-2015-027. This file number should be included on the [[Page 71876]] subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-C2-2015-027 and should be submitted on or before December 8, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-29224 Filed 11-16-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices 71873
Commission, 100 F Street NE., ‘‘Act’’),1 and Rule 19b–4 thereunder,2 A. Self-Regulatory Organization’s
Washington, DC 20549–1090. notice is hereby given that on November Statement of the Purpose of, and
All submissions should refer to File 2, 2015, C2 Options Exchange, Statutory Basis for, the Proposed Rule
Number SR–BATS–2015–99. This file Incorporated (the ‘‘Exchange’’ or ‘‘C2’’) Change
number should be included on the filed with the Securities and Exchange 1. Purpose
subject line if email is used. To help the Commission (the ‘‘Commission’’) the
Commission process and review your The Exchange proposes to amend
proposed rule change as described in
comments more efficiently, please use Interpretation and Policy .07 to Rule 3.4
Items I, II, and III below, which Items
only one method. The Commission will (Qualification and Registration) to
have been prepared by the Exchange. replace the Proprietary Trader (PT)
post all comments on the Commission’s The Commission is publishing this
Internet Web site (http://www.sec.gov/ registration category and qualification
notice to solicit comments on the examination (Series 56) with the
rules/sro.shtml). Copies of the proposed rule change from interested Securities Trader (TD) registration
submission, all subsequent persons. category and qualification examination
amendments, all written statements
I. Self-Regulatory Organization’s (Series 57). In addition, the Exchange
with respect to the proposed rule
Statement of the Terms of Substance of proposes to replace the Proprietary
change that are filed with the
the Proposed Rule Change Trader Principal (TP) registration
Commission, and all written
category with a Securities Trader
communications relating to the
The Exchange proposes to amend Principal (TP) registration category for
proposed rule change between the
Interpretation and Policy .07 to Rule 3.4 individual TPHs or associated person
Commission and any person, other than
(Qualification and Registration) [sic] who either: (i) Supervise or
those that may be withheld from the
regarding the categories of registration monitor proprietary trading, market-
public in accordance with the
and respective qualification making and/or brokerage activities for
provisions of 5 U.S.C. 552, will be
examinations required for individual broker-dealers; (ii) supervise or train
available for Web site viewing and
Permit Holder [sic] and associated those engaged in proprietary trading,
printing in the Commission’s Public
persons of Permit Holders that engage in market-making and/or effecting
Reference Room, 100 F Street NE.,
transactions on behalf of a broker-
Washington, DC 20549, on official the securities activities of the Permit
dealer, with respect to those activities;
business days between the hours of Holder on the Exchange. Specifically,
and/or (iii) are officers, partners or
10:00 a.m. and 3:00 p.m. Copies of the the Exchange proposes to replace the directors of a Permit Holder, as
filing also will be available for Proprietary Trader registration category described in paragraph (a)(2) of
inspection and copying at the principal and the Series 56 Proprietary Trader Interpretation and Policy .07 to Rule 3.4.
office of the Exchange. All comments registration qualification examination The Exchange also proposes to replace
received will be posted without change; for Proprietary Traders with the the Proprietary Trader Compliance
the Commission does not edit personal Securities Trader category of registration Officer (CT) registration category with
identifying information from and the Series 57 Securities Trader the Securities Trader Compliance
submissions. You should submit only registration qualification examination Officer (CT) registration category for
information that you wish to make for Securities Traders respectively. The Chief Compliance Officers (or
available publicly. All submissions text of the proposed rule change is individuals performing similar
should refer to File Number SR–BATS–
available on the Exchange’s Web site functions) of a TPH or TPH
2015–99, and should be submitted on or
(http://www.cboe.com/AboutCBOE/ organization. This filing is, in all
before December 8, 2015.
CBOELegalRegulatoryHome.aspx), at material respects, based upon SR–
For the Commission, by the Division of the Exchange’s Office of the Secretary, FINRA–2015–017, which was recently
Trading and Markets, pursuant to delegated approved by the Securities and
and at the Commission’s Public
authority.11 Exchange Commission (‘‘SEC’’ or
Reference Room.
Robert W. Errett, ‘‘Commission’’).3
Deputy Secretary. II. Self-Regulatory Organization’s Rule 3.4 sets forth various
[FR Doc. 2015–29223 Filed 11–16–15; 8:45 am] Statement of the Purpose of, and qualification and registration
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule requirements that individual Permit
Change Holders and associated persons must
satisfy in order to transact business on
SECURITIES AND EXCHANGE In its filing with the Commission, the the Exchange. Among the qualification
COMMISSION Exchange included statements and registration requirements set forth
concerning the purpose of and basis for in Rule 3.4, Interpretation and Policy
[Release No. 34–76408; File No. SR–C2– the proposed rule change and discussed .07 provides that individual Permit
2015–027] any comments it received on the Holders and associated persons that
proposed rule change. The text of these engage in proprietary trading, market-
Self-Regulatory Organizations; C2 statements may be examined at the making, or effect transactions on behalf
Options Exchange, Incorporated; places specified in Item IV below. The of a broker-dealer must register and
Notice of Filing and Immediate Exchange has prepared summaries, set qualify as a Proprietary Trader (TP) in
Effectiveness of a Proposed Rule forth in sections A, B, and C below, of WebCRD.4 To qualify as a Proprietary
mstockstill on DSK4VPTVN1PROD with NOTICES
Change Relating to Qualification and the most significant aspects of such
Registration of Permit Holders statements. 3 See Securities Exchange Act Release No. 75783
(August 28, 2015) (Order Approving a Proposed
November 10, 2015. Rule Change To Establish the Securities Trader and
Pursuant to Section 19(b)(1) of the Securities Trader Principal Registration Categories)
(SR–FINRA–2015–017).
Securities Exchange Act of 1934 (the 4 WebCRD is a secure registration and licensing
1 15 U.S.C. 78s(b)(1). system operated by FINRA and is the central
11 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. Continued
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Trader, individual Permit Holders and to passing the Series 24 General The Proprietary Trader Principal (PT)
associated persons must either pass the Securities Principal Examination or an and Proprietary Trader Compliance
Series 56 Proprietary Trader acceptable alternative qualification Officer (CT) registration categories
qualification examination 5 or Series 7 examination.8 An individual Permit would be replaced with the renamed
General Securities Representative Holder or associated person who is a registration categories of Securities
qualification examination.6 Several Chief Compliance Officer (or performs Trader Principal (PT) and Securities
exchanges, including C2 currently use similar functions) for a Permit Holder Trader Compliance Officer respectively
the Series 56 examination as a that engages in proprietary trading, (CT).12
qualification standard.7 market-making, or effecting transactions The Exchange will announce the
Interpretation and Policy .07 to Rule on behalf of a broker-dealer is also effective date of the proposed rule
3.4 further requires that individual required to register and qualify as a change in a Regulatory Circular.
Permit Holders and associated persons Proprietary Trader Compliance Officer Currently, the Exchange intends for the
with supervisory responsibility over (CT) in WebCRD and satisfy the effective date to be January 4, 2016.
proprietary trading activities or who is prerequisite registration and Under the proposed rule, individual
[sic] an officer, partner, or director of a qualification requirements, including, Permit Holders and associated persons
Permit Holder or Permit Holder but not limited to passing the Series 14 who have passed the Proprietary Trader
organization qualify and register as a Compliance Official Examination.9 (Series 56) qualification examination
Proprietary Trader Principal. The Exchange proposes to replace the and who have registered as Proprietary
Specifically, under paragraph (a)(2) of Series 56 qualification examination with Trader [sic] (PT) in WebCRD on or
Interpretation and Policy .07 to Rule 3.4, the Series 57 qualification examination before the effective date of the proposed
an individual Permit Holder or for those registration categories where rule change and individual Permit
associated person who either: (i) the Series 56 is currently an acceptable Holders and associated persons who
Supervises or monitors proprietary qualification standard.10 Specifically, have passed the General Securities
trading, market-making and/or with respect to the Proprietary Trader Representative (Series 7) qualification
brokerage activities for broker-dealers; registration categories identified in examination and who have registered as
(ii) supervises or trains those engaged in Interpretation and Policy .07 to Rule 3.4, Proprietary Traders (PT) in WebCRD on
proprietary trading, market-making and/ the Exchange proposes to replace the or before the effective date of the
or effecting transactions on behalf of a Proprietary Trader (PT) registration proposed rule change would be
broker-dealer, with respect to those category with the Securities Trader (TD) grandfathered as Securities Traders
activities; and/or (iii) is an officer, registration category as well as eliminate (TDs) without having to take any
partner or director of a Permit Holder is the current Series 56 Proprietary Trader additional examinations and without
required register and qualify as a Exam prerequisite and, instead, include having to take any other action,
Proprietary Trader Principal (TP) in a Series 57 Securities Trader provided that the individual TPH’s or
WebCRD and satisfy prerequisite qualification examination in its place.11 associated person’s registration has not
registration and qualification been revoked by the Exchange as a
requirements, including, but not limited 8 Under current Interpretation and Policy .07 to disciplinary sanction and no more than
Rule 3.4, the Series 9/10 General Securities Sales two years have passed between the date
licensing and registration system for the U.S. Supervisor Examination and Series 23 General that the individual Permit Holder or
securities industry and its regulators. The system Securities Principal Exam—Sales Supervisor
contains the registration records of more than 6,500 Module are acceptable alternative qualification associated person last registered as a
registered broker-dealers, and the qualification, examinations to the Series 24 General Securities Proprietary Trader (PT) and the effective
employment and disclosure histories of more than Principal Examination. Because the Series 23 is not date. After the effective date, an
650,000 active registered individuals. In addition, available in WebCRD, however, each applicant that individual Permit Holder or associated
Web CRD facilitates the processing and payment of chooses to take the Series 23 module as an
FINRA registration-related fees such as form filings, alternative to the Series 24 qualification person would need to pass the new
fingerprint submissions, qualification exams and examination must provide documentation of a valid Series 57 Securities Trader qualification
continuing education sessions. Series 23 license to the Registration Services examination and register as a Securities
5 The Series 56 Proprietary Trader Examination is Department upon request for proof of licensure. Trader (TD).
a two hour and thirty minute exam, consisting of 9 Under current Interpretation and Policy .07 to
100 scored multiple-choice questions. The Series 56 Rule 3.4, the Series 24 General Securities Principal
In addition, individual Permit
examination is administered by FINRA, but is not Examination is considered an acceptable alternative Holders and associated persons who
recognized by FINRA as an acceptable qualification qualification examination for the Series 14 have either passed the Proprietary
examination for associated persons engaged in Compliance Official Examination and registered Trader (PT) qualification examination or
securities trading. Under FINRA rules, associated General Securities Principals may register as
persons of FINRA members that engage in over-the- Proprietary Trader Compliance Officers subject to
the General Securities Representative
counter securities trading are required to pass the applicable provisions under the Rules. See (Series 7) qualification examination and
Series 55 Equity Trader Exam. Nevertheless, as Interpretation and Policy .07(b) to Rule 3.4. who have registered as Proprietary
FINRA has recognized, because the Series 55 and 10 See Interpretation and Policy .07 to Rule 3.4.
Traders (PT) in WebCRD on or before
Series 56 are intended to test the core knowledge 11 Neither the Exchange’s current Rules nor the
required of individuals engaged in trading activities
the effective date of the proposed rule
proposed rule would require that a Proprietary
as well as self-regulatory organization (‘‘SRO’’) Trader or Securities Trader work at, or be associated
change and who have also passed the
rules, including trading rules that are common with, a ‘‘proprietary trading firm.’’ Rather, both the General Securities Principal (Series 24)
across all SROs, there is significant overlap in the current Rules and the proposed rule would require qualification examination (or have
content of the Series 55 and Series 56 qualification that individual Permit Holders and associated
examinations. See Securities Exchange Act Release
completed any of the alternative
persons that engage in proprietary trading, market-
No. 75394 (July 8, 2015), 80 FR 41119 (Notice of making, or effect transactions on behalf of a broker-
acceptable qualifications requirements
Filing of a Proposed Rule Change to Establish the dealer to [sic] qualify and register as a [sic]
mstockstill on DSK4VPTVN1PROD with NOTICES
Securities Trader and Securities Trader Principal Proprietary Trader (or Securities Trader) in 57 Securities Trader qualification examination in
Registration Categories) (SR–FINRA–2015–017). WebCRD. Whereas the current rule allows order to qualify as a [sic] Securities Trader after the
6 See Interpretation and Policy .08 to Rule 3.6A. effective date of the proposed rule change.
individual Permit Holders and associated persons
7 See, e.g., BATS Exchange, Inc. (‘‘BATS’’) to qualify and register as a [sic] Proprietary Trader 12 As is the case under the current Rules, under
Interpretation and Policy .01 to Rule 2.5 by either passing the Series 56 Proprietary Trader the proposed rule, only individuals qualified and
(Proficiency Examinations); Miami International qualification examination or Series 7 General registered as a [sic] Proprietary Trader Principal
Securities Exchange, LLC (‘‘MIAX’’) Rule 1302 Securities Representative qualification examination, (TP) (Securities Trader Principal TP)) would be
(Registration of Representatives). See also the proposed rule would require individual Permit permitted to supervise a Proprietary Trader (PT)
Interpretation and Policy .07 to Rule 3.4. Holders and associated persons to pass the Series (Securities Trader (TD)).
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![Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices 71875
as defined in current Interpretation and the Section 6(b)(5) 17 requirement that participants across the multiple national
Policy .07(b) to Rule 3.4) and who have the rules of an exchange not be designed securities exchanges.
also registered as Proprietary Trader to permit unfair discrimination between
C. Self-Regulatory Organization’s
Principals (TP) in WebCRD on or before customers, issuers, brokers, or dealers.
Statement on Comments on the
the effective date of the proposed rule In particular, the Exchange believes Proposed Rule Change Received From
change would be eligible to register as that adoption of the Securities Trader Members, Participants, or Others
Securities Trader Principals (TPs), registration category and Series 57
provided that the individual Permit Securities Trader qualification The Exchange neither solicited nor
Holders or associated person’s examination registration requirement is received written comments on the
registration has not been revoked by the consistent with the Act. FINRA has proposed rule change.
Exchange as a disciplinary sanction and indicated that the Series 57 qualification III. Date of Effectiveness of the
no more than two years have passed examination is being developed in an Proposed Rule Change and Timing for
between the date that the individual effort to adopt a more tailored Commission Action
Permit Holder or associated person last examination. The Exchange believes
registered as a Proprietary Trader that a more tailored qualification Because the foregoing proposed rule
Principal (TP) and the date they [sic] examination for individual Permit change does not:
register as a Securities Trader Principal Holders and associated persons engaged A. Significantly affect the protection
(TP).13 After the effective date, a in trading activities is a measure of investors or the public interest;
B. impose any significant burden on
Securities Trader Principal (TP) would designed to help ensure professionalism
competition; and
need to pass the Securities Trader among market participants, prevent
C. become operative for 30 days from
(Series 57) qualification examination fraudulent and manipulative practices,
the date on which it was filed, or such
and the General Securities Principal and promote just and equitable
shorter time as the Commission may
(Series 24) qualification examination (or principles of trade. The Exchange also
designate, it has become effective
have completed any of the alternative believes that it is in the interests of
pursuant to Section 19(b)(3)(A) of the
acceptable qualifications as defined in investors and the general public to
Act 18 and Rule 19b–4(f)(6) 19
current Interpretation and Policy .07(b) develop a more tailored qualification
thereunder. At any time within 60 days
to Rule 3.4) and be registered as such in examination for proprietary traders and
of the filing of the proposed rule change,
order to register as a Securities Trader that a more uniform qualification
the Commission summarily may
Principal (TP).14 standard may help ensure fair and
temporarily suspend such rule change if
orderly markets. Furthermore, the
2. Statutory Basis it appears to the Commission that such
Exchange believes that it is in the
action is necessary or appropriate in the
The Exchange believes the proposed interests of all market participants to
public interest, for the protection of
rule change is consistent with the Act provide consistent qualification and
investors, or otherwise in furtherance of
and the rules and regulations registration requirements across
the purposes of the Act. If the
thereunder applicable to the Exchange markets. The Exchange believes that
Commission takes such action, the
and, in particular, the requirements of harmonizing the Exchange’s
Commission will institute proceedings
Section 6(b) of the Act.15 Specifically, qualification and registration
to determine whether the proposed rule
the Exchange believes the proposed rule requirements with those of FINRA and
change should be approved or
change is consistent with the Section the other national securities exchanges
disapproved.
6(b)(5) 16 requirements that the rules of would further such interests.
an exchange be designed to prevent IV. Solicitation of Comments
B. Self-Regulatory Organization’s
fraudulent and manipulative acts and Statement on Burden on Competition Interested persons are invited to
practices, to promote just and equitable submit written data, views, and
principles of trade, to foster cooperation The Exchange does not believe that arguments concerning the foregoing,
and coordination with persons engaged the proposed rule change will impose including whether the proposed rule
in regulating, clearing, settling, any burden on competition that is not change is consistent with the Act.
processing information with respect to, necessary or appropriate in furtherance Comments may be submitted by any of
and facilitating transactions in of the purposes of the Act. The the following methods:
securities, to remove impediments to Exchange believes that the proposed
and perfect the mechanism of a free and rule change relating to Securities Electronic Comments
open market and a national market Traders, which is, in all material • Use the Commission’s Internet
system, and, in general, to protect respects, based upon and substantially comment form (http://www.sec.gov/
investors and the public interest. similar to, recent rule changes adopted rules/sro.shtml); or
Additionally, the Exchange believes the by FINRA and which is being filed in • Send an email to rule-comments@
proposed rule change is consistent with conjunction with similar filings by the sec.gov. Please include File Number SR–
other national securities exchanges, will C2–2015–027 on the subject line.
13 See Rule 3.4(e) (Requirement for Examination reduce the regulatory burden placed on
market participants engaged in trading Paper Comments
on Lapse of Registration).
14 The Exchange also proposes to add text to activities across different markets. The • Send paper comments in triplicate
Interpretation and Policy .07(b) to Rule 3.4 Exchange believes that the to Secretary, Securities and Exchange
regarding the supervisory responsibilities of the harmonization of these registration
mstockstill on DSK4VPTVN1PROD with NOTICES
Securities Trader Principals, which would limit
Commission, 100 F Street NE.,
Securities Trader Principals’ supervisory requirements across the various markets Washington, DC 20549–1090.
responsibilities to supervision of the securities will reduce burdens on competition by All submissions should refer to File
trading functions of Permit Holders as described in removing impediments to participation Number SR–C2–2015–027. This file
paragraph (a)(2) of Interpretation and Policy .07 to in the national market system and
Rule 3.4, and the activities of officers, partners, and number should be included on the
directors of Permit Holders. promoting competition among
15 15 U.S.C. 78f(b). 18 15 U.S.C. 78s(b)(3)(A).
16 15 U.S.C. 78f(b)(5). 17 Id. 19 17 CFR 240.19b–4(f)(6).
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![71876 Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices
subject line if email is used. To help the proposed rule change, as described in Background
Commission process and review your Items I, II, and III below, which items On December 17, 2007, ISE Holdings,
comments more efficiently, please use have been prepared by the self- the sole, direct parent of the Exchange,
only one method. The Commission will regulatory organization. The became a direct, wholly-owned
post all comments on the Commission’s Commission is publishing this notice to subsidiary of U.S. Exchange Holdings.
Internet Web site (http://www.sec.gov/ solicit comments on the proposed rule U.S. Exchange Holdings is 85% directly
rules/sro.shtml). Copies of the change from interested persons. owned by Eurex Frankfurt and 15%
submission, all subsequent directly owned by Deutsche Börse AG
amendments, all written statements I. Self-Regulatory Organization’s
Statement of the Terms of the Substance (‘‘Deutsche Börse’’). Eurex Frankfurt is a
with respect to the proposed rule wholly-owned, direct subsidiary of
change that are filed with the of the Proposed Rule Change
Deutsche Börse.4 Deutsche Börse
Commission, and all written The Exchange proposes to remove therefore owns 100% of U.S. Exchange
communications relating to the Eurex Frankfurt AG (‘‘Eurex Frankfurt’’) Holdings through its aggregate direct
proposed rule change between the as an indirect, non-U.S. upstream owner and indirect ownership.
Commission and any person, other than of the Exchange (the ‘‘Transaction’’). In
those that may be withheld from the order to consummate the Transaction, The Transaction
public in accordance with the the Exchange proposes to: (i) Amend The Transaction is designed to
provisions of 5 U.S.C. 552, will be and restate the Third Amended and simplify the indirect ownership
available for Web site viewing and Restated Trust Agreement (the ‘‘Trust structure of the Exchange.5 The
printing in the Commission’s Public Agreement’’) that exists among Transaction will not have any effect on
Reference Room, 100 F Street NE., International Securities Exchange ISE Holdings’ direct ownership of the
Washington, DC 20549 on official Holdings, Inc. (‘‘ISE Holdings’’), U.S. Exchange or the operations of the
business days between the hours of Exchange Holdings, Inc. (‘‘U.S. Exchange. Consummation of the
10:00 a.m. and 3:00 p.m. Copies of the Exchange Holdings’’), and the Trustees Transaction is subject to approval of this
filing also will be available for (as defined therein) in order to remove proposed rule change by the
inspection and copying at the principal references to Eurex Frankfurt; and (ii) Commission.6 In order to effectuate the
office of the Exchange. All comments amend and restate the Third Amended Transaction, on or about December 31,
received will be posted without change; and Restated Certificate of Incorporation 2015, Eurex Frankfurt will transfer its
the Commission does not edit personal of U.S. Exchange Holdings (‘‘U.S. 85% ownership in U.S. Exchange
identifying information from Exchange Holdings COI’’) to update a Holdings to Deutsche Börse.7 As a result
submissions. You should submit only reference therein to the Trust of the Transaction, Eurex Frankfurt will
information that you wish to make Agreement. cease to be a Non-U.S. Upstream Owner
available publicly. All submissions The text of the proposed rule change of the Exchange, as Deutsche Börse will
should refer to File Number SR–C2– is available at the Commission’s Public be the sole, direct owner of U.S.
2015–027 and should be submitted on Reference Room and on the Exchange’s Exchange Holdings.8 U.S. Exchange
or before December 8, 2015. Internet Web site at http://www.ise.com.
For the Commission, by the Division of exchange on July 26, 2013. See Securities Exchange
II. Self-Regulatory Organization’s Act Release No. 70050 (July 26, 2013), 78 FR 46622
Trading and Markets, pursuant to delegated
authority.20 Statement of the Purpose of, and the (File No. 10–209). The Exchange was originally
Statutory Basis for, the Proposed Rule named ‘‘Topaz Exchange, LLC.’’
Robert W. Errett, 4 Each of Deutsche Börse and Eurex Frankfurt is
Change
Deputy Secretary. referred to as a ‘‘Non-U.S. Upstream Owner’’ and
[FR Doc. 2015–29224 Filed 11–16–15; 8:45 am] In its filing with the Commission, the collectively as the ‘‘Non-U.S. Upstream Owners.’’
self-regulatory organization included Each of the Non-U.S. Upstream Owners has
BILLING CODE 8011–01–P previously taken appropriate steps to incorporate
statements concerning the purpose of, provisions regarding ownership, jurisdiction, books
and basis for, the proposed rule change and records, and other issues related to their control
SECURITIES AND EXCHANGE and discussed any comments it received of the Exchange. Specifically, each of the Non-U.S.
Upstream Owners has adopted resolutions, which
COMMISSION on the proposed rule change. The text were previously approved by the Commission, to
of these statements may be examined at incorporate these concepts with respect to itself, as
[Release No. 34–76416; File No. SR–
ISEGemini–2015–24]
the places specified in Item IV below. well as its board members, officers, employees, and
The self-regulatory organization has agents (as applicable), to the extent that they are
involved in the activities of the Exchange. See File
Self-Regulatory Organizations; ISE prepared summaries, set forth in No. 10–209, supra note 3.
Gemini, LLC; Notice of Filing of sections A, B and C below, of the most 5 In 2014 the Exchange submitted a proposed rule
Proposed Rule Change Relating to a significant aspects of such statements. change with the Commission to similarly simplify
Corporate Transaction Involving Its the indirect ownership structure of the Exchange.
A. Self-Regulatory Organization’s See Securities Exchange Act Release No. 73861
Indirect Parent Statement of the Purpose of, and the (December 17, 2014), 79 FR 77064 (December 23,
Statutory Basis for, the Proposed Rule 2014) (SR–ISEGemini–2014–24).
November 10, 2015. 6 See infra notes 14 and 15.
Pursuant to Section 19(b)(1) of the Change 7 As referenced above, Deutsche Börse is already
Securities Exchange Act of 1934 (the 1. Purpose the 100% indirect owner of Eurex Frankfurt. In
‘‘Act’’),1 and Rule 19b–4 thereunder,2 addition, Deutsche Börse also is already an
notice is hereby given that on October The purpose of the proposal is to approved Non-U.S. Upstream Owner of the
remove Eurex Frankfurt as an indirect, Exchange. See supra note 4.
mstockstill on DSK4VPTVN1PROD with NOTICES
30, 2015, ISE Gemini, LLC (the 8 In connection with each of their ownership
‘‘Exchange’’ or the ‘‘ISE Gemini’’) filed non-U.S. upstream owner of the
interests in the Exchange, Deutsche Börse, Eurex
with the Securities and Exchange Exchange.3 Frankfurt, U.S. Exchange Holdings, ISE Holdings
Commission (‘‘Commission’’) the and ISE became parties to an agreement to provide
3 The Exchange’s affiliate, International Securities for adequate funding for the Exchange’s regulatory
Exchange, LLC (‘‘ISE’’), has submitted a nearly responsibilities. The Exchange subsequently
20 17 CFR 200.30–3(a)(12). identical proposed rule change. See SR–ISE–2015– became a party to the agreement. ISE Gemini
1 15 U.S.C. 78s(b)(1). 36. The Commission granted the Exchange’s subsequently became a party to the agreement.
2 17 CFR 240.19b–4. application for registration as a national securities Following the completion of the Transaction, Eurex
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Document Created: 2015-12-14 14:00:51
Document Modified: 2015-12-14 14:00:51
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 71873 |
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