80 FR 71903 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the Securities Trader and Securities Trader Principal Registration Categories and To Retire Other Registration Categories
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 221 (November 17, 2015)
Federal Register Volume 80, Issue 221 (November 17, 2015)
| Page Range | 71903-71906 | |
| FR Document | 2015-29213 |
[Federal Register Volume 80, Number 221 (Tuesday, November 17, 2015)] [Notices] [Pages 71903-71906] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-29213] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76414; File No. SR-Phlx-2015-92] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the Securities Trader and Securities Trader Principal Registration Categories and To Retire Other Registration Categories November 10, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on November 4, 2015, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``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 establish the Securities Trader and Securities Trader Principal registration categories and to retire the Proprietary Trader and Proprietary Trader Principal registration categories. Phlx will announce the effective date of the proposed rule change in a Trader Alert. The Exchange is also amending its rules to establish the Series 57 examination as the appropriate qualification examination for Securities Traders and deleting the rule referring to the S501 continuing education program currently applicable to Proprietary Traders. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqomxphlx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. [[Page 71904]] 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 is proposing to replace the Proprietary Trader registration category and Proprietary Trader qualification examination (Series 56) with the Securities Trader Registration Category and the Securities Trader qualification examination (Series 57) in its registration rules relating to securities trading activity. It is also proposing to replace the Proprietary Trader Principal registration category with the Securities Trader Principal registration category. This filing is, in all material respects, based upon SR-FINRA-2015-017, which was recently approved by the Commission.\3\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 75783 (August 28, 2015), 80 FR 53369 (September 3, 2015) (approving SR-FINRA-2015-017) referred to herein as the ``FINRA Amendments''. According to the approval order, FINRA's expected effective date for the FINRA Amendments is January 4, 2016. --------------------------------------------------------------------------- I. Phlx's Securities Trader Registration Category Currently, under Exchange Rule 613, except members whose activities are limited to the Exchange's options trading floor and who are registered pursuant to Rule 620(a) \4\ as well as associated persons whose activities are limited to the Exchange's options trading floor and are registered pursuant to Rule 620(b) \5\, all persons engaged or to be engaged in the investment banking or securities business of a member organization who are to function as representatives \6\ must register as such with the Exchange through WebCRD under PHLX in the category of registration appropriate to the function to be performed as specified in Rule 613(e). Rule 613(e) provides that individuals required to register with the Exchange as a General Securities Representative must pass the Series 7 examination before such registration may become effective. --------------------------------------------------------------------------- \4\ Pursuant to Exchange Rule 620(a), each Floor Broker, Specialist and Registered Options Trader on the Exchange trading floor must be registered as ``Member Exchange'' (``ME'') under ``PHLX'' on Form U4, pursuant to Rule 616. In addition, each Floor Broker, Specialist and Registered Options Trader must successfully complete the appropriate floor trading examination(s), if prescribed by the Exchange, in addition to requirements imposed by other Exchange Rules. The Exchange may also require periodic examinations due to changes in trading rules, products or automated systems. The registration rule changes proposed herein will not apply to the trading floor entities covered by Rule 620(a). \5\ Pursuant to Exchange Rule 620(b), all trading floor personnel, including clerks, interns, stock execution clerks and any other associated persons, of a member organization not required to register pursuant to Rule 620(a) must be registered as [sic] ``Floor Employee'' (``FE'') under ``PHLX'' on Form U4, pursuant to Rule 616. The Exchange may require successful completion by such persons of an examination, in addition to requirements imposed by other Exchange Rules. The Exchange may also require periodic examinations of such persons due to changes in trading rules, products or automated systems. The registration rule changes proposed herein will not apply to the trading floor personnel covered by Rule 620(b). \6\ Exchange Rule 1(cc) defines ``representative'' as a member or an associated person of a registered broker or dealer, including assistant officers other than principals, who is engaged in the investment banking or securities business for the member organization including the functions of supervision, solicitation or conduct of business in securities or who is engaged in the training of persons associated with a broker or dealer for any of these functions. The rule also states that, to the extent required by the provisions of Rule 613, all representatives are required to be registered with the Exchange. --------------------------------------------------------------------------- In 2012, the Exchange adopted the Proprietary Trader registration category as an alternative to the General Securities Representative registration category.\7\ The Proprietary Trader registration category is an available alternative to General Securities Representative registration for members and persons associated with member organizations who are engaged solely in proprietary trading, market making or effecting transactions on behalf of a broker-dealer account. Individuals registering in the Proprietary Trader registration category must pass the Series 56 examination and are not required to pass the Series 7 examination. Individuals who qualify for registration as Proprietary Traders are not required to do so if they register as General Securities Representatives. --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 66840 (April 20, 2012), 77 FR 25003 (April 26, 2012) (SR-Phlx-2012-23). --------------------------------------------------------------------------- The Exchange now proposes to amend Rule 613(f) by deleting the Proprietary Trader registration category and replacing it with a new requirement that each person associated with a member who is included within the definition of a representative as defined in Rule 1(cc) must register with the Exchange as a Securities Trader if, with respect to transactions in equity, preferred or convertible debt securities, or foreign currency options on the Exchange, such person is engaged in proprietary trading, the execution of transactions on an agency basis, or the direct supervision of such activities, other than any person associated with a member whose trading activities are conducted principally on behalf of an investment company that is registered with the Commission pursuant to the Investment Company Act of 1940 and that controls, is controlled by or is under common control, with the member (an ``investment company firm''). The proposed language requires applicants to pass an appropriate Qualification Examination for Securities Trader (the Series 57 examination) before registering in the new Securities Trader category. It also provides that a person registered as a Securities Trader shall not be qualified to function in any other registration category, unless he or she is also qualified and registered in such other registration category. A reference to paragraph (f) is being added to Rule 613(a) to make clear that representatives who are required to register shall register in the category of registration appropriate to the function to be performed as specified in paragraph (e) or (f). Additionally, the Exchange is deleting from Rule 613(a) the general requirement that before a representative's registration may become effective, they [sic] shall pass the Series 7 examination. The Series 7 requirement continues to apply to candidates for General Securities Representative registration, however, pursuant to Rule 613(e). Proposed paragraph (f) provides that candidates for Securities Trader registration must pass the Series 57 examination. They will not, however, be required to pass the Series 7 in order to register as Securities Traders. A person registered as a Proprietary Trader in the Central Registration Depository (CRD[supreg]) system on the effective date of the proposed rule change will be grandfathered as a Securities Trader without having to take any additional examinations and without having to take any other actions. In addition, individuals who were registered as a Proprietary Trader in the CRD system prior to the effective date of the proposed rule change will be eligible to register as Securities Traders without having to take any additional examinations, provided that no more than two years have passed between the date they were last registered as a [[Page 71905]] representative and the date they register as a Securities Trader. Persons registered in the new category would be subject to the continuing education requirements of Rule 640. The Exchange proposes to amend Rule 640 by removing the option for Series 56 registered persons to participate in the S501 Series 56 Proprietary Trader continuing education program in order to satisfy the Regulatory Element. The S501 Series 56 Proprietary Trader continuing education program is being phased out along with the Series 56 Proprietary Trader qualification examination. As a result, effective January 4, 2016, the S501 Series 56 Proprietary Trader continuing education program for Series 56 registered persons will cease to exist. In place of the S501 Series 56 Proprietary Trader continuing education program for Series 56 registered persons, the Exchange proposes that Series 57 registered persons be permitted to enroll in the S101 General Program for Series 7 and all other registered persons.\8\ --------------------------------------------------------------------------- \8\ The Commission notes that amended Rule 640(a)(1) would require Series 57 registered persons to take the S101 General Program. See Rule 640(a)(1). --------------------------------------------------------------------------- II. Securities Trader Principal Registration Category Currently, under Rule 612(a), each member and person associated with a member organization to which Rule 611 \9\ applies and who is included within the definition of Principal in Rule 611, and each person designated as a Chief Compliance Officer on Schedule A of Form BD of a member organization to which Rule 611 applies, must register with the Exchange as a General Securities Principal and pass the Series 24 examination before such registration may become effective, unless such person's activities are so limited as to qualify such person for one or more of the limited categories of Principal registration specified in the rule. In 2012, the Exchange adopted, as a corollary to the Proprietary Trader representative registration category, a new Rule 612(e) Proprietary Trader Principal registration category. Under Rule 612(e), individuals required to register as Principal may register with the Exchange as a [sic] Proprietary Trader Principal if (A) his or her supervisory responsibilities in the investment banking and securities business are limited to the activities of a member organization that involve proprietary trading, market making and effecting transactions on behalf of broker-dealers; (B) he or she is registered pursuant to Exchange Rules as a Proprietary Trader; and (C) he or she is qualified to be so registered by passing the Series 24 examination. A person registered in the Proprietary Trader Principal category solely on the basis of having passed the Series 24 examination for that category may not function in a Principal capacity with responsibility over any area of business activity other than proprietary trading, market making and effecting transactions on behalf of broker-dealers as set forth in Rule 612(e)(i)(A). --------------------------------------------------------------------------- \9\ Rule 611 provides that all persons engaged or to be engaged in the investment banking or securities business of a member organization who are to function as Principals shall be registered as such with the Exchange through WebCRD in the category of registration appropriate to the function to be performed as specified in the rule. It also defines ``Principal'' as including sole proprietors, officers, partners, managers of offices of supervisory jurisdiction, and corporate directors, in each case associated with a member organization who are actively engaged in the management of the member organization's investment banking or securities business, including supervision, solicitation, conduct of business or the training of persons associated with a member organization for any of these functions. --------------------------------------------------------------------------- In consultation with FINRA and other exchanges, the Exchange is now proposing to retire the Proprietary Trader Principal category. Accordingly, it is deleting Rule 612(e) in its entirety. In its place, the Exchange is adopting proposed Rule 612(e), which adds a new Securities Trader Principal registration category. Under the proposed rule each person associated with a member who is included within the definition of principal in Rule 611(b) and who will have supervisory responsibility over the securities trading activities described in Rule 613(f) must become qualified and registered as a Securities Trader Principal. The proposed rule change should allow Phlx to more easily track principals with supervisory responsibility over securities trading activities. To qualify for registration as a Securities Trader Principal, a candidate would first be required to qualify and register as a Securities Trader under Rule 613(f) and pass the General Securities Principal qualification examination. A person who is qualified and registered as a Securities Trader Principal under the proposed rule would only have supervisory responsibility over the securities trading activities specified in Rule 613(f), unless such person were separately qualified and registered in another appropriate principal registration category, such as the General Securities Principal registration category. Finally, a registered General Securities Principal would not be qualified to supervise the securities trading activities described in Rule 613(f), unless such person also qualified and registered as a Securities Trader under Rule 613(f) by passing the Securities Trader qualification examination and registering as a Securities Trader Principal. A person registered as a Proprietary Trader Principal or as a Limited Principal-Registered Options Principal (``Limited Options Principal'') \10\ in the CRD system on the effective date of the proposed rule change will be eligible to register as a Securities Trader Principal without having to take any additional examinations. An individual who was registered as a Proprietary Trader Principal in the CRD system prior to the effective date of the proposed rule change will also be eligible to register as a Securities Trader Principal without having to take any additional examinations, provided that no more than two years have passed between the date they [sic] were last registered as a principal and the date they [sic] register as a Securities Trader Principal. Members, however, will be required to affirmatively register persons transitioning to the proposed registration category as Securities Trader Principals on or after the effective date of the proposed rule change. --------------------------------------------------------------------------- \10\ Currently, under Rule 612(d), a Principal may register with the Exchange as a Limited Principal--Registered Options Principal (``Limited Options Principal'') if (A) his or her supervisory responsibilities in the investment banking and securities business are limited exclusively to the options activities of a member organization, (B) he or she is registered pursuant to Exchange Rules as a General Securities Representative, and (C) he or she is qualified to be so registered by passing the Series 4 examination. A person registered in the Limited Options Principal category solely on the basis of having passed the Series 4 examination for Limited Principal--Registered Options Principal may not function in a Principal capacity with responsibility over any area of business activity other than the options activities of a member organization. The Exchange proposes to permit Limited Options Principals who are functioning in a principal capacity at a member organization for which the Exchange is the designated examining authority on the effective date of this proposed rule change to register as Securities Trader Principals without having to take any additional examinations in order to minimize disruption to firms when the Securities Trader registration category becomes effective. The Exchange will waive the Series 24 examination requirement for these individuals so that they may be registered as Securities Trader Principals. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \11\ in general, and furthers the objectives of Section 6(b)(5) of the Act \12\ in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market [[Page 71906]] system, and, in general to protect investors and the public interest. The Exchange believes that the requirements of the Securities Trader and Securities Trader Principal registration categories, as well as the new Securities Trader qualification examination, should help ensure that proprietary traders and the principals who supervise proprietary traders and proprietary trading are, and will continue to be, properly trained and qualified to perform their functions which should protect investors and the public interest. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f(b). \12\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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 not necessary or appropriate in furtherance of the purposes of the Act. Implementation of the proposed changes to Phlx's registration rules in coordination with the FINRA Amendments does not present any competitive issues, but rather is designed to provide less burdensome and more efficient regulatory compliance for members and enhance the ability of the Exchange to fairly and efficiently regulate members, which will further enhance competition. Additionally, the proposed rule change should not affect intramarket competition because all similarly situated representatives and principals will be required to complete the same qualification examinations and maintain the same registrations. Finally, the proposed rule change does not impose any additional examination burdens on persons who are already registered. There is no obligation to take the proposed Series 57 examination in order to continue in their present duties, so the proposed rule change is not expected to disadvantage current registered persons relative to new entrants in this regard. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. 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 19(b)(3)(A)(iii) of the Act \13\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\14\ --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(3)(a)(iii). \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. 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 rule-comments@sec.gov. Please include File Number SR-Phlx-2015-92 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2015-92. This file number should be included on the 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-Phlx-2015-92 and should be submitted on or before December 8, 2015. --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ Robert W. Errett, Deputy Secretary. [FR Doc. 2015-29213 Filed 11-16-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices 71903
result in OCC being able to better ensure with respect to the proposal are be submitted on or before December 2,
that margin requirements computed by completed.24 2015.
STANS because [sic] STANS would IV. Solicitation of Comments By the Commission.
appropriately take into account normal Robert W. Errett,
market conditions that OCC may Interested persons are invited to
submit written data, views and Deputy Secretary.
encounter in the event that, pursuant to
arguments concerning the foregoing. [FR Doc. 2015–29227 Filed 11–16–15; 8:45 am]
OCC Rule 1102, it suspends a defaulted
Clearing Member and liquidates its Comments may be submitted by any of BILLING CODE 8011–01–P
accounts. As a result, the proposed the following methods:
change would make it less likely that Electronic Comments SECURITIES AND EXCHANGE
OCC would need to use additional • Use the Commission’s Internet COMMISSION
financial resources, such as its clearing comment form (http://www.sec.gov/
fund, in order to appropriately manage rules/sro.shtml); or [Release No. 34–76414; File No. SR–Phlx–
a clearing member default. Moreover, • Send an email to rule-comments@ 2015–92]
the proposed change is intended to sec.gov. Please include File Number SR–
measure the exposure associated with OCC–2015–804 on the subject line. Self-Regulatory Organizations;
changes in option implied volatilities, NASDAQ OMX PHLX LLC; Notice of
thus mitigating credit risk presented by Paper Comments
Filing and Immediate Effectiveness of
clearing members. Accordingly, OCC • Send paper comments in triplicate Proposed Rule Change To Establish
believes that the proposed changes to Secretary, Securities and Exchange the Securities Trader and Securities
would reduce risks to OCC and its Commission, 100 F Street NE., Trader Principal Registration
participants. Moreover, and for the same Washington, DC 20549–1090. Categories and To Retire Other
reasons, the proposed change will All submissions should refer to File Registration Categories
facilitate OCC’s ability to manage risk. Number SR–OCC–2015–804. This file
number should be included on the November 10, 2015.
III. Date of Effectiveness of the Advance subject line if email is used. To help the Pursuant to Section 19(b)(1) of the
Notice and Timing for Commission Commission process and review your Securities Exchange Act of 1934
Action comments more efficiently, please use (‘‘Act’’),1 and Rule 19b–4 thereunder,2
only one method. The Commission will notice is hereby given that on November
The designated clearing agency may
post all comments on the Commission’s 4, 2015, NASDAQ OMX PHLX LLC
implement this change if it has not
Internet Web site (http://www.sec.gov/ (‘‘Phlx’’ or ‘‘Exchange’’) filed with the
received an objection to the proposed
rules/sro.shtml). Copies of the Securities and Exchange Commission
change within 60 days of the later of (i)
submission, all subsequent (‘‘SEC’’ or ‘‘Commission’’) the proposed
the date that the Commission receives
amendments, all written statements rule change as described in Items I, II,
the notice of proposed change, or (ii) the
with respect to the advance notice that and III, below, which Items have been
date the Commission receives any
are filed with the Commission, and all prepared by the Exchange. The
further information it requests for
written communications relating to the Commission is publishing this notice to
consideration of the notice. The solicit comments on the proposed rule
advance notice between the
designated clearing agency shall not change from interested persons.
Commission and any person, other than
implement this change if the
those that may be withheld from the
Commission has an objection. I. Self-Regulatory Organization’s
public in accordance with the
The Commission may, during the 60- Statement of the Terms of Substance of
provisions of 5 U.S.C. 552, will be
day review period, extend the review the Proposed Rule Change
available for Web site viewing and
period for an additional 60 days for printing in the Commission’s Public The Exchange proposes to establish
proposed changes that raise novel or Reference Room, 100 F Street NE., the Securities Trader and Securities
complex issues, subject to the Washington, DC 20549 on official Trader Principal registration categories
Commission providing the designated business days between the hours of and to retire the Proprietary Trader and
clearing agency with prompt written 10:00 a.m. and 3:00 p.m. Copies of the Proprietary Trader Principal registration
notice of the extension. The designated filing also will be available for categories. Phlx will announce the
clearing agency may implement a inspection and copying at the principal effective date of the proposed rule
change in less than 60 days from the office OCC and on OCC’s Web site at change in a Trader Alert. The Exchange
date of receipt of the notice of proposed http://www.optionsclearing.com/ is also amending its rules to establish
change by the Commission, or the date components/docs/legal/rules_and_ the Series 57 examination as the
the Commission receives any further bylaws/sr_occ_2015_804.pdf. All appropriate qualification examination
information it requested, if the comments received will be posted for Securities Traders and deleting the
Commission notifies the designated without change; the Commission does rule referring to the S501 continuing
clearing agency in writing that it does not edit personal identifying education program currently applicable
not object to the proposed change and information from submissions. You to Proprietary Traders.
authorizes the designated clearing should submit only information that The text of the proposed rule
agency to implement the change on an you wish to make available publicly. All change is available on the Exchange’s
mstockstill on DSK4VPTVN1PROD with NOTICES
earlier date, subject to any conditions submissions should refer to File Web site at http://
imposed by the Commission. Number SR–OCC–2015–804 and should nasdaqomxphlx.cchwallstreet.com/, at
The designated clearing agency shall the principal office of the Exchange, and
24 OCC also filed a proposed rule change with the at the Commission’s Public Reference
post notice on its Web site of proposed Commission pursuant to Section 19(b)(1) of the Room.
changes that are implemented. Securities Exchange Act of 1934 and Rule 19b–4
thereunder, seeking approval of changes to its rules
The proposal shall not take effect necessary to implement the proposal. See supra 1 15 U.S.C. 78s(b)(1).
until all regulatory actions required note 3. 2 17 CFR 240.19b–4.
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II. Self-Regulatory Organization’s to Rule 620(b) 5, all persons engaged or must register with the Exchange as a
Statement of the Purpose of, and to be engaged in the investment banking Securities Trader if, with respect to
Statutory Basis for, the Proposed Rule or securities business of a member transactions in equity, preferred or
Change organization who are to function as convertible debt securities, or foreign
representatives 6 must register as such currency options on the Exchange, such
In its filing with the Commission, the
with the Exchange through WebCRD person is engaged in proprietary trading,
Exchange included statements
under PHLX in the category of the execution of transactions on an
concerning the purpose of and basis for
registration appropriate to the function agency basis, or the direct supervision
the proposed rule change and discussed
to be performed as specified in Rule of such activities, other than any person
any comments it received on the
613(e). Rule 613(e) provides that associated with a member whose trading
proposed rule change. The text of these
individuals required to register with the activities are conducted principally on
statements may be examined at the
Exchange as a General Securities behalf of an investment company that is
places specified in Item IV below. The
Representative must pass the Series 7 registered with the Commission
Exchange has prepared summaries, set
examination before such registration pursuant to the Investment Company
forth in sections A, B, and C below, of
may become effective. Act of 1940 and that controls, is
the most significant aspects of such In 2012, the Exchange adopted the controlled by or is under common
statements. Proprietary Trader registration category control, with the member (an
A. Self-Regulatory Organization’s as an alternative to the General ‘‘investment company firm’’). The
Statement of the Purpose of, and Securities Representative registration proposed language requires applicants
Statutory Basis for, the Proposed Rule category.7 The Proprietary Trader to pass an appropriate Qualification
Change registration category is an available Examination for Securities Trader (the
alternative to General Securities Series 57 examination) before
1. Purpose Representative registration for members registering in the new Securities Trader
The Exchange is proposing to replace and persons associated with member category. It also provides that a person
the Proprietary Trader registration organizations who are engaged solely in registered as a Securities Trader shall
category and Proprietary Trader proprietary trading, market making or not be qualified to function in any other
qualification examination (Series 56) effecting transactions on behalf of a registration category, unless he or she is
with the Securities Trader Registration broker-dealer account. Individuals also qualified and registered in such
Category and the Securities Trader registering in the Proprietary Trader other registration category.
qualification examination (Series 57) in registration category must pass the A reference to paragraph (f) is being
its registration rules relating to Series 56 examination and are not added to Rule 613(a) to make clear that
securities trading activity. It is also required to pass the Series 7 representatives who are required to
proposing to replace the Proprietary examination. Individuals who qualify register shall register in the category of
Trader Principal registration category for registration as Proprietary Traders registration appropriate to the function
with the Securities Trader Principal are not required to do so if they register to be performed as specified in
registration category. This filing is, in all as General Securities Representatives. paragraph (e) or (f). Additionally, the
material respects, based upon SR– The Exchange now proposes to amend Exchange is deleting from Rule 613(a)
FINRA–2015–017, which was recently Rule 613(f) by deleting the Proprietary the general requirement that before a
approved by the Commission.3 Trader registration category and representative’s registration may
replacing it with a new requirement that become effective, they [sic] shall pass
I. Phlx’s Securities Trader Registration each person associated with a member
Category the Series 7 examination. The Series 7
who is included within the definition of requirement continues to apply to
Currently, under Exchange Rule 613, a representative as defined in Rule 1(cc) candidates for General Securities
except members whose activities are Representative registration, however,
5 Pursuant to Exchange Rule 620(b), all trading
limited to the Exchange’s options pursuant to Rule 613(e). Proposed
floor personnel, including clerks, interns, stock
trading floor and who are registered execution clerks and any other associated persons, paragraph (f) provides that candidates
pursuant to Rule 620(a) 4 as well as of a member organization not required to register for Securities Trader registration must
associated persons whose activities are pursuant to Rule 620(a) must be registered as [sic] pass the Series 57 examination. They
limited to the Exchange’s options ‘‘Floor Employee’’ (‘‘FE’’) under ‘‘PHLX’’ on Form will not, however, be required to pass
U4, pursuant to Rule 616. The Exchange may
trading floor and are registered pursuant require successful completion by such persons of an the Series 7 in order to register as
examination, in addition to requirements imposed Securities Traders.
3 See Securities Exchange Act Release No. 75783 by other Exchange Rules. The Exchange may also A person registered as a Proprietary
(August 28, 2015), 80 FR 53369 (September 3, 2015) require periodic examinations of such persons due
to changes in trading rules, products or automated
Trader in the Central Registration
(approving SR–FINRA–2015–017) referred to herein
as the ‘‘FINRA Amendments’’. According to the systems. The registration rule changes proposed Depository (CRD®) system on the
approval order, FINRA’s expected effective date for herein will not apply to the trading floor personnel effective date of the proposed rule
the FINRA Amendments is January 4, 2016. covered by Rule 620(b). change will be grandfathered as a
4 Pursuant to Exchange Rule 620(a), each Floor 6 Exchange Rule 1(cc) defines ‘‘representative’’ as
Securities Trader without having to take
Broker, Specialist and Registered Options Trader on a member or an associated person of a registered
the Exchange trading floor must be registered as broker or dealer, including assistant officers other any additional examinations and
‘‘Member Exchange’’ (‘‘ME’’) under ‘‘PHLX’’ on than principals, who is engaged in the investment without having to take any other
Form U4, pursuant to Rule 616. In addition, each banking or securities business for the member actions. In addition, individuals who
Floor Broker, Specialist and Registered Options organization including the functions of supervision,
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were registered as a Proprietary Trader
Trader must successfully complete the appropriate solicitation or conduct of business in securities or
floor trading examination(s), if prescribed by the who is engaged in the training of persons associated in the CRD system prior to the effective
Exchange, in addition to requirements imposed by with a broker or dealer for any of these functions. date of the proposed rule change will be
other Exchange Rules. The Exchange may also The rule also states that, to the extent required by eligible to register as Securities Traders
require periodic examinations due to changes in the provisions of Rule 613, all representatives are without having to take any additional
trading rules, products or automated systems. The required to be registered with the Exchange.
registration rule changes proposed herein will not 7 See Securities Exchange Act Release No. 66840 examinations, provided that no more
apply to the trading floor entities covered by Rule (April 20, 2012), 77 FR 25003 (April 26, 2012) (SR– than two years have passed between the
620(a). Phlx–2012–23). date they were last registered as a
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![Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices 71905
representative and the date they register Principal registration category. Under Trader under Rule 613(f) by passing the
as a Securities Trader. Rule 612(e), individuals required to Securities Trader qualification
Persons registered in the new category register as Principal may register with examination and registering as a
would be subject to the continuing the Exchange as a [sic] Proprietary Securities Trader Principal.
education requirements of Rule 640. Trader Principal if (A) his or her A person registered as a Proprietary
The Exchange proposes to amend Rule supervisory responsibilities in the Trader Principal or as a Limited
640 by removing the option for Series 56 investment banking and securities Principal-Registered Options Principal
registered persons to participate in the business are limited to the activities of (‘‘Limited Options Principal’’) 10 in the
S501 Series 56 Proprietary Trader a member organization that involve CRD system on the effective date of the
continuing education program in order proprietary trading, market making and proposed rule change will be eligible to
to satisfy the Regulatory Element. The effecting transactions on behalf of register as a Securities Trader Principal
S501 Series 56 Proprietary Trader broker-dealers; (B) he or she is without having to take any additional
continuing education program is being registered pursuant to Exchange Rules examinations. An individual who was
phased out along with the Series 56 as a Proprietary Trader; and (C) he or registered as a Proprietary Trader
Proprietary Trader qualification she is qualified to be so registered by Principal in the CRD system prior to the
examination. As a result, effective passing the Series 24 examination. A effective date of the proposed rule
January 4, 2016, the S501 Series 56 person registered in the Proprietary change will also be eligible to register as
Proprietary Trader continuing education Trader Principal category solely on the a Securities Trader Principal without
program for Series 56 registered persons basis of having passed the Series 24 having to take any additional
will cease to exist. In place of the S501 examination for that category may not examinations, provided that no more
Series 56 Proprietary Trader continuing function in a Principal capacity with than two years have passed between the
education program for Series 56 responsibility over any area of business date they [sic] were last registered as a
registered persons, the Exchange activity other than proprietary trading, principal and the date they [sic] register
proposes that Series 57 registered market making and effecting as a Securities Trader Principal.
persons be permitted to enroll in the transactions on behalf of broker-dealers Members, however, will be required to
S101 General Program for Series 7 and as set forth in Rule 612(e)(i)(A). affirmatively register persons
all other registered persons.8 In consultation with FINRA and other transitioning to the proposed
exchanges, the Exchange is now registration category as Securities
II. Securities Trader Principal
proposing to retire the Proprietary Trader Principals on or after the
Registration Category
Trader Principal category. Accordingly, effective date of the proposed rule
Currently, under Rule 612(a), each it is deleting Rule 612(e) in its entirety. change.
member and person associated with a In its place, the Exchange is adopting
member organization to which Rule 2. Statutory Basis
proposed Rule 612(e), which adds a new
611 9 applies and who is included Securities Trader Principal registration The Exchange believes that its
within the definition of Principal in category. Under the proposed rule each proposal is consistent with Section 6(b)
Rule 611, and each person designated as person associated with a member who is of the Act 11 in general, and furthers the
a Chief Compliance Officer on Schedule included within the definition of objectives of Section 6(b)(5) of the Act 12
A of Form BD of a member organization principal in Rule 611(b) and who will in particular, in that it is designed to
to which Rule 611 applies, must register have supervisory responsibility over the promote just and equitable principles of
with the Exchange as a General securities trading activities described in trade, to remove impediments to and
Securities Principal and pass the Series Rule 613(f) must become qualified and perfect the mechanism of a free and
24 examination before such registration registered as a Securities Trader open market and a national market
may become effective, unless such Principal. The proposed rule change
person’s activities are so limited as to should allow Phlx to more easily track 10 Currently, under Rule 612(d), a Principal may
qualify such person for one or more of register with the Exchange as a Limited Principal—
principals with supervisory Registered Options Principal (‘‘Limited Options
the limited categories of Principal responsibility over securities trading Principal’’) if (A) his or her supervisory
registration specified in the rule. In activities. responsibilities in the investment banking and
2012, the Exchange adopted, as a To qualify for registration as a securities business are limited exclusively to the
corollary to the Proprietary Trader Securities Trader Principal, a candidate options activities of a member organization, (B) he
or she is registered pursuant to Exchange Rules as
representative registration category, a would first be required to qualify and a General Securities Representative, and (C) he or
new Rule 612(e) Proprietary Trader register as a Securities Trader under she is qualified to be so registered by passing the
Rule 613(f) and pass the General Series 4 examination. A person registered in the
8 The Commission notes that amended Rule
Securities Principal qualification Limited Options Principal category solely on the
640(a)(1) would require Series 57 registered persons basis of having passed the Series 4 examination for
examination. A person who is qualified Limited Principal—Registered Options Principal
to take the S101 General Program. See Rule
640(a)(1). and registered as a Securities Trader may not function in a Principal capacity with
9 Rule 611 provides that all persons engaged or to Principal under the proposed rule responsibility over any area of business activity
be engaged in the investment banking or securities would only have supervisory other than the options activities of a member
business of a member organization who are to organization. The Exchange proposes to permit
responsibility over the securities trading Limited Options Principals who are functioning in
function as Principals shall be registered as such
with the Exchange through WebCRD in the category activities specified in Rule 613(f), unless a principal capacity at a member organization for
of registration appropriate to the function to be such person were separately qualified which the Exchange is the designated examining
performed as specified in the rule. It also defines and registered in another appropriate authority on the effective date of this proposed rule
‘‘Principal’’ as including sole proprietors, officers, change to register as Securities Trader Principals
mstockstill on DSK4VPTVN1PROD with NOTICES
principal registration category, such as without having to take any additional examinations
partners, managers of offices of supervisory
jurisdiction, and corporate directors, in each case
the General Securities Principal in order to minimize disruption to firms when the
associated with a member organization who are registration category. Finally, a Securities Trader registration category becomes
actively engaged in the management of the member registered General Securities Principal effective. The Exchange will waive the Series 24
organization’s investment banking or securities examination requirement for these individuals so
would not be qualified to supervise the that they may be registered as Securities Trader
business, including supervision, solicitation,
conduct of business or the training of persons
securities trading activities described in Principals.
associated with a member organization for any of Rule 613(f), unless such person also 11 15 U.S.C. 78f(b).
these functions. qualified and registered as a Securities 12 15 U.S.C. 78f(b)(5).
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![71906 Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices
system, and, in general to protect become effective pursuant to Section provisions of 5 U.S.C. 552, will be
investors and the public interest. The 19(b)(3)(A)(iii) of the Act 13 and available for Web site viewing and
Exchange believes that the requirements subparagraph (f)(6) of Rule 19b–4 printing in the Commission’s Public
of the Securities Trader and Securities thereunder.14 Reference Room, 100 F Street NE.,
Trader Principal registration categories, At any time within 60 days of the Washington, DC 20549, on official
as well as the new Securities Trader filing of the proposed rule change, the business days between the hours of
qualification examination, should help Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the
ensure that proprietary traders and the temporarily suspend such rule change if filing also will be available for
principals who supervise proprietary it appears to the Commission that such inspection and copying at the principal
traders and proprietary trading are, and action is: (i) Necessary or appropriate in office of the Exchange. All comments
will continue to be, properly trained the public interest; (ii) for the protection received will be posted without change;
and qualified to perform their functions of investors; or (iii) otherwise in the Commission does not edit personal
which should protect investors and the furtherance of the purposes of the Act. identifying information from
public interest. If the Commission takes such action, the submissions. You should submit only
B. Self-Regulatory Organization’s Commission shall institute proceedings information that you wish to make
Statement on Burden on Competition to determine whether the proposed rule available publicly.
should be approved or disapproved. All submissions should refer to File
The Exchange does not believe that Number SR–Phlx–2015–92 and should
the proposed rule change will impose IV. Solicitation of Comments be submitted on or before December 8,
any burden on competition not Interested persons are invited to 2015.
necessary or appropriate in furtherance submit written data, views, and For the Commission, by the Division of
of the purposes of the Act. arguments concerning the foregoing, Trading and Markets, pursuant to delegated
Implementation of the proposed including whether the proposed rule authority.15
changes to Phlx’s registration rules in change is consistent with the Act. Robert W. Errett,
coordination with the FINRA Comments may be submitted by any of Deputy Secretary.
Amendments does not present any the following methods: [FR Doc. 2015–29213 Filed 11–16–15; 8:45 am]
competitive issues, but rather is
designed to provide less burdensome Electronic Comments BILLING CODE 8011–01–P
and more efficient regulatory • Use the Commission’s Internet
compliance for members and enhance comment form (http://www.sec.gov/ SECURITIES AND EXCHANGE
the ability of the Exchange to fairly and rules/sro.shtml); or COMMISSION
efficiently regulate members, which will • Send an email to rule-comments@
further enhance competition. sec.gov. Please include File Number SR– [SEC File No. 270–101, OMB Control No.
Additionally, the proposed rule change Phlx–2015–92 on the subject line. 3235–0082]
should not affect intramarket
competition because all similarly Paper Comments Submission for OMB Review;
situated representatives and principals • Send paper comments in triplicate Comment Request
will be required to complete the same to Brent J. Fields, Secretary, Securities Upon Written Request Copies Available
qualification examinations and maintain and Exchange Commission, 100 F Street From: Securities and Exchange
the same registrations. Finally, the NE., Washington, DC 20549–1090. Commission, Office of FOIA Services,
proposed rule change does not impose All submissions should refer to File 100 F Street NE., Washington, DC
any additional examination burdens on Number SR–Phlx–2015–92. This file 20549–2736.
persons who are already registered. number should be included on the Extension: Form 11–K.
There is no obligation to take the subject line if email is used. To help the
proposed Series 57 examination in order Commission process and review your Notice is hereby given that, pursuant
to continue in their present duties, so comments more efficiently, please use to the Paperwork Reduction Act of 1995
the proposed rule change is not only one method. The Commission will (44 U.S.C. 3501 et seq.), the Securities
expected to disadvantage current post all comments on the Commission’s and Exchange Commission
registered persons relative to new Internet Web site (http://www.sec.gov/ (‘‘Commission’’) has submitted to the
entrants in this regard. rules/sro.shtml). Office of Management and Budget this
Copies of the submission, all request for extension of the previously
C. Self-Regulatory Organization’s approved collection of information
Statement on Comments on the subsequent amendments, all written
statements with respect to the proposed discussed below.
Proposed Rule Change Received From Form 11–K (17 CFR 249.311) is the
Members, Participants, or Others rule change that are filed with the
annual report designed for use by
Commission, and all written
No written comments were either employee stock purchase, savings and
communications relating to the
solicited or received. similar plans to comply with the
proposed rule change between the
reporting requirements under Section
III. Date of Effectiveness of the Commission and any person, other than
15(d) of the Securities and Exchange Act
Proposed Rule Change and Timing for those that may be withheld from the
of 1934 (the ‘‘Exchange Act’’) (15 U.S.C.
Commission Action public in accordance with the
78o(d)). Section 15(d) establishes a
mstockstill on DSK4VPTVN1PROD with NOTICES
Because the foregoing proposed rule 13 15
periodic reporting obligation for every
U.S.C. 78s(b)(3)(a)(iii).
change does not: (i) Significantly affect 14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– issuer of securities registered under the
the protection of investors or the public 4(f)(6) requires a self-regulatory organization to give Securities Act of 1933 (the ‘‘Securities
interest; (ii) impose any significant the Commission written notice of its intent to file Act’’)(15 U.S.C. 77a et seq.). Form 11–
burden on competition; and (iii) become the proposed rule change at least five business days K provides employees of an issuer with
prior to the date of filing of the proposed rule
operative for 30 days from the date on change, or such shorter time as designated by the financial information so that they can
which it was filed, or such shorter time Commission. The Exchange has satisfied this
as the Commission may designate, it has requirement. 15 17 CFR 200.30–3(a)(12).
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Document Created: 2015-12-14 14:01:11
Document Modified: 2015-12-14 14:01:11
| 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 71903 |
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