80 FR 77035 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Exchange Rules To Prescribe the Securities Traders Examination as the Qualifying Examination for Persons Associated With a Member Organization Engaged Solely in Proprietary Trading, and Amend Continuing Education Requirement Applicable to Such Members

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 238 (December 11, 2015)

[Federal Register Volume 80, Number 238 (Friday, December 11, 2015)]
[Notices]
[Pages 77035-77037]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-31279]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76580; File No. SR-NYSEMKT-2015-99]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Exchange Rules 
To Prescribe the Securities Traders Examination as the Qualifying 
Examination for Persons Associated With a Member Organization Engaged 
Solely in Proprietary Trading, and Amend Continuing Education 
Requirement Applicable to Such Members

December 8, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on November 23, 2015, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') 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 self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Exchange rules to prescribe the 
Securities Traders examination (Series 57) (the ``Series 57 
Examination'') as the qualifying examination for persons associated 
with a member organization (``Member'') engaged solely in proprietary 
trading, and amend Exchange rules regarding continuing education 
requirement applicable to such Member. The proposed rule change is 
available on the Exchange's Web site at www.nyse.com, at the principal 
office of the Exchange, 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 self-regulatory organization 
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Rule 345--Equities currently states that no Member shall permit any 
natural person to perform the duties customarily performed by a 
securities lending representative or a direct supervisor of such, 
unless such person is registered with, qualified by and is acceptable 
to the Exchange. The rule further states that Members shall comply with 
NASD Rule 1031 concerning the registration and approval of registered 
representatives and their supervisors. Under the current rule, each 
associated person of a Member who is included within the definition of 
``representative'' in NASD Rule 1031 is required to appropriately 
register with the Exchange if such person is engaged in proprietary 
trading or directly supervises such activity. In order to engage in 
proprietary trading on the Exchange, an associated person must be 
registered as a General Securities Representative (Series 7) as NYSE 
MKT does not recognize the Series 56 Examination as an acceptable 
qualification standard for associated persons engaged in equities 
proprietary trading.\4\
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    \4\ While the Series 7 Examination is required for associated 
persons engaged in proprietary trading, Exchange rules do not 
require such individuals to work at a proprietary trading firm only. 
These individuals can work at any type of firm. However, they only 
may engage in proprietary trading at the firm where they are 
employed. For example, an individual engaged in proprietary trading 
at a full service firm, who is registered solely to engage in 
proprietary trading, may not act as a registered representative for 
that firm.

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[[Page 77036]]

    The Exchange proposes to amend Rule 345--Equities to recognize a 
new category of limited representative registration for a Securities 
Trader and allow such individual to register in Web CRD \5\ as a 
Securities Trader in order to engage in proprietary trading. As 
proposed, a Securities Trader would be any person engaged in the 
purchase or sale of securities or other similar instruments for the 
account of a member organization with which such person is associated, 
as an employee or otherwise, and who does not transact any business 
with the public.\6\ Under the proposed rule, a Securities Trader must 
be registered as such on Web CRD and pass an appropriate qualification 
examination as prescribed by the Exchange. With this proposed rule 
change, Members engaged solely in proprietary trading, or who supervise 
such activity, would qualify for registration by passing the Series 57 
Examination.
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    \5\ Web CRD is the central licensing and registration system for 
the U.S. securities industry and its regulators.
    \6\ The proposed definition is similar to NYSE MKT LLC Rule 341, 
Commentary .01(c) [sic] and NYSE Arca, Inc. Rule 2.23(b)(2)(C).
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    The Series 57 Examination is being developed by the Financial 
Industry Regulatory Authority, Inc. (``FINRA'') in consultation with 
industry and exchange representatives. The Series 57 Examination will 
be based on industry rules applicable to trading of equity securities 
and listed options contracts. The Series 57 examination will cover, 
among other things, recordkeeping and recording requirements; types and 
characteristics of securities and investments; trading practices; and 
display, execution, and trading systems.\7\ The Exchange believes that 
acceptance of the Series 57 Examination will benefit both the Exchange 
and the applicable proprietary traders affected by the proposal because 
the examination would allow an individual who wishes to transact 
business on NYSE MKT in a limited capacity to qualify by passing an 
examination tailored to that limited capacity.
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    \7\ See Securities Exchange Act Release No. 75783 (August 28, 
2015), 80 FR 53369 (September 3, 2015) (SR-FINRA-2015-017) (Order 
Approving a Proposed Rule Change to Establish the Securities Trader 
and Securities Trader Principal Registration Categories).
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    Individuals currently engaged solely in proprietary trading, who 
currently qualify for registration by passing the Series 7 Examination 
and have registered in Web CRD as Proprietary Traders will have their 
registration converted in Web CRD on January 4, 2016 to a Securities 
Trader without having to take any additional examinations and without 
having to take any other actions. However, the registration of 
individuals who have taken the Series 7 Examination will not be 
converted to a Securities Trader if they have not registered as a 
Proprietary Trader in Web CRD by December 28, 2015. After that date, 
these individuals would be required to take the Series 57 Examination 
in order to register as Securities Traders as the Series 7 Examination 
would no longer serve as a qualifying exam to engage solely in 
proprietary trading on the Exchange. In addition, individuals 
registered as Proprietary Traders in Web CRD 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 the 
individual last registered as a Proprietary Trader and the date the 
individual registers as a Securities Trader.\8\
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    \8\ See Rule 345A--Equities, Commentary .30.
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    In addition, the Exchange proposes to amend Rule 345--Equities to 
create a new category of limited representative Principal--the 
Securities Trader Principal. Registration as a Securities Trader 
Principal would be restricted to individuals whose supervisory 
responsibilities are limited to Securities Traders, as defined in 
amended Supplementary Material .10 to Rule 345--Equities. As proposed, 
a supervisor of a Securities Trader must satisfy its registration 
requirements under Supplementary Material .10 to Rule 345--Equities by 
registering and qualifying as a Securities Trader Principal in Web CRD 
if (a) such supervisor's supervisory responsibilities are limited 
solely to supervising Securities Traders; (b) such supervisor is 
qualified to be so registered by passing the General Securities 
Principal Qualification Examination--Series 24; and (c) such supervisor 
is registered pursuant to Exchange Rules as a Securities Trader. Under 
the proposed rule change, a Securities Trader Principal would not be 
qualified to function in a Principal or supervisory capacity with 
responsibility over any area of business other than that involving 
proprietary trading.\9\
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    \9\ The proposed rule is similar to NYSE MKT LLC Rule 341, 
Commentary .01(e) and NYSE Arca, Inc. Rule 2.23(b)(3)(B).
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    The Exchange notes that in order to currently qualify as a 
Proprietary Trader Principal, an associated person must pass the Series 
7 Examination and the Series 24 Examination. Once the Series 57 
Examination becomes the qualifying exam for a Securities Trader, 
associated persons would need to pass the Series 57 Examination and the 
Series 24 Examination in order to register as a Securities Trader 
Principal. Only those individuals who are registered as such would be 
qualified to supervise a Securities Trader. Individuals registered as a 
General Securities Principal would not be qualified to supervise a 
Securities Trader, nor would a Securities Trader Principal be able to 
act as a General Securities Principal, unless the individual is 
appropriately registered as a Securities Trader Principal and a General 
Securities Principal.
    Further, registered persons are required under Rule 345A--Equities 
to comply with the Exchange's continuing education requirements. 
Specifically, under Rule 345A--Equities(a)(1), no Member may permit any 
registered person to continue to, and no registered person may continue 
to, perform duties as a registered person, unless such person has 
complied with the Exchange's continuing education requirements. The 
Exchange proposes to amend the rule to specifically require each 
registered person who is qualified solely as a Securities Trader to 
comply with the continuing education requirements appropriate for the 
Series 57.\10\
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    \10\ Registered persons will be required to complete the S101 
Program to fulfill the Regulatory Element of their continuing 
education requirement.
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    Within 30 days of filing the proposed rule change, the Exchange 
will issue a Regulatory Bulletin announcing the operative date of the 
rule change, which will not be sooner than January 4, 2016.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (``Act''),\11\ in general, 
and furthers the objectives of Section 6(c)(3)(B) \12\ of the Act, 
pursuant to which a national securities exchange prescribes standards 
of training, experience and competence for members and their associated 
persons, and Section 6(b)(5) \13\ of the Act, in particular, in that it 
is designed,

[[Page 77037]]

among other things, 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 system, and, in general, to protect 
investors and the public interest. The Exchange believes that the 
proposed rule change to make the Series 57 Examination the qualifying 
exam for individuals engaged solely in proprietary trading is 
appropriate because the Series 57 Examination addresses industry topics 
that establish the foundation for the regulatory and procedural 
knowledge necessary for such individuals to appropriately register 
under Exchange rules. In addition, the Series 57 Examination is 
expected to be shared by other exchanges and become the industry 
standard.\14\ Accordingly, adopting the Series 57 Examination will help 
to promote consistency in examination requirements and uniformity 
across markets.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(c)(3)(B).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ See supra, note 7.
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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. The proposed rule change does 
not impose any additional examination burdens on persons who are 
already registered. There is no obligation to take the 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 solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\18\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such 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 shall institute proceedings under 
Section 19(b)(2)(B) \19\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \19\ 15 U.S.C. 78s(b)(2)(B).
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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 Comments

     Use 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-NYSEMKT-2015-99 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-NYSEMKT-2015-99. 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 Section, 100 F Street 
NE., Washington, DC 20549-1090. Copies of the filing will also be 
available for inspection and copying at the NYSE's principal office and 
on its Internet Web site at www.nyse.com. 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-NYSEMKT-2015-99 and should be submitted 
on or before January 4, 2016.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31279 Filed 12-10-15; 8:45 am]
BILLING CODE 8011-01-P