81 FR 2925 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Section (a)(6) of Rule 1120 (Continuing Education Requirements)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 11 (January 19, 2016)
Federal Register Volume 81, Issue 11 (January 19, 2016)
| Page Range | 2925-2928 | |
| FR Document | 2016-00786 |
[Federal Register Volume 81, Number 11 (Tuesday, January 19, 2016)] [Notices] [Pages 2925-2928] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-00786] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76875; File No. SR-BX-2016-002] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Section (a)(6) of Rule 1120 (Continuing Education Requirements) January 12, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given that, on January 7, 2016, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II 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 section (a)(6) of Rule 1120 (Continuing Education Requirements) to provide for web-based delivery of the Exchange's continuing education (``CE'') program. The proposed rule change would phase out the current option of completing the Regulatory Element in a test center, and eliminates the rule providing for in-house delivery of the Regulatory Element of the CE program. The amendments will delete the current text of Rule 1120(a)(6) (In-Firm Delivery of the Regulatory Element). The Exchange's proposal is materially similar to a recent FINRA filing to amend FINRA Rule 1250, which was recently approved by the Securities and Exchange Commission (``SEC'' or ``Commission'').\3\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 75581 (July 31, 2015), 80 FR 47018 (August 6, 2015) (Order Approving a Proposed Rule Change to Provide a Web-based Delivery Method for Completing the Regulatory Element of the Continuing Education Requirements) (SR- FINRA-2015-015). See also Securities Exchange Act Release No. 76107 (October 8, 2015), 80 FR 62139 (October 15, 2015) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Delivery of the Regulatory Element of the Exchange's Continuing Education Program) (SR-CBOE-2015-084). --------------------------------------------------------------------------- The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqomxbx.cchwallstreet.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 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 CE requirements under Rule 1120 consist of a Regulatory Element \4\ and a Firm Element.\5\ The Regulatory Element applies to all registered persons \6\ and consists of periodic computer-based training on regulatory, compliance, ethical, and supervisory subjects and sales practice standards, which must be completed within prescribed timeframes.\7\ In addition, a registered person is required to retake the Regulatory Element in the event that such person (A) is subject to any statutory disqualification as defined in Section 3(a)(39) of the Act; (B) is subject [[Page 2926]] to suspension or to the imposition of a fine of $5,000 or more for violation of any provision of any securities law or regulation, or any agreement with or rule or standard of conduct of any securities governmental agency, securities self-regulatory organization, or as imposed by any such regulatory or self-regulatory organization in connection with a disciplinary proceeding; or (C) is ordered as a sanction in a disciplinary action to retake the Regulatory Element by any securities governmental agency or self-regulatory organization. Rule 1120(a)(1) provides that the following Regulatory Elements administered by FINRA shall be required: The S201 Supervisor Program for registered principals and supervisors, the S501 Series 56 Proprietary Trader continuing education program for Series 56 registered persons, and the S101 General Program for Series 7 and all other registered persons. Currently, the rules state that Regulatory Element may be administered or in-firm subject to specified procedures.\8\ The Regulatory Element may also be administered in a test center. --------------------------------------------------------------------------- \4\ See Rule 1120(a) (Regulatory Element). \5\ See Rule 1120(b) (Firm Element). \6\ For purposes of the Regulatory Element, a ``registered person'' means any person registered with the Exchange as a representative, principal, or assistant representative pursuant to the Rule 1020, 1030 and 1110 Series. See Rule 1120(a)(5). \7\ Pursuant to Rule 1120(a)(1), each registered person shall complete the Regulatory Element of the continuing education program beginning with the occurrence of their second registration anniversary date and every three years thereafter, or as otherwise prescribed by the Exchange. On each occasion, the Regulatory Element must be completed within 120 days after the person's registration anniversary date. A person's initial registration date, also known as the ``base date'', shall establish the cycle of anniversary dates for purposes of the Rule. The content of the Regulatory Element of the program shall be determined by the Exchange and shall be appropriate to either the registered representative or principal status of the person subject to the Rule. \8\ Pursuant to Rule 1120(a)(6), Exchange Members that are also FINRA members are currently permitted to administer the continuing education Regulatory Element program to their registered persons by instituting an in-firm program to the extent such program has been deemed acceptable to FINRA in accordance with NASD Rule 1120(a)(6). (The Exchange notes that NASD Rule 1120 has previously been superseded by FINRA Rule 1250 which FINRA has amended, as discussed above, to delete the in-firm CE option on a phased basis.) Rule 1120(a)(6) provides that the Exchange and FINRA are parties to the Regulatory Contract pursuant to which FINRA has agreed to perform certain functions on behalf of the Exchange. Therefore, Exchange members are complying with Exchange Rule 1120(a)(6) by complying with NASD Rule 1250. In addition, functions performed by FINRA, FINRA departments, and FINRA staff under Rule 1120(a)(6) are being performed by FINRA on behalf of the Exchange. Exchange Members that are not FINRA members are not permitted to institute in-firm delivery of the Regulatory Element program. --------------------------------------------------------------------------- The Firm Element consists of annual, member-developed and administered training programs for covered registered persons,\9\ which must be appropriate for the business of the member and, at a minimum, must cover the following matters concerning securities products, services and strategies offered by the member: (i) General investment features and associated risk factors; (ii) suitability and sales practice considerations; and (iii) applicable regulatory requirements. --------------------------------------------------------------------------- \9\ Under Rule 1120(b)(1) (Persons Subject to the Firm Element), a ``covered registered person'' means any person registered with a member who has direct contact with customers in the conduct of the member's securities sales, trading and investment banking activities, and to the immediate supervisors of such persons. --------------------------------------------------------------------------- Today, most registered persons complete the Regulatory Element in a test center rather than in-firm. Given the advances in Web-based technology, the Exchange believes that there is diminishing utility in the test center and in-firm delivery methods. Moreover, according to FINRA,\10\ registered persons have raised concerns with the test center delivery method because of the travel involved, the limited time currently available to complete a Regulatory Element session \11\ and the use of rigorous security measures at test centers, which are appropriate for taking qualification examinations but onerous for a CE program.\12\ Also, according to FINRA, the test center is expensive to operate.\13\ --------------------------------------------------------------------------- \10\ FINRA is currently responsible for the operation of the test centers used for test center delivery method of the Regulatory Element. \11\ The current session time is three-and-a-half hours. \12\ See Securities Exchange Act Release No. 75154 (June 11, 2015), 80 FR 34777 (June 17, 2015) (Notice of Filing of a Proposed Rule Change To Provide a Web-Based Delivery Method for Completing the Regulatory Element of the Continuing Education Requirements) (SR-FINRA-2015-015). \13\ Id. at 34779. --------------------------------------------------------------------------- In response to the issues noted above, FINRA engaged in extensive outreach with the industry and completed a pilot of a Web-based delivery system for administering the Regulatory Element.\14\ According to FINRA, the proposed Web-based system performed well during the pilot in terms of both performance and accessibility.\15\ FINRA also received positive feedback from firms and the individual pilot participants.\16\ FINRA noted that among other things, pilot participants appreciated the expanded time to focus on the provided learning materials without the pressure of a timed session and the ability to resume or complete their session from where they left off.\17\ --------------------------------------------------------------------------- \14\ Id. \15\ Id. \16\ Id. \17\ Id. --------------------------------------------------------------------------- Proposal Based on the recent amendments to FINRA Rule 1250,\18\ the Exchange proposes to amend Rule 1120(a)(6) to provide for a Web-based delivery method for completing the Regulatory Element. Specifically, the Exchange proposes to amend Rule 1120(a)(6) to provide that the continuing education Regulatory Element set forth in paragraph (a) of Rule 1120(a) will be administered through Web-based delivery or such other technological manner and format as specified by the Exchange. Should the Exchange determine to administer the Regulatory Element through a delivery mechanism other than Web-based delivery, however, the Exchange would notify the Commission and would need to file a further rule change with the Commission. --------------------------------------------------------------------------- \18\ See FINRA Rule 1250 (Continuing Education Requirements). See also Securities Exchange Act Release No. 75581 (July 31, 2015) 80 FR 47018 (August 6, 2015) (Order Approving a Proposed Rule Change to Provide a Web-based Delivery Method for Completing the Regulatory Element of the Continuing Education Requirements) (SR-FINRA-2015- 015). --------------------------------------------------------------------------- The first phase of the Web-based delivery system was launched October 1, 2015 and includes the Regulatory Element of the S201 Supervisor Program for registered principals and supervisors. The second phase of the Web-based delivery system was launched January 4, 2016 and includes the Regulatory Element of the S101 General Program for Series 7 and all other registered persons, including, but not limited to Securities Traders. The Exchange is proposing to phase out test-center delivery by no later than six months after January 4, 2016. Registered persons will continue to have the option of completing the Regulatory Element in a test center, but they will be required to use the Web-based system after the test-center delivery is phased out.\19\ --------------------------------------------------------------------------- \19\ The Exchange has recently filed a separate proposed rule change, SR-BX-2015-090, to amend Rule 7003, Registration and Processing Fees, to reduce the cost for the CE Regulatory Element from $100 to $55 if administered by Web-delivery. Fees for completing the CE Regulatory Element at a test center will remain $100. --------------------------------------------------------------------------- Further, the Exchange is deleting the current language in Rule 1120(a)(6) relating to in-firm delivery of the CE Regulatory Element. The proposed Web-based delivery method will provide registered persons the flexibility to complete the Regulatory Element at a location of their choosing, including their private residence, at any time during their 120-day window for completion of the Regulatory Element.\20\ --------------------------------------------------------------------------- \20\ Although the proposed rule change provides flexibility, firms may choose to impose their own conditions based on their supervisory and compliance needs. For instance, a firm that wishes to have registered persons complete CE on the firm's premises can do so by having the registered person access Web-based CE from a firm device and location. Moreover, firms would have to update their written policies and procedures regarding the Regulatory Element to reflect the transition to Web-based CE and communicate the update to registered persons. --------------------------------------------------------------------------- The Exchange notes that the Web-based format will include safeguards to authenticate the identity of the CE candidate. For instance, prior to commencing a Web-based session, the candidate will be asked to provide a portion of their [sic] SSN (either first five or last four digits) and their [sic] [[Page 2927]] date of birth. This information will only be used for matching data in FINRA's Web-CRD system. The Web CE system will discard this information after the matching process. Further, before commencing a Web-based session, each candidate will be required to agree to the Rules of Conduct for Web-based delivery. Among other things, the Rules of Conduct will require each candidate to attest that he or she is in fact the person who is taking the Web-based session. The Rules of Conduct will also require that each candidate agree that the Regulatory Element content is intellectual property and that the content cannot be copied or redistributed by any means. If the Exchange discovers that a candidate has violated the Rules of Conduct, the candidate will forfeit the results of the Web-based session and may be subject to disciplinary action by the Exchange. Violation of the Rules of Conduct will be considered conduct inconsistent with high standards of commercial honor and just and equitable principles of trade, in violation of Rule 2110, Standards of Commercial Honor and Principles of Trade. The Exchange is not proposing any changes to the Firm Element requirements under Rule 1120(b). 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \21\ in general, and furthers the objectives of Section 6(b)(5) of the Act \22\ 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 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) \23\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers and Section 6(c)(3) \24\ of the Act, which authorizes the Exchange to, among other things, prescribe standards of financial responsibility or operational capability and standards of training, experience and competence for its members and persons associated with members. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78f(b). \22\ 15 U.S.C. 78f(b)(5). \23\ 15 U.S.C. 78f(b)(5). \24\ 15 U.S.C. 78f(c)(3). --------------------------------------------------------------------------- In particular, the Exchange believes that the proposed rule change will improve members' compliance efforts and will allow registered persons to spend a greater amount of time on the review of CE materials and potentially achieve better learning outcomes, which will in turn enhance investor protection. Further, while the proposed rule change will provide more flexibility to members and registered persons, it will maintain the integrity of the Regulatory Element of the CE program and the CE program in general. 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 notes that the proposed rule change is specifically intended to reduce the burden on firms while preserving the integrity of the CE program. As described above, the Web-based delivery method will provide registered persons the flexibility to complete the Regulatory Element at any location that they choose. Further, Web-based delivery is efficient and offers significant cost savings over test-center and in-firm deliveries. With respect to the authentication process for Web-based delivery, the CE candidate's personal identifying information will be masked and will be submitted to FINRA through a secure, encrypted, network. The personal identifying information submitted via the Web-based system will be used for authentication purposes only--the information will not be stored in the Web-based system. 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 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, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \25\ and Rule 19b-4(f)(6) thereunder.\26\ --------------------------------------------------------------------------- \25\ 15 U.S.C. 78s(b)(3)(A). \26\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of 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 asked the Commission to waive the 30-day operative delay so that the proposal may become operative upon filing. The Exchange states the Exchange believes that the proposed rule change will improve members' compliance efforts and will allow registered persons to spend more time on the review of CE materials and potentially achieve better learning outcomes, which will in turn enhance investor protection. In addition, waiving the operative delay will make BX's rules consistent with those of the other exchanges. For these reasons, the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission designates the proposed rule change to be operative upon filing.\27\ --------------------------------------------------------------------------- \27\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- 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 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 [email protected]. Please include File Number SR-BX-2016-002 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-BX-2016-002. 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 [[Page 2928]] 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-BX-2016-002 and should be submitted on or before February 9, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\28\ --------------------------------------------------------------------------- \28\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-00786 Filed 1-15-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 11 / Tuesday, January 19, 2016 / Notices 2925
a Modification to the existing Global By the Commission. The text of the proposed rule change
Expedited Package Services 3 negotiated Stacy L. Ruble, is available on the Exchange’s Web site
service agreement approved in this Secretary. at http://
docket.1 In support of its Notice, the [FR Doc. 2016–00876 Filed 1–15–16; 8:45 am] nasdaqomxbx.cchwallstreet.com/, at the
Postal Service includes a redacted copy BILLING CODE 7710–FW–P
principal office of the Exchange, and at
of the Modification and a certification of the Commission’s Public Reference
compliance with 39 U.S.C. 3633(a), as Room.
required by 39 CFR 3015.5. SECURITIES AND EXCHANGE II. Self-Regulatory Organization’s
The Postal Service also filed the COMMISSION Statement of the Purpose of, and
unredacted Modification and supporting
[Release No. 34–76875; File No. SR–BX– Statutory Basis for, the Proposed Rule
financial information under seal. The
2016–002] Change
Postal Service seeks to incorporate by
reference the Application for Non- In its filing with the Commission, the
Self-Regulatory Organizations; Exchange included statements
Public Treatment originally filed in this
NASDAQ OMX BX, Inc.; Notice of Filing concerning the purpose of and basis for
docket for the protection of information
and Immediate Effectiveness of the proposed rule change and discussed
that it has filed under seal. Id. at 1–2.
Proposed Rule Change To Amend any comments it received on the
The Modification ‘‘revises a few
Section (a)(6) of Rule 1120 (Continuing proposed rule change. The text of these
articles in the agreement and replaces
Education Requirements) statements may be examined at the
Annex 1 of the agreement.’’ Id. at 1.
The Postal Service states that it will January 12, 2016. places specified in Item IV below. The
‘‘notify the Mailer of the Effective Date Pursuant to Section 19(b)(1) of the Exchange has prepared summaries, set
of this Modification within thirty (30) Securities Exchange Act of 1934 forth in sections A, B, and C below, of
days after receiving the approval of the (‘‘Act’’),1 and Rule 19b–4 2 thereunder, the most significant aspects of such
entities that have oversight notice is hereby given that, on January statements.
responsibilities for the USPS.’’ Id., 7, 2016, NASDAQ OMX BX, Inc. (‘‘BX’’ A. Self-Regulatory Organization’s
Attachment 1 at 2. The Postal Service or ‘‘Exchange’’) filed with the Securities Statement of the Purpose of, and
asserts that the Modification will not and Exchange Commission (‘‘SEC’’ or Statutory Basis for, the Proposed Rule
impair the ability of the contract to ‘‘Commission’’) the proposed rule Change
comply with 39 U.S.C. 3633. Id., change as described in Items I and II
Attachment 2. 1. Purpose
below, which Items have been prepared
II. Notice of Filings by the Exchange. The Commission is The CE requirements under Rule 1120
publishing this notice to solicit consist of a Regulatory Element 4 and a
The Commission invites comments on comments on the proposed rule change Firm Element.5 The Regulatory Element
whether the changes presented in the from interested persons. applies to all registered persons 6 and
Postal Service’s Notice are consistent consists of periodic computer-based
with the policies of 39 U.S.C. 3632, I. Self-Regulatory Organization’s training on regulatory, compliance,
3633, or 3642, 39 CFR 3015.5, and 39 Statement of the Terms of Substance of ethical, and supervisory subjects and
CFR part 3020, subpart B. Comments are the Proposed Rule Change sales practice standards, which must be
due no later than January 20, 2016. The The Exchange proposes to amend completed within prescribed
public portions of these filings can be section (a)(6) of Rule 1120 (Continuing timeframes.7 In addition, a registered
accessed via the Commission’s Web site Education Requirements) to provide for person is required to retake the
(http://www.prc.gov). web-based delivery of the Exchange’s Regulatory Element in the event that
The Commission appoints Curtis E. continuing education (‘‘CE’’) program. such person (A) is subject to any
Kidd to represent the interests of the The proposed rule change would phase statutory disqualification as defined in
general public (Public Representative) out the current option of completing the Section 3(a)(39) of the Act; (B) is subject
in this docket. Regulatory Element in a test center, and
III. Ordering Paragraphs eliminates the rule providing for in- Effectiveness of a Proposed Rule Change Relating to
house delivery of the Regulatory Delivery of the Regulatory Element of the
It is ordered: Exchange’s Continuing Education Program) (SR–
Element of the CE program. The CBOE–2015–084).
1. The Commission reopens Docket amendments will delete the current text 4 See Rule 1120(a) (Regulatory Element).
No. CP2015–104 for consideration of of Rule 1120(a)(6) (In-Firm Delivery of 5 See Rule 1120(b) (Firm Element).
matters raised by the Postal Service’s the Regulatory Element). The 6 For purposes of the Regulatory Element, a
Notice. Exchange’s proposal is materially ‘‘registered person’’ means any person registered
2. Pursuant to 39 U.S.C. 505, the similar to a recent FINRA filing to with the Exchange as a representative, principal, or
Commission appoints Curtis E. Kidd to assistant representative pursuant to the Rule 1020,
amend FINRA Rule 1250, which was 1030 and 1110 Series. See Rule 1120(a)(5).
serve as an officer of the Commission recently approved by the Securities and 7 Pursuant to Rule 1120(a)(1), each registered
(Public Representative) to represent the Exchange Commission (‘‘SEC’’ or person shall complete the Regulatory Element of the
interests of the general public in this ‘‘Commission’’).3 continuing education program beginning with the
proceeding. occurrence of their second registration anniversary
date and every three years thereafter, or as
3. Comments are due no later than 1 15 U.S.C. 78s(b)(1).
asabaliauskas on DSK5VPTVN1PROD with NOTICES
otherwise prescribed by the Exchange. On each
January 20, 2016. 2 17 CFR 240.19b–4. occasion, the Regulatory Element must be
4. The Secretary shall arrange for 3 See Securities Exchange Act Release No. 75581 completed within 120 days after the person’s
publication of this order in the Federal (July 31, 2015), 80 FR 47018 (August 6, 2015) registration anniversary date. A person’s initial
(Order Approving a Proposed Rule Change to registration date, also known as the ‘‘base date’’,
Register. Provide a Web-based Delivery Method for shall establish the cycle of anniversary dates for
Completing the Regulatory Element of the purposes of the Rule. The content of the Regulatory
1 Notice of the United States Postal Service of Continuing Education Requirements) (SR–FINRA– Element of the program shall be determined by the
Filing Modification to Global Expedited Package 2015–015). See also Securities Exchange Act Exchange and shall be appropriate to either the
Services 3 Negotiated Service Agreement, January Release No. 76107 (October 8, 2015), 80 FR 62139 registered representative or principal status of the
12, 2016 (Notice). (October 15, 2015) (Notice of Filing and Immediate person subject to the Rule.
VerDate Sep<11>2014 17:50 Jan 15, 2016 Jkt 238001 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 E:\FR\FM\19JAN1.SGM 19JAN1](https://thefederalregister.org/doc/81_FR_2936/page/1.svg)
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to suspension or to the imposition of a Today, most registered persons paragraph (a) of Rule 1120(a) will be
fine of $5,000 or more for violation of complete the Regulatory Element in a administered through Web-based
any provision of any securities law or test center rather than in-firm. Given the delivery or such other technological
regulation, or any agreement with or advances in Web-based technology, the manner and format as specified by the
rule or standard of conduct of any Exchange believes that there is Exchange. Should the Exchange
securities governmental agency, diminishing utility in the test center and determine to administer the Regulatory
securities self-regulatory organization, in-firm delivery methods. Moreover, Element through a delivery mechanism
or as imposed by any such regulatory or according to FINRA,10 registered other than Web-based delivery,
self-regulatory organization in persons have raised concerns with the however, the Exchange would notify the
connection with a disciplinary test center delivery method because of Commission and would need to file a
proceeding; or (C) is ordered as a the travel involved, the limited time further rule change with the
sanction in a disciplinary action to currently available to complete a Commission.
retake the Regulatory Element by any Regulatory Element session 11 and the The first phase of the Web-based
securities governmental agency or self- use of rigorous security measures at test delivery system was launched October
regulatory organization. Rule 1120(a)(1) centers, which are appropriate for taking 1, 2015 and includes the Regulatory
provides that the following Regulatory qualification examinations but onerous Element of the S201 Supervisor Program
Elements administered by FINRA shall for a CE program.12 Also, according to for registered principals and
be required: The S201 Supervisor FINRA, the test center is expensive to supervisors. The second phase of the
Program for registered principals and operate.13 Web-based delivery system was
supervisors, the S501 Series 56 In response to the issues noted above, launched January 4, 2016 and includes
Proprietary Trader continuing education FINRA engaged in extensive outreach the Regulatory Element of the S101
program for Series 56 registered with the industry and completed a pilot General Program for Series 7 and all
persons, and the S101 General Program of a Web-based delivery system for other registered persons, including, but
for Series 7 and all other registered administering the Regulatory Element.14 not limited to Securities Traders.
persons. Currently, the rules state that According to FINRA, the proposed Web- The Exchange is proposing to phase
Regulatory Element may be based system performed well during the out test-center delivery by no later than
administered or in-firm subject to pilot in terms of both performance and six months after January 4, 2016.
specified procedures.8 The Regulatory accessibility.15 FINRA also received Registered persons will continue to have
Element may also be administered in a positive feedback from firms and the the option of completing the Regulatory
test center. individual pilot participants.16 FINRA Element in a test center, but they will
The Firm Element consists of annual, noted that among other things, pilot be required to use the Web-based system
member-developed and administered participants appreciated the expanded after the test-center delivery is phased
training programs for covered registered time to focus on the provided learning out.19
persons,9 which must be appropriate for materials without the pressure of a Further, the Exchange is deleting the
the business of the member and, at a timed session and the ability to resume current language in Rule 1120(a)(6)
minimum, must cover the following or complete their session from where relating to in-firm delivery of the CE
matters concerning securities products, they left off.17 Regulatory Element. The proposed Web-
services and strategies offered by the Proposal based delivery method will provide
member: (i) General investment features registered persons the flexibility to
Based on the recent amendments to complete the Regulatory Element at a
and associated risk factors; (ii) FINRA Rule 1250,18 the Exchange
suitability and sales practice location of their choosing, including
proposes to amend Rule 1120(a)(6) to
considerations; and (iii) applicable their private residence, at any time
provide for a Web-based delivery
regulatory requirements. during their 120-day window for
method for completing the Regulatory
completion of the Regulatory Element.20
8 Pursuant to Rule 1120(a)(6), Exchange Members
Element. Specifically, the Exchange The Exchange notes that the Web-
that are also FINRA members are currently
proposes to amend Rule 1120(a)(6) to based format will include safeguards to
permitted to administer the continuing education provide that the continuing education authenticate the identity of the CE
Regulatory Element program to their registered Regulatory Element set forth in
persons by instituting an in-firm program to the candidate. For instance, prior to
extent such program has been deemed acceptable to 10 FINRA is currently responsible for the
commencing a Web-based session, the
FINRA in accordance with NASD Rule 1120(a)(6). operation of the test centers used for test center candidate will be asked to provide a
(The Exchange notes that NASD Rule 1120 has delivery method of the Regulatory Element. portion of their [sic] SSN (either first
previously been superseded by FINRA Rule 1250
which FINRA has amended, as discussed above, to
11 The current session time is three-and-a-half
five or last four digits) and their [sic]
hours.
delete the in-firm CE option on a phased basis.) 12 See Securities Exchange Act Release No. 75154
Rule 1120(a)(6) provides that the Exchange and 19 The Exchange has recently filed a separate
FINRA are parties to the Regulatory Contract (June 11, 2015), 80 FR 34777 (June 17, 2015) (Notice proposed rule change, SR–BX–2015–090, to amend
pursuant to which FINRA has agreed to perform of Filing of a Proposed Rule Change To Provide a Rule 7003, Registration and Processing Fees, to
Web-Based Delivery Method for Completing the reduce the cost for the CE Regulatory Element from
certain functions on behalf of the Exchange.
Regulatory Element of the Continuing Education
Therefore, Exchange members are complying with $100 to $55 if administered by Web-delivery. Fees
Requirements) (SR–FINRA–2015–015).
Exchange Rule 1120(a)(6) by complying with NASD 13 Id. at 34779.
for completing the CE Regulatory Element at a test
Rule 1250. In addition, functions performed by center will remain $100.
14 Id.
FINRA, FINRA departments, and FINRA staff under 20 Although the proposed rule change provides
15 Id.
Rule 1120(a)(6) are being performed by FINRA on
asabaliauskas on DSK5VPTVN1PROD with NOTICES
flexibility, firms may choose to impose their own
behalf of the Exchange. Exchange Members that are 16 Id.
conditions based on their supervisory and
not FINRA members are not permitted to institute 17 Id. compliance needs. For instance, a firm that wishes
in-firm delivery of the Regulatory Element program. 18 See FINRA Rule 1250 (Continuing Education to have registered persons complete CE on the
9 Under Rule 1120(b)(1) (Persons Subject to the firm’s premises can do so by having the registered
Requirements). See also Securities Exchange Act
Firm Element), a ‘‘covered registered person’’ Release No. 75581 (July 31, 2015) 80 FR 47018 person access Web-based CE from a firm device and
means any person registered with a member who (August 6, 2015) (Order Approving a Proposed Rule location. Moreover, firms would have to update
has direct contact with customers in the conduct of Change to Provide a Web-based Delivery Method for their written policies and procedures regarding the
the member’s securities sales, trading and Completing the Regulatory Element of the Regulatory Element to reflect the transition to Web-
investment banking activities, and to the immediate Continuing Education Requirements) (SR–FINRA– based CE and communicate the update to registered
supervisors of such persons. 2015–015). persons.
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![2928 Federal Register / Vol. 81, No. 11 / Tuesday, January 19, 2016 / Notices
only one method. The Commission will have been prepared by the Exchange. ethical, and supervisory subjects and
post all comments on the Commission’s The Commission is publishing this sales practice standards, which must be
Internet Web site (http://www.sec.gov/ notice to solicit comments on the completed within prescribed
rules/sro.shtml). Copies of the proposed rule change from interested timeframes.5 In addition, unless
submission, all subsequent persons. otherwise determined by the Exchange,
amendments, all written statements a registered person is required to re-take
I. Self-Regulatory Organization’s
with respect to the proposed rule the Regulatory Element of the program
Statement of the Terms of Substance of
change that are filed with the and satisfy the program’s requirements
the Proposed Rule Change
Commission, and all written in their entirety in the event such
communications relating to the The Exchange proposes to amend person: (i) Becomes subject to any
proposed rule change between the Section (a)(4) of Rule 640, Continuing statutory disqualification as defined in
Commission and any person, other than Education for Registered Persons, to Section 3(a)(39) of the Securities
those that may be withheld from the provide for web-based delivery of the Exchange Act of 1934; (ii) becomes
public in accordance with the Exchange’s continuing education (‘‘CE’’) subject to suspension or to the
provisions of 5 U.S.C. 552, will be program. The proposed rule change imposition of a fine of $5,000 or more
available for Web site viewing and would phase out the current option of for violation of any provision of any
printing in the Commission’s Public completing the Regulatory Element in a securities law or regulation, or any
Reference Room, 100 F Street NE., test center, delete the current option for agreement with or rule or standard of
Washington, DC 20549, on official in-house delivery of the Regulatory conduct of any securities governmental
business days between the hours of Element of the CE program and also agency, securities self-regulatory
10:00 a.m. and 3:00 p.m. Copies of the delete the existing text of Rule 640(a)(4), organization, or as imposed by any such
filing also will be available for In-Firm Delivery of the Regulatory regulatory or self-regulatory
inspection and copying at the principal Element. The Exchange’s proposal, organization in connection with a
office of the Exchange. All comments which is being filed for immediate disciplinary proceeding; or (iii) is
received will be posted without change; effectiveness and will be operative ordered as a sanction in a disciplinary
the Commission does not edit personal January 4, 2016, is materially similar to action to re-take the Regulatory Element
identifying information from a recent FINRA filing to amend FINRA by any securities governmental agency
submissions. You should submit only Rule 1250, which was recently or securities self-regulatory
information that you wish to make approved by the Securities and organization.
available publicly. All submissions Exchange Commission (‘‘Commission’’).
Rule 640(a)(1) provides that the
should refer to File Number SR–BX– The text of the proposed rule change
following Regulatory Elements
2016–002 and should be submitted on is available on the Exchange’s Web site
at http:// administered by FINRA shall be
or before February 9, 2016. required: The S201 Supervisor Program
nasdaqomxphlx.cchwallstreet.com/, at
For the Commission, by the Division of
the principal office of the Exchange, and for registered principals and
Trading and Markets, pursuant to delegated supervisors, the S501 Series 56
authority.28 at the Commission’s Public Reference
Room. Proprietary Trader continuing education
Robert W. Errett, program for Series 56 registered
Deputy Secretary. II. Self-Regulatory Organization’s persons, and the S101 General Program
[FR Doc. 2016–00786 Filed 1–15–16; 8:45 am] Statement of the Purpose of, and for Series 7 and all other registered
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule persons. Currently, the Regulatory
Change Element may be administered in a test
In its filing with the Commission, the center or in-firm subject to specified
SECURITIES AND EXCHANGE Exchange included statements procedures.6
COMMISSION concerning the purpose of and basis for
5 Pursuant to Rule 640, each registered person
[Release No. 34–76880; File No. SR–Phlx– the proposed rule change and discussed
shall complete the Regulatory Element of the
2015–118] any comments it received on the continuing education program on the occurrence of
proposed rule change. The text of these their second registration anniversary date(s), and
Self-Regulatory Organizations; statements may be examined at the every three years thereafter or as otherwise
NASDAQ OMX PHLX LLC; Notice of places specified in Item IV below. The prescribed by the Exchange. On each occasion, the
Filing and Immediate Effectiveness of Regulatory Element must be completed within 120
Exchange has prepared summaries, set days after the person’s registration anniversary date.
Proposed Rule Change To Amend forth in sections A, B, and C below, of A person’s initial registration date, also known as
Section (a)(4) of Rule 640, Continuing the most significant aspects of such the ‘‘base date,’’ shall establish the cycle of
Education for Registered Persons statements. anniversary dates for purposes of this Rule.
6 Under current Rule 640(a)(4), In-Firm Delivery
January 12, 2016. A. Self-Regulatory Organization’s of the Regulatory Element, members and member
Pursuant to Section 19(b)(1) of the Statement of the Purpose of, and organizations are permitted to administer the
Securities Exchange Act of 1934 continuing education Regulatory Element program
Statutory Basis for, the Proposed Rule to their registered persons by instituting an in-firm
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Change program acceptable to the Exchange. Among others,
notice is hereby given that on December the following procedures are required in order to
30, 2015, NASDAQ OMX PHLX LLC 1. Purpose administer the Regulatory Element of the CE
asabaliauskas on DSK5VPTVN1PROD with NOTICES
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the The CE requirements under Rule 640 program in-house: (1) The firm must designate a
principal/officer-in-charge to be responsible for the
Securities and Exchange Commission consist of a Regulatory Element 3 and a in-firm delivery of the Regulatory Element; (2) the
(‘‘SEC’’ or ‘‘Commission’’) the proposed Firm Element.4 The Regulatory Element location of the delivery site must be under the
rule change as described in Items I, II, applies to all registered persons and control of the firm; (3) the communication links and
and III, below, of which Items I and II consists of periodic computer-based firm delivery computer hardware must comply with
standards defined by the Exchange or its designated
training on regulatory, compliance, vendor; (4) the firm’s written supervisory
28 17 CFR 200.30–3(a)(12). procedures must contain the procedures
1 15 U.S.C. 78s(b)(1). 3 See Rule 640(a) (Regulatory Element). implemented to comply with requirements of in-
2 17 CFR 240.19b–4. 4 See Rule 640(b) (Firm Element). firm delivery of the Regulatory Element continuing
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Document Created: 2016-01-16 01:09:52
Document Modified: 2016-01-16 01:09:52
| 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 | 81 FR 2925 |
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