81 FR 60083 - Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules Regarding Qualification, Registration and Continuing Education for Persons Associated With Equity Trading Permit Holders, To Add Definitions, Amend Definitions, and To Make Technical, Non-Substantive and Conforming Amendments to Rules
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 169 (August 31, 2016)
Federal Register Volume 81, Issue 169 (August 31, 2016)
| Page Range | 60083-60088 | |
| FR Document | 2016-20883 |
[Federal Register Volume 81, Number 169 (Wednesday, August 31, 2016)] [Notices] [Pages 60083-60088] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-20883] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78676; File No. SR-NSX-2016-07] Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules Regarding Qualification, Registration and Continuing Education for Persons Associated With Equity Trading Permit Holders, To Add Definitions, Amend Definitions, and To Make Technical, Non- Substantive and Conforming Amendments to Rules August 25, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Exchange Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on August 24, 2016, National Stock Exchange, Inc. (``NSX'' or the ``Exchange'') filed with the Securities and Exchange Commission (``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 is proposing amendments to its rules regarding qualification, registration and continuing education requirements applicable to Equity Trading Permit (``ETP'') Holders \3\ and Persons Associated with ETP Holders.\4\ The Exchange's rule proposal is intended to align its rules with those of other self-regulatory organizations (``SROs'') and thus promote consistency within the securities industry. The Exchange is also proposing to amend NSX Rule 1.5, Definitions, and make technical or conforming changes to certain other NSX rules. --------------------------------------------------------------------------- \3\ Exchange Rule 1.5E.(1) defines the term ``ETP,'' in relevant part, as ``. . . an Equity Trading Permit issued by the Exchange for effecting approved securities transactions on the Exchange's trading facilities. . . .'' \4\ Exchange Rule 1.5P.(2) defines ``Person Associated with an ETP Holder'' as ``. . . any partner, officer, director, or branch manager of an ETP Holder (or any person occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with an ETP Holder, or any employee of such ETP Holder, except that any person associated with an ETP Holder whose functions are solely clerical or ministerial shall not be included in the meaning of such terms.'' --------------------------------------------------------------------------- The Exchange has designated this rule proposal as a ``non- controversial'' rule change pursuant to Section 19(b)(3)(A) of the Act \5\ and provided the Commission with the notice required by Rule 19b- 4(f)(6)(iii) under the Act.\6\ --------------------------------------------------------------------------- \5\ 15 U.S.C. 78s(b)(3)(A). \6\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- The text of the proposed rule change is available on the Exchange's Web site at http://www.nsx.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 parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its qualification, registration, and continuing education requirements applicable to ETP Holders and Persons Associated with ETP Holders. The proposed amendments are intended to: (i) Provide transparency and clarity with respect to the Exchange's registration, qualification, and examination requirements; (ii) ensure that all persons engaging in trading on the Exchange or performing supervisory or operational functions are properly registered and subject to the examination and continuing education requirements necessary for their business function; (iii) align the Exchange's qualification, registration and examination rules with those of the Financial Industry Regulatory Authority (``FINRA'') and other SROs so as to promote uniform standards across the securities industry; (iv) provide for the Securities Trader registration (Series 57) and Securities Trader Principal registration; and (v) reorganize certain rules, add new definitions of terms, and make other conforming or ministerial, non-substantive amendments designed to enhance the comprehensiveness and clarity of the Exchange's rules. The proposed changes are discussed below. Amendments to NSX Rule 1.5--Definitions The Exchange is proposing to amend NSX Rule 1.5 to add new definitions, revise certain definitions in the current rule, and make non-substantive changes to the rule text. The Exchange first proposes to amend the definition of an ETP in NSX Rule 1.5E.(1). As currently defined in the rule, the term ETP ``. . . shall refer to an Equity Trading Permit issued by the Exchange for effecting approved securities transactions on the Exchange's trading facilities. An ETP may be issued to a sole proprietor, partnership, corporation, limited liability company or other organization which is a registered broker or dealer pursuant to Section 15 of the Act, and which has been approved by the Exchange.'' Under the Exchange's proposed amendment, the definition of an ``ETP'' would retain the text that an ETP shall refer to an Equity Trading Permit issued by the Exchange for effecting approved securities transactions on the Exchange's trading facilities. However, the subsequent text in the current rule, which provides that an ETP may be issued to a sole proprietor, partnership, corporation, limited liability company or other organization which is a registered broker or dealer pursuant to Section 15 of the Act, will be moved to NSX Rule 2.3, entitled ``ETP Holder Eligibility,'' where it is more logically placed given the content of that rule. Additionally, the relocated text will be amended to add a requirement that the prospective ETP Holder must be a member of another national securities exchange or national securities association in order to be eligible to become an ETP Holder of NSX. The Exchange is proposing this amendment because it will not act as the Designated Examining Authority for any ETP [[Page 60084]] Holder under Section 17(d) of the Act \7\ and Rules 17d-1 \8\ and 17d-2 \9\ thereunder. In new NSX Rule 1.5E.(2), the Exchange proposes to add a new definition of ETP Holder as meaning ``the Exchange-approved holder of an ETP'' in order to clarify that term and add its definition to Rule 1.5. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78q(d). \8\ 17 CFR 240.17d-1. \9\ 17 CFR 240.17d-2. --------------------------------------------------------------------------- The Exchange is also proposing to add new definitions for the terms ``Person,'' ``Principal,'' ``Principal--Financial and Operations,'' ``Securities Trader,'' and ``Securities Trader Principal.'' Proposed Rule 1.5P.(1) will define the term ``Person'' as a natural person, corporation, partnership, limited liability company, association, joint stock company, trustee of a trust fund, or any organized group of persons whether incorporated or not.\10\ --------------------------------------------------------------------------- \10\ The proposed definition of a ``Person'' is the same as that contained in NYSE Arca, Inc. Rule 1.1(v) and NYSE Arca Equities Inc. Rule 1.1(oo). --------------------------------------------------------------------------- The term ``Principal'' will be defined in proposed Rule 1.5P.(3) as any person actively engaged in the management of the ETP Holder's securities business, including supervision, solicitation, the conduct of the ETP Holder's business, or the training of Authorized Traders \11\ and Persons Associated with the ETP Holder for any of these functions. Such persons shall include Sole Proprietors, Officers, Partners and Directors of Corporations. The definition of a ``Principal'' in the proposed amendment aligns with the definition of Principal in NASD Rule 1021(b), Definition of Principal.\12\ --------------------------------------------------------------------------- \11\ Exchange Rule 1.5A.(2) defines ``Authorized Trader'' as ``. . . a person who may submit orders (or who supervises a routing engine that may automatically submit orders) to the Exchange's trading facilities on behalf of his or her ETP Holder or Sponsored Participant.'' No changes to that definition are proposed in this rule filing. \12\ NASD Rule 1021(b), and other NASD Rules regarding the qualification, registration and continuing education requirements for registered personnel, as applicable, are part of FINRA's Transitional Rule Book. --------------------------------------------------------------------------- A Principal--Financial and Operations (``FINOP'') will be defined in proposed Rule 1.5P.(4) as a Person Associated with an ETP Holder whose responsibilities include final approval and responsibility for the accuracy of financial reports submitted to securities industry regulatory bodies and the final preparation of such reports; supervision of individuals who assist in the preparation of such reports; supervision of and responsibility for individuals who are involved in the maintenance of the ETP Holder's books and records from which such reports are derived; supervision and/or performance of the ETP Holder's responsibilities under all financial responsibility rules under the provisions of the Act; overall supervision of and responsibility for the individuals who are involved in the administration and maintenance of the ETP Holder's back office operations; or any other matter involving the financial and operational management of the ETP Holder. The Exchange proposes to add the terms Securities Trader and Securities Trader Principal to Exchange Rule 1.5S. Proposed Rule 1.5S.(1) states that the term ``Securities Trader'' means any person engaged in the purchase or sale of securities or other similar instruments for the account of an ETP Holder with which such person is associated, as an employee or otherwise, and who does not transact any business with the public. Proposed Rule 1.5S.(2) states that the term ``Securities Trader Principal'' means a person who has become qualified and registered as a Securities Trader and passes the General Securities Principal qualification examination. Each Principal with responsibility over securities trading activity on the Exchange shall become qualified and registered as a Securities Trader Principal. The Exchange's proposed definitions of the Securities Trader and Securities Trader Principal registration categories align with those contained in NASD Rules 1032 and 1022(a)(6)(A), respectively. The Exchange also proposes to make changes to the numbering and capitalization and other ministerial changes to Rule 1.5 in light of the additions that have been made to the Rule. Amendments to Chapter II--ETP Holders of the Exchange The Exchange is proposing to make changes to Chapter II of its rules with respect to the eligibility, obligations and restrictions applicable to ETP Holders; and the qualification, registration and continuing education requirements applicable to Principals of ETP Holders, Authorized Traders, and Persons Associated with an ETP Holder. The proposed changes will align the Exchange's rules with those of other SROs and provide ETP Holders, their registered and non-registered personnel, and other market participants with reasonable notice of the requirements established by the Exchange in these subject areas. Amendments to NSX Rule 2.2, Obligations of ETP Holders and the Exchange The Exchange proposes to amend NSX Rule 2.2, entitled Obligations of ETP Holders and the Exchange. The current text of the rule will be denoted as paragraph (a) and additional rule text will be added in new paragraphs (b) through (e). Proposed paragraph (b) provides that each ETP Holder shall require each Person Associated with such ETP Holder as defined in NSX Rule 1.5P.(2) to agree: (i) To supply the Exchange with such information as may be specified by the Exchange with respect to such person's relationships and dealings with the ETP Holder; (ii) to permit the examination by the Exchange of such person's books and records to verify the accuracy of the information so supplied; and (iii) to be regulated by the Exchange and recognize the Exchange's obligation under the Act to enforce compliance with the Exchange's Rules, By-Laws, Interpretations and Policies and the provisions of the Act and the rules and regulations thereunder. The Exchange is proposing these requirements in order to make more explicit in the Exchange's rules the obligation of ETP Holders, and all Persons Associated with the ETP Holder, to comply with Exchange information requests, to permit the examination of any books and records relevant to the subject matter of an Exchange inquiry, and to consent to the regulatory jurisdiction of the Exchange.\13\ --------------------------------------------------------------------------- \13\ See 15 U.S.C.78f(c)(3)(C). --------------------------------------------------------------------------- Proposed new subparagraph (c)(i) of Rule 2.2 provides that an ETP Holder shall register through the Central Registration Depository System (``CRD System'') \14\ as a Principal all persons who meet the definition thereof under Rule 1.5P.(3), i.e., persons actively engaged in the management of the ETP Holder's securities business, including supervision, solicitation, the conduct of the ETP Holder's business, or the training of Authorized Traders and Persons Associated with the ETP Holder for any of these functions. Such persons shall include sole proprietors, officers, partners, and directors of corporations. --------------------------------------------------------------------------- \14\ The CRD System is operated by FINRA and defined in proposed NSX Rule 2.2(c). ETP Holders are not required to be members of FINRA. --------------------------------------------------------------------------- Further, pursuant to proposed subparagraph (c)(i), a Principal that is responsible for supervising Authorized Traders or any Principal designated as a Chief Compliance Officer on Schedule A of the ETP Holder's Form BD must pass the General Securities Principal qualification examination (``Series 24'') and be registered in CRD. Alternatively, proposed Interpretations and Policies provision .02 provides that the Exchange will accept the New York Stock Exchange (``NYSE'') Chief Compliance Officer Examination [[Page 60085]] (``NYSE Series 14'') as an alternative examination to qualify as a Principal a registrant who is identified as the Chief Compliance Officer on the ETP Holder's Form BD. This provision recognizes that potential registrants cannot register with the Exchange as a Principal using the Series 14 qualification through the CRD System. Except as provided in Interpretations and Policies provisions .04, described below, a Principal must pass the General Securities Representative examination (``Series 7 examination'') or an equivalent foreign examination module as a prerequisite to taking the Series 24 examination. Proposed subparagraphs (c)(ii) and (iii) of Rule 2.2 require each ETP Holder, except a sole proprietorship or a proprietary trading firm with 25 or fewer Authorized Traders (such entity defined as a ``Limited Size Proprietary Firm''), to have a minimum of two registered Principals. A Person registered solely as a FINOP, as defined in Rule 1.5P.(4), does not count toward the two-Principal requirement and shall not be qualified to function in a Principal capacity with responsibility over any area of business activity not described in Rule 1.5P.(4).\15\ --------------------------------------------------------------------------- \15\ The provisions of the proposed rule align with those of other SROs. See e.g., NASD Rule 1022; Bats BZX Exchange, Inc. (``BZX'') Rule 2.5, Interpretations and Policies .01(d). --------------------------------------------------------------------------- Proposed subparagraph (c)(iii) states that for purposes of the Rule, the Exchange proposes to define a proprietary firm as an ETP Holder that trades its own capital and conducts all of its trading activity using exclusively firm accounts and firm funds; does not have customer accounts; whose traders are owners of, employees of, or contractors of the firm; and is not a FINRA member.\16\ The Exchange submits that it is appropriate and consistent with the goal of promoting consistency and uniformity in SRO rules, to allow for an exemption from the two-Principal requirement for those ETP Holders that only engage in proprietary trading and have 25 or fewer Authorized Traders. Accordingly, as proposed, such ETP Holders will be required to maintain one Series 24 Registered Principal. --------------------------------------------------------------------------- \16\ The definition of ``proprietary trading firm'' proposed in subparagraph (c)(iii) is identical to that provided in BZX Rule 2.5, Interpretations and Policies 01(g). --------------------------------------------------------------------------- The Exchange further proposes to include a waiver provision that will permit the Exchange to waive the requirements of this proposed subparagraph in situations that indicate conclusively that only one person associated with an applicant for membership should be required to register as a Principal. The Exchange is proposing this amendment to align Rule 2.2(c)(ii) with NASD Rule 1021(e)(2), which contains the same waiver provision. The Exchange proposes in paragraph (d) of amended NSX Rule 2.2 to require that ETP Holders designate and register with the Exchange through the CRD System a FINOP, as described in proposed NSX Rule 1.5P.(5). The FINOP will be required by the Exchange to pass the Financial and Operations Principal examination (``Series 27'') examination'').\17\ The proposed rule will allow a FINOP to be either an employee of the ETP Holder or an independent contractor. --------------------------------------------------------------------------- \17\ See NASD Rule 1022(b), (c). --------------------------------------------------------------------------- The Exchange is further proposing to adopt NSX Rule 2.2(e), Continuing Education Requirements, describing such requirements for all Registered Persons of ETP Holders. The requirements proposed in Rule 2.2(e) are identical to those in the rules of other SROs. For the purposes of paragraph (e) the term ``Registered Person'' means any Person registered with the Exchange as a General Securities Representative, Securities Trader, Principal, FINOP, Person Associated with an ETP Holder, Authorized Trader, or Market Maker Authorized Trader pursuant to Exchange Rules.\18\ Proposed NSX Rule 2.2(e), which aligns with FINRA Rule 1250, establishes both a ``Regulatory Element'' (applicable to Principals, Authorized Traders and General Securities Representatives) and a ``Firm Element'' (applicable to those registered persons that have direct customer contact). --------------------------------------------------------------------------- \18\ The proposed definition of ``Registered Person'' is substantially similar to that contained in FINRA Rule 1250(a)(5). --------------------------------------------------------------------------- The Exchange submits that its proposed adoption of the uniform securities industry rules regarding continuing education requirements will promote uniformity among SRO rules.\19\ --------------------------------------------------------------------------- \19\ See, e.g., NYSE Rule 345A; NYSE Arca Equities Rule 2.21; BZX and Bats BZY Exchange, Inc. Rules 2.5, Interpretations and Policies .02. --------------------------------------------------------------------------- Amendments to NSX Rule 2.2, Interpretations and Policies The Exchange proposes to amend the Interpretations and Policies of NSX Rule 2.2 to add new provisions and to relocate and amend certain text currently found in the Interpretation and Policies provisions of current NSX Rule 2.4 (Restrictions) as Interpretations and Policies to NSX Rule 2.2. Currently, NSX Rule 2.4 Interpretations and Policies describe the qualification requirements that align with NSX Rule 2.2, as proposed to be amended by this rule filing, and the Exchange believes that relocating these provisions will result in a better organizational structure and greater clarity in its rules. The Exchange also proposes to add to the amended NSX Rule 2.2 Interpretations and Policies new provisions relating to the Securities Trader and Securities Trader Principal categories of registration.\20\ --------------------------------------------------------------------------- \20\ See Securities Exchange Act Release No. 75783 (August 28, 2015), 80 FR 53369 (September 3, 2015) (SR-FINRA-2015-17), Order Approving a Proposed Rule Change To Establish the Securities Trader and Securities Trader Principal Registration Categories. --------------------------------------------------------------------------- As amended, the NSX Rule 2.2 Interpretations and Policies include the following: In provision .01, the Exchange states that it requires the Series 7 or an equivalent foreign examination module approved by the Exchange in qualifying persons seeking registration as General Securities Representatives. The Exchange is relocating this clause from NSX Rule 2.4 Interpretations and Policies, provision .01(c) and adding the text allowing for an equivalent foreign examination module, which will align the Exchange's requirements with those of other SROs.\21\ --------------------------------------------------------------------------- \21\ See, e.g., NASD Rule 1032(a)(2); BZX Rule 2.5, Interpretations and Policies .01(c). --------------------------------------------------------------------------- In proposed provision .02, the Exchange states that it will accept the NYSE Series 14 as an alternative qualification to the Series 24 to register as a Principal an individual identified as the Chief Compliance Officer on ETP Holder's Form BD. Additionally, in order to conform to the rules of other SROs, the Exchange specifies in provision .05 that it uses the Uniform Application for Securities Industry Registration or Transfer (``Form U4''), and the Uniform Termination Notice for Securities Industry Registration (``Form U5''), through the CRD System as part of its procedure for registration of ETP Holder personnel. Form U4 shall be amended by the ETP Holder no later than 30 days after an event that would require an amendment to Form U4. In proposed provision .06, the substance of which is being relocated from NSX Rule 2.4 Interpretations and Policies .01(b), the Exchange will have the authority to waive the requirement of a proficiency examination in exceptional cases, upon a written request and a showing of good cause by an applicant. Advanced age or physical infirmity will not individually of themselves constitute sufficient grounds to waive a qualification examination. Experience in fields ancillary to the investment banking or securities business may constitute sufficient [[Page 60086]] grounds to waive a qualification examination.\22\ The Exchange is further proposing to add Interpretations and Policies provision .07. This proposed provision states that any costs borne by the Exchange with respect to registration and examination may be passed through to the applicable ETP Holder. The Exchange believes this addition is necessary to provide ETP Holders with notice that costs may be assessed by the Exchange to comply with the changes to its registration rules.\23\ --------------------------------------------------------------------------- \22\ Proposed provision .06 aligns with NASD Rule 1070(d). The Exchange proposes this provision, in part, to allow for experience in fields ancillary to the investment banking or securities business to potentially constitute sufficient grounds to waive a qualification examination, which is in line with FINRA registration rules. Under current Exchange rules, such experience cannot individually of itself constitute sufficient grounds to waive a qualification examination. \23\ The Exchange is not proposing to add a specific fee to its Fee and Rebate Schedule at this juncture and would make a filing with the Commission pursuant to Section 19(b) of the Act, 15 U.S.C. 78s, prior to implementing any such fee. --------------------------------------------------------------------------- Securities Trader and Securities Trader Principal Registrations The Exchange is proposing to add Interpretations and Policies provisions .03 and .04 to adopt the Securities Trader and Securities Trader Principal registrations. In proposed provision .03, the Exchange will require the Securities Trader Qualification Examination (``Series 57'') and registration for persons meeting the definition of a Securities Trader as set forth in Rule 1.5S.(1). A person registered as a Securities Trader will not be able to function in any other registration category unless he or she is also qualified in such other registration category. For example, a person registered solely as a Securities Trader would not be able to perform all of the functions of a General Securities Representative (Series 7), unless such person had obtained that registration as well. Proposed provision .04 would further require that a Principal who will have supervisory responsibility for securities trading activity on the Exchange to become qualified and registered as a Securities Trader Principal. Qualification as a Securities Trader Principal would require the Series 57 examination as a prerequisite to taking the Series 24 examination. A Person who is qualified and registered as a Securities Trader Principal may only have supervisory responsibilities for the trading activity described in NASD Rule 1032(f)(1), unless such person is separately qualified and registered in another appropriate principal registration category. A person who is registered as a General Securities Principal shall not be qualified to supervise the trading activities described in NASD Rule 1032(f)(1), unless such person has also become qualified and registered as a Securities Trader under NASD Rule 1032(f) by passing the Securities Trader qualification examination and becoming registered as a Securities Trader Principal.\24\ Adopting the Securities Trader and Securities Trader Principal qualification and registration categories will promote consistency and uniformity within the securities industry. --------------------------------------------------------------------------- \24\ Proposed provision .04 aligns with NASD Rule 1022(a)(6)(B). --------------------------------------------------------------------------- Amendments to NSX Rule 2.4, Restrictions The Exchange is proposing amendments to NSX Rule 2.4, Restrictions, that are intended to streamline and clarify the rule requirements. In light of other changes contained in this rule proposal, the text of current NSX Rule 2.4(e) and Interpretations and Policies .01 and .02 has been relocated to NSX Rule 2.2 and the Interpretations and Policies to such rule. In certain areas, the repositioned rule text has been further amended. These changes are proposed to better organize the Exchange's requirements for the qualification, registration and continuing education requirements applicable to registered persons. With respect to the remaining text of NSX Rule 2.4, the Exchange is proposing certain non-substantive amendments designed to enhance the clarity of the rule. Amendments to NSX Rules 2.5, 2.6, 2.7 and 2.11 The Exchange is proposing certain non-substantive, technical or conforming amendments to NSX Rules 2.5, 2.6, 2.7 and 2.11. Current NSX Rule 2.5, Application Procedures for an ETP Holder or to become an Associated Person of an ETP Holder, provides in paragraph (b) that ``[a]pplications for association with an ETP Holder shall be made on Form U4 and such other forms as the Exchange may prescribe, and shall be delivered to the Exchange's Vice President of Regulation or such other officer or employee as designated by the Exchange.'' In view of the Exchange's proposed amendments to NSX Rule 2.2, the text of paragraph (b) is no longer needed and the Exchange proposes to delete this text and denote paragraph (b) as ``Reserved.'' Similarly, paragraph (f) currently provides that ``[e]xcept where, pursuant to Section 17(d) of the Act, the Exchange has been relieved of its responsibility to review and act upon applications for associated persons of an ETP Holder, the procedure set forth in this Chapter shall govern the processing of any such applications.'' The Exchange is proposing to delete this provision because it retains the authority and responsibility to review and approve applications for associated persons of ETP Holders, and the proposed amendments to the qualification and registration requirements discussed in this filing make this current rule text inapposite. Moreover, were the Exchange to enter into an agreement with another SRO to review and act upon applications for associated persons of ETP Holders, such an agreement would be subject to a filing with the Commission pursuant to Section 17(d) of the Act. Accordingly, the Exchange proposes to delete the current text and make paragraph (f) ``Reserved.'' The Exchange is proposing ministerial, non-substantive amendments to NSX Rule 2.6, entitled Revocation of an ETP or an Association with an ETP Holder, NSX Rule 2.7, entitled Voluntary Termination of Rights as an ETP Holder and NSX Rule 2.11, entitled NSX Securities, LLC. NSX Rule 2.6 currently states, in relevant part, that ``[i]n connection with any revocation or voluntary termination of an ETP pursuant to Rule 2.7, the ETP shall be cancelled.'' The Exchange proposes to delete the text referencing a voluntary termination of an ETP from NSX Rule 2.6 and add it to NSX Rule 2.7, where it is more logically placed. Finally, the Exchange proposes a ministerial amendment to Rule 2.11(a)(2) to remove an obsolete reference to the National Association of Securities Dealers (``NASD'') as the unaffiliated SRO having oversight responsibilities for NSX Securities, LLC, the Exchange's outbound order routing facility. The correct reference should be to the Financial Industry Regulatory Authority and the Exchange proposes to amend the rule to denote that fact. Amendments to Chapter XI--Trading Rules The Exchange is proposing to make several amendments to Chapter XI, Trading Rules. First, the Exchange proposes to amend Rule 11.6, Obligations of Market Maker Authorized Traders, to align the text of the rule with the Exchange's proposed rule changes regarding the qualification and registration of Persons Associated with [[Page 60087]] ETP Holders. The Exchange proposes to amend subparagraph (b)(2) of the rule to add text stating that a person who successfully completes the Series 57 qualification examination will be qualified to be registered as a Market Maker Authorized Trader (``MMAT''). The Exchange proposes to remove the Series 7 qualification for registration as an MMAT. The Exchange further proposes to amend subparagraph (b)(2) to eliminate a provision that would allow the Exchange to waive such qualification requirements if the person applying for MMAT status had served as a dealer-specialist or market maker on a registered national securities exchange or association for at least two consecutive years within three years of the date of application. The Exchange believes that requiring the Series 57 as the qualification for registration as an MMAT and the elimination of the waiver provision currently in NSX Rule 11.6(b)(2) will operate to clarify the requirements necessary to qualify as an MMAT and will further promote consistency and uniformity in the rules regarding registration of Associated Persons. The Exchange is further proposing amendments to NSX Rule 11.10, Authorized Traders, to add new paragraph (e). As proposed, the new rule text will state that, to be eligible for registration as an Authorized Trader of an ETP Holder, a person must successfully complete the Series 57 examination and any other training and/or certification programs as may be required by the Exchange. The Exchange believes that the proposed amendments to NSX Rules 11.6 and 11.10 will provide internal consistency within NSX's rules and eliminate a fragmented qualification standard for individuals engaged in trading on the Exchange. Currently under Rule 11.6, an individual is required to pass the Series 7 examination to register as an MMAT. Current Rule 11.10 does not include a similar requirement for an Authorized Trader that will not act as an MMAT. The Exchange proposes to replace the Series 7 qualification with the Series 57 qualification for both Authorized Traders and MMATs, thereby providing a uniform registration requirement. Additionally, the Exchange proposes to change Rule 11.6(b) to clarify that the Exchange will register an MMAT upon receiving a written application from a Market Maker and subject to the eligibility criteria described in the rule. This change is intended to clarify that the MMAT applicant must meet the eligibility criteria set forth in the Rule before the Exchange will register the MMAT. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act \25\ in general, and furthers the objectives of Sections 6(b)(5) \26\ and 6(c)(3)(B) \27\ in particular, in that the amendments are intended to promote just and equitable principles of trade, foster cooperation, and coordination among the SROs responsible for the qualification, registration, and continuing education requirements for registered securities industry personnel, and in general are designed to protect investors the public interest. In addition, the proposed amendments further the objectives of Section 6(c)(3)(B) of the Act, which provides that it is the Exchange's responsibility to prescribe in its rules the standards of training, experience, and competence for ETP Holders and Persons Associated with ETP Holders; the Exchange has the authority under Section 6(c)(3)(B) to bar an individual from becoming an ETP Holder or a person Associated with an ETP Holder, or condition the individual's status as such, if such person does not meet the standards of training, experience and competence that the Exchange prescribes. --------------------------------------------------------------------------- \25\ 15 U.S.C. 78f(b). \26\ 15 U.S.C. 78f(b)(5). \27\ 15 U.S.C. 78f(c)(3)(B). --------------------------------------------------------------------------- The proposed amendments to NSX Rule 1.5, whereby the Exchange proposes to add new definitions for the terms ``ETP Holder,'' ``Person,'' ``Principal,'' ``Principal--Financial and Operational,'' ``Securities Trader,'' and ``Securities Trader Principal,'' are consistent with the statutory provisions in that they add clarity and context to the Exchange's rules regarding securities industry personnel to whom the proposed amended qualification and registration requirements will apply. The Exchange's proposed amendments to certain provisions contained in Chapter II of the NSX rules, entitled ``ETP Holders of the Exchange,'' also satisfy the requirements of Sections (6)(b)(5) and 6(c)(3)(B) of the Act in that, among other things, they prescribe the standards of training, experience, and competence for ETP Holders and their Associated Persons. Specifically, the proposed amendments to NSX Rule 2.2(b)(i) through (iii), providing that each ETP Holder shall require its Associated Persons to agree: (i) To supply the Exchange with information as requested; (ii) to permit the examination by the Exchange of the person's books and records; and (iii) to be regulated by the Exchange and recognize the Exchange's obligations to enforce compliance with its rules, by-laws and policies and the provisions of the Act, are consistent with Section 6(b)(5) in that they are designed to establish standards of conduct for proposed Associated Persons. The provisions will operate to promote cooperation and coordination among persons regulating the securities markets, which is one of the objectives of Section 6(b)(5). Proposed NSX Rule 2.2(c)(i)-(iii) addresses the requirements for ETP Holders to register Principals, and provides an exemption from the two-Principal registration requirement for sole proprietorships and proprietary trading firms, the latter as defined in NSX Rule 2.2(c)(iii). Proposed NSX Rule 2.2(d) contains the requirement for each ETP Holder to register a FINOP. These proposed rule provisions are consistent with the rules of other SROs; their adoption by the Exchange is designed to further enhance cooperation and coordination among those entities responsible for regulating the securities industry, thereby meeting the statutory requirement set forth in Section 6(b)(5). In proposed NSX Rules 2.2(e)(i) and (ii) the Exchange will adopt the uniform industry rules establishing continuing education requirements for the registered personnel. The proposed revisions will contribute to the consistency of application of continuing education requirements and meet the statutory mandate of Section 6(c)(3)(B) that the Exchange's rules be designed to prescribe standards of training and competence for registered personnel associated with its ETP Holders. The proposed continuing education requirements will contribute to uniform standards across the securities industry and avoid unnecessary duplication or inconsistencies among SRO rules. The Exchange's proposed amendments to Interpretations and Policies .01 through .07 of NSX Rule 2.2 also meet the requirements of Sections 6(b)(5) and 6(c)(3)(B) pursuant to the Act. These proposed amendments specify that: (i) The Exchange requires the Series 7 or an equivalent foreign examination module in qualifying persons as General Securities Representatives; (ii) the NYSE Series 14 can be used as a qualification for Principals designated as an ETP Holder's Chief Compliance Officer; (iii) those who meet the qualifications of a Securities Trader must pass the Series 57; (iv) any Principal who supervises Securities Trading activity must qualify as a Securities Trader Principal, and only a Principal qualified as a Securities [[Page 60088]] Trader Principal may supervise Securities Trading activity; (v) ETP Holders must use the Form U4 and Form U5 for registration and termination of ETP Holder personnel; (vi) the Exchange may grant a waiver of an examination requirement in exceptional cases and upon a showing of good cause; and (vii) the Exchange may pass through the reasonable costs associated with such examinations and qualifications to ETP Holders. All of these proposed amendments to the NSX Rule 2.2 Interpretations and Policies are designed to align the Exchange's rules with the qualification and registration requirements of other SROs and thus are designed to promote uniformity and certainty in the securities industry, which is consistent with the statutory mandate of Section 6(b)(5) of the Act that the rules of the Exchange foster coordination and cooperation among those entities regulating the securities markets. The Exchange's proposed amendments to NSX Rules 2.5, 2.6, 2.7, and 2.11 are designed as conforming amendments that resulted from the proposed changes to the Exchange's qualification and registration rules, or are ministerial, non-substantive changes designed to correct deficient or obsolete text and promote clarity and consistency in the Exchange's rules. Such amendments are consistent with Section 6(b)(5) of the Act in that, by enhancing the organization and clarity of the Exchange's rules, they operate to promote just and equitable principles of trade. The Exchange has further proposed amendments Chapter XI, Trading Rules, and specifically to NSX Rules 11.6 and 11.10. The proposed amendments codify the qualification standards for MMATs and for Authorized Traders. The proposed amendments are designed to establish the standard of competence and knowledge required of those categories of registered personnel, which is consistent with the requirements of Section 6(c)(3)(B) of the Act. The adoption of these rule amendments will conform the Exchange's standards those of FINRA and other SROs. 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 proposed amendments are intended to promote transparency in the Exchange's rules, and consistency with the rules of other SROs with respect to the examination, qualification, and continuing education requirements applicable to ETP Holders and their registered personnel. The Exchange believes in that regard that any burden on competition would be clearly outweighed by the important regulatory goal of ensuring clear and consistent requirements applicable across SROs, avoiding duplication, and mitigating any risk of SROs implementing different standards in these important areas. Further, the Exchange does not believe that the proposed amendments will affect competition among securities markets since FINRA and exchanges have adopted similar rules with uniform standards for qualification, registration and continuing education requirements. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has not solicited or received any comments on the proposed rule change from market participants or others. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: A. Significantly affect the protection of investors or the public interest; B. impose any significant burden on competition; and C. become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) \28\ of the Exchange Act and Rule 19b-4(f)(6) thereunder.\29\ --------------------------------------------------------------------------- \28\ 15 U.S.C. 78(s)(b)(3)(A). \29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange's intent to file the proposed rule change, along with a brief description of the text of the proposed rule change, at least five business days prior to the date of the filing of the proposed rule change, or such other time as designated by the Commission. The Exchange provided the Commission with the required notice. --------------------------------------------------------------------------- At any time within sixty (60) days of the filing of such proposed rule change, the Commission may summarily 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. 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-NSX-2016-07 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 No. SR-NSX-2016-07. This file number should be included in the subject line if email is used. To help the Commission process and review 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 a.m. and 3 p.m. eastern time. Copies of such filings will also 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-NSX-2016-07 and should be submitted on or before September 21, 2016. For the Commission by the Division of Trading and Markets, pursuant to the delegated authority.\30\ Robert W. Errett, Deputy Secretary. --------------------------------------------------------------------------- \30\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- [FR Doc. 2016-20883 Filed 8-30-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 169 / Wednesday, August 31, 2016 / Notices 60083
identifying information from Associated with ETP Holders.4 The subject to the examination and
submissions. You should submit only Exchange’s rule proposal is intended to continuing education requirements
information that you wish to make align its rules with those of other self- necessary for their business function;
available publicly. All submissions regulatory organizations (‘‘SROs’’) and (iii) align the Exchange’s qualification,
should refer to File Number SR–NYSE– thus promote consistency within the registration and examination rules with
2016–59 and should be submitted on or securities industry. The Exchange is those of the Financial Industry
before September 21, 2016. also proposing to amend NSX Rule 1.5, Regulatory Authority (‘‘FINRA’’) and
For the Commission, by the Division of Definitions, and make technical or other SROs so as to promote uniform
Trading and Markets, pursuant to delegated conforming changes to certain other standards across the securities industry;
authority.16 NSX rules. (iv) provide for the Securities Trader
Robert W. Errett, The Exchange has designated this rule registration (Series 57) and Securities
proposal as a ‘‘non-controversial’’ rule Trader Principal registration; and (v)
Deputy Secretary.
change pursuant to Section 19(b)(3)(A) reorganize certain rules, add new
[FR Doc. 2016–20892 Filed 8–30–16; 8:45 am]
of the Act 5 and provided the definitions of terms, and make other
BILLING CODE 8011–01–P Commission with the notice required by conforming or ministerial, non-
Rule 19b–4(f)(6)(iii) under the Act.6 substantive amendments designed to
The text of the proposed rule change enhance the comprehensiveness and
SECURITIES AND EXCHANGE is available on the Exchange’s Web site
COMMISSION clarity of the Exchange’s rules. The
at http://www.nsx.com, at the principal proposed changes are discussed below.
office of the Exchange, and at the
[Release No. 34–78676; File No. SR–NSX– Commission’s Public Reference Room. Amendments to NSX Rule 1.5—
2016–07] Definitions
II. Self-Regulatory Organization’s
Self-Regulatory Organizations; Statement of the Purpose of, and The Exchange is proposing to amend
National Stock Exchange, Inc.; Notice Statutory Basis for, the Proposed Rule NSX Rule 1.5 to add new definitions,
of Filing and Immediate Effectiveness Change revise certain definitions in the current
of Proposed Rule Change To Amend rule, and make non-substantive changes
In its filing with the Commission, the
Rules Regarding Qualification, to the rule text. The Exchange first
Exchange included statements
Registration and Continuing Education proposes to amend the definition of an
concerning the purpose of and basis for
for Persons Associated With Equity ETP in NSX Rule 1.5E.(1). As currently
the proposed rule change and discussed
Trading Permit Holders, To Add any comments it received on the defined in the rule, the term ETP ‘‘. . .
Definitions, Amend Definitions, and To proposed rule change. The text of these shall refer to an Equity Trading Permit
Make Technical, Non-Substantive and statements may be examined at the issued by the Exchange for effecting
Conforming Amendments to Rules places specified in Item IV below. The approved securities transactions on the
Exchange has prepared summaries, set Exchange’s trading facilities. An ETP
August 25, 2016. may be issued to a sole proprietor,
forth in sections A, B, and C below, of
Pursuant to Section 19(b)(1) of the the most significant parts of such partnership, corporation, limited
Securities Exchange Act of 1934 (the statements. liability company or other organization
‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule which is a registered broker or dealer
19b–4 thereunder,2 notice is hereby A. Self-Regulatory Organization’s pursuant to Section 15 of the Act, and
given that on August 24, 2016, National Statement of the Purpose of, and which has been approved by the
Stock Exchange, Inc. (‘‘NSX’’ or the Statutory Basis for, the Proposed Rule Exchange.’’
‘‘Exchange’’) filed with the Securities Change Under the Exchange’s proposed
and Exchange Commission 1. Purpose amendment, the definition of an ‘‘ETP’’
(‘‘Commission’’) the proposed rule would retain the text that an ETP shall
The Exchange proposes to amend its refer to an Equity Trading Permit issued
change, as described in Items I, II, and qualification, registration, and
III below, which Items have been by the Exchange for effecting approved
continuing education requirements securities transactions on the
prepared by the Exchange. The applicable to ETP Holders and Persons
Commission is publishing this notice to Exchange’s trading facilities. However,
Associated with ETP Holders. The
solicit comments on the proposed rule the subsequent text in the current rule,
proposed amendments are intended to:
change from interested persons. which provides that an ETP may be
(i) Provide transparency and clarity with
issued to a sole proprietor, partnership,
I. Self-Regulatory Organization’s respect to the Exchange’s registration,
corporation, limited liability company
Statement of the Terms of Substance of qualification, and examination
or other organization which is a
the Proposed Rule Change requirements; (ii) ensure that all persons
registered broker or dealer pursuant to
engaging in trading on the Exchange or
The Exchange is proposing Section 15 of the Act, will be moved to
performing supervisory or operational
amendments to its rules regarding NSX Rule 2.3, entitled ‘‘ETP Holder
functions are properly registered and
qualification, registration and Eligibility,’’ where it is more logically
continuing education requirements 4 Exchange Rule 1.5P.(2) defines ‘‘Person placed given the content of that rule.
applicable to Equity Trading Permit Associated with an ETP Holder’’ as ‘‘. . . any Additionally, the relocated text will be
(‘‘ETP’’) Holders 3 and Persons partner, officer, director, or branch manager of an amended to add a requirement that the
ETP Holder (or any person occupying a similar prospective ETP Holder must be a
mstockstill on DSK3G9T082PROD with NOTICES
status or performing similar functions), any person
16 17 CFR 200.30–3(a)(12). directly or indirectly controlling, controlled by, or
member of another national securities
1 15 U.S.C. 78s(b)(1). under common control with an ETP Holder, or any exchange or national securities
2 17 CFR 240.19b–4. employee of such ETP Holder, except that any association in order to be eligible to
3 Exchange Rule 1.5E.(1) defines the term ‘‘ETP,’’ person associated with an ETP Holder whose become an ETP Holder of NSX. The
in relevant part, as ‘‘. . . an Equity Trading Permit functions are solely clerical or ministerial shall not
be included in the meaning of such terms.’’
Exchange is proposing this amendment
issued by the Exchange for effecting approved
securities transactions on the Exchange’s trading 5 15 U.S.C. 78s(b)(3)(A). because it will not act as the Designated
facilities. . . .’’ 6 17 CFR 240.19b–4(f)(6)(iii). Examining Authority for any ETP
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![60086 Federal Register / Vol. 81, No. 169 / Wednesday, August 31, 2016 / Notices
grounds to waive a qualification another appropriate principal Similarly, paragraph (f) currently
examination.22 The Exchange is further registration category. A person who is provides that ‘‘[e]xcept where, pursuant
proposing to add Interpretations and registered as a General Securities to Section 17(d) of the Act, the
Policies provision .07. This proposed Principal shall not be qualified to Exchange has been relieved of its
provision states that any costs borne by supervise the trading activities responsibility to review and act upon
the Exchange with respect to described in NASD Rule 1032(f)(1), applications for associated persons of an
registration and examination may be unless such person has also become ETP Holder, the procedure set forth in
passed through to the applicable ETP qualified and registered as a Securities this Chapter shall govern the processing
Holder. The Exchange believes this Trader under NASD Rule 1032(f) by of any such applications.’’ The
addition is necessary to provide ETP passing the Securities Trader Exchange is proposing to delete this
Holders with notice that costs may be qualification examination and becoming provision because it retains the
assessed by the Exchange to comply registered as a Securities Trader authority and responsibility to review
with the changes to its registration Principal.24 Adopting the Securities and approve applications for associated
rules.23 Trader and Securities Trader Principal persons of ETP Holders, and the
qualification and registration categories proposed amendments to the
Securities Trader and Securities Trader
will promote consistency and qualification and registration
Principal Registrations
uniformity within the securities requirements discussed in this filing
The Exchange is proposing to add industry. make this current rule text inapposite.
Interpretations and Policies provisions Moreover, were the Exchange to enter
.03 and .04 to adopt the Securities Amendments to NSX Rule 2.4,
into an agreement with another SRO to
Trader and Securities Trader Principal Restrictions
review and act upon applications for
registrations. The Exchange is proposing associated persons of ETP Holders, such
In proposed provision .03, the amendments to NSX Rule 2.4, an agreement would be subject to a
Exchange will require the Securities Restrictions, that are intended to filing with the Commission pursuant to
Trader Qualification Examination streamline and clarify the rule Section 17(d) of the Act. Accordingly,
(‘‘Series 57’’) and registration for requirements. In light of other changes the Exchange proposes to delete the
persons meeting the definition of a contained in this rule proposal, the text current text and make paragraph (f)
Securities Trader as set forth in Rule of current NSX Rule 2.4(e) and ‘‘Reserved.’’
1.5S.(1). A person registered as a Interpretations and Policies .01 and .02 The Exchange is proposing
Securities Trader will not be able to has been relocated to NSX Rule 2.2 and ministerial, non-substantive
function in any other registration the Interpretations and Policies to such amendments to NSX Rule 2.6, entitled
category unless he or she is also rule. In certain areas, the repositioned Revocation of an ETP or an Association
qualified in such other registration rule text has been further amended. with an ETP Holder, NSX Rule 2.7,
category. For example, a person These changes are proposed to better entitled Voluntary Termination of
registered solely as a Securities Trader organize the Exchange’s requirements Rights as an ETP Holder and NSX Rule
would not be able to perform all of the for the qualification, registration and 2.11, entitled NSX Securities, LLC. NSX
functions of a General Securities continuing education requirements Rule 2.6 currently states, in relevant
Representative (Series 7), unless such applicable to registered persons. With part, that ‘‘[i]n connection with any
person had obtained that registration as respect to the remaining text of NSX revocation or voluntary termination of
well. Rule 2.4, the Exchange is proposing an ETP pursuant to Rule 2.7, the ETP
Proposed provision .04 would further certain non-substantive amendments shall be cancelled.’’ The Exchange
require that a Principal who will have designed to enhance the clarity of the proposes to delete the text referencing a
supervisory responsibility for securities rule. voluntary termination of an ETP from
trading activity on the Exchange to NSX Rule 2.6 and add it to NSX Rule
become qualified and registered as a Amendments to NSX Rules 2.5, 2.6, 2.7 2.7, where it is more logically placed.
Securities Trader Principal. and 2.11 Finally, the Exchange proposes a
Qualification as a Securities Trader The Exchange is proposing certain ministerial amendment to Rule
Principal would require the Series 57 non-substantive, technical or 2.11(a)(2) to remove an obsolete
examination as a prerequisite to taking conforming amendments to NSX Rules reference to the National Association of
the Series 24 examination. A Person 2.5, 2.6, 2.7 and 2.11. Current NSX Rule Securities Dealers (‘‘NASD’’) as the
who is qualified and registered as a 2.5, Application Procedures for an ETP unaffiliated SRO having oversight
Securities Trader Principal may only Holder or to become an Associated responsibilities for NSX Securities, LLC,
have supervisory responsibilities for the Person of an ETP Holder, provides in the Exchange’s outbound order routing
trading activity described in NASD Rule paragraph (b) that ‘‘[a]pplications for facility. The correct reference should be
1032(f)(1), unless such person is association with an ETP Holder shall be to the Financial Industry Regulatory
separately qualified and registered in made on Form U4 and such other forms Authority and the Exchange proposes to
as the Exchange may prescribe, and amend the rule to denote that fact.
22 Proposed provision .06 aligns with NASD Rule
1070(d). The Exchange proposes this provision, in
shall be delivered to the Exchange’s Amendments to Chapter XI—Trading
part, to allow for experience in fields ancillary to Vice President of Regulation or such Rules
the investment banking or securities business to other officer or employee as designated
potentially constitute sufficient grounds to waive a by the Exchange.’’ In view of the The Exchange is proposing to make
qualification examination, which is in line with several amendments to Chapter XI,
mstockstill on DSK3G9T082PROD with NOTICES
FINRA registration rules. Under current Exchange Exchange’s proposed amendments to
rules, such experience cannot individually of itself NSX Rule 2.2, the text of paragraph (b) Trading Rules. First, the Exchange
constitute sufficient grounds to waive a is no longer needed and the Exchange proposes to amend Rule 11.6,
qualification examination. proposes to delete this text and denote Obligations of Market Maker Authorized
23 The Exchange is not proposing to add a specific
paragraph (b) as ‘‘Reserved.’’ Traders, to align the text of the rule with
fee to its Fee and Rebate Schedule at this juncture
and would make a filing with the Commission
the Exchange’s proposed rule changes
pursuant to Section 19(b) of the Act, 15 U.S.C. 78s, 24 Proposed provision .04 aligns with NASD Rule regarding the qualification and
prior to implementing any such fee. 1022(a)(6)(B). registration of Persons Associated with
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![60088 Federal Register / Vol. 81, No. 169 / Wednesday, August 31, 2016 / Notices
Trader Principal may supervise examination, qualification, and including whether the proposed rule
Securities Trading activity; (v) ETP continuing education requirements change is consistent with the Act.
Holders must use the Form U4 and applicable to ETP Holders and their Comments may be submitted by any of
Form U5 for registration and registered personnel. The Exchange the following methods:
termination of ETP Holder personnel; believes in that regard that any burden
(vi) the Exchange may grant a waiver of Electronic Comments
on competition would be clearly
an examination requirement in outweighed by the important regulatory • Use the Commission’s Internet
exceptional cases and upon a showing goal of ensuring clear and consistent comment form (http://www.sec.gov/
of good cause; and (vii) the Exchange requirements applicable across SROs, rules/sro.shtml); or
may pass through the reasonable costs avoiding duplication, and mitigating
associated with such examinations and any risk of SROs implementing different • Send an email to rule-comments@
qualifications to ETP Holders. All of standards in these important areas. sec.gov. Please include File Number SR–
these proposed amendments to the NSX Further, the Exchange does not NSX–2016–07 on the subject line.
Rule 2.2 Interpretations and Policies are believe that the proposed amendments Paper Comments
designed to align the Exchange’s rules will affect competition among securities
with the qualification and registration markets since FINRA and exchanges • Send paper comments in triplicate
requirements of other SROs and thus are have adopted similar rules with uniform to Brent J. Fields, Secretary, Securities
designed to promote uniformity and standards for qualification, registration and Exchange Commission, 100 F Street
certainty in the securities industry, and continuing education requirements. NE., Washington, DC 20549–1090.
which is consistent with the statutory
mandate of Section 6(b)(5) of the Act C. Self-Regulatory Organization’s All submissions should refer to File No.
that the rules of the Exchange foster Statement on Comments on the SR–NSX–2016–07. This file number
coordination and cooperation among Proposed Rule Change Received From should be included in the subject line
those entities regulating the securities Members, Participants or Others if email is used. To help the
markets. The Exchange has not solicited or Commission process and review
The Exchange’s proposed received any comments on the proposed comments more efficiently, please use
amendments to NSX Rules 2.5, 2.6, 2.7, rule change from market participants or only one method. The Commission will
and 2.11 are designed as conforming others. post all comments on the Commission’s
amendments that resulted from the Internet Web site (http://www.sec.gov/
proposed changes to the Exchange’s III. Date of Effectiveness of the rules/sro.shtml). Copies of the
qualification and registration rules, or Proposed Rule Change and Timing for submission, all subsequent
are ministerial, non-substantive changes Commission Action amendments, all written statements
designed to correct deficient or obsolete Because the foregoing proposed rule with respect to the proposed rule
text and promote clarity and change does not: change that are filed with the
consistency in the Exchange’s rules. A. Significantly affect the protection Commission, and all written
Such amendments are consistent with of investors or the public interest; communications relating to the
Section 6(b)(5) of the Act in that, by B. impose any significant burden on proposed rule change between the
enhancing the organization and clarity competition; and Commission and any person, other than
of the Exchange’s rules, they operate to C. become operative for 30 days from those that may be withheld from the
promote just and equitable principles of the date on which it was filed, or such public in accordance with the
trade. shorter time as the Commission may provisions of 5 U.S.C. 552, will be
The Exchange has further proposed designate, it has become effective available for Web site viewing and
amendments Chapter XI, Trading Rules, pursuant to Section 19(b)(3)(A) 28 of the printing in the Commission’s Public
and specifically to NSX Rules 11.6 and Exchange Act and Rule 19b–4(f)(6) Reference Room, 100 F Street NE.,
11.10. The proposed amendments thereunder.29 Washington, DC 20549, on official
codify the qualification standards for At any time within sixty (60) days of business days between the hours of 10
MMATs and for Authorized Traders. the filing of such proposed rule change, a.m. and 3 p.m. eastern time. Copies of
The proposed amendments are designed the Commission may summarily such filings will also be available for
to establish the standard of competence temporarily suspend such rule change if inspection and copying at the principal
and knowledge required of those it appears to the Commission that such office of the Exchange. All comments
categories of registered personnel, action is necessary or appropriate in the received will be posted without change;
which is consistent with the public interest, for the protection of the Commission does not edit personal
requirements of Section 6(c)(3)(B) of the investors, or otherwise in furtherance of identifying information from
Act. The adoption of these rule the purposes of the Act. submissions. You should submit only
amendments will conform the information that you wish to make
IV. Solicitation of Comments
Exchange’s standards those of FINRA available publicly. All submissions
and other SROs. Interested persons are invited to should refer to file number SR–NSX–
submit written data, views, and 2016–07 and should be submitted on or
B. Self-Regulatory Organization’s arguments concerning the foregoing, before September 21, 2016.
Statement on Burden on Competition
For the Commission by the Division of
The Exchange does not believe that 28 15 U.S.C. 78(s)(b)(3)(A).
Trading and Markets, pursuant to the
29 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
the proposed rule change will impose
mstockstill on DSK3G9T082PROD with NOTICES
4(f)(6)(iii) requires the Exchange to give the delegated authority.30
any burden on competition that is not Commission written notice of the Exchange’s intent Robert W. Errett,
necessary or appropriate in furtherance to file the proposed rule change, along with a brief
of the purposes of the Act. The description of the text of the proposed rule change, Deputy Secretary.
proposed amendments are intended to at least five business days prior to the date of the [FR Doc. 2016–20883 Filed 8–30–16; 8:45 am]
filing of the proposed rule change, or such other
promote transparency in the Exchange’s time as designated by the Commission. The
BILLING CODE 8011–01–P
rules, and consistency with the rules of Exchange provided the Commission with the
other SROs with respect to the required notice. 30 17 CFR 200.30–3(a)(12).
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Document Created: 2018-02-02 12:15:02
Document Modified: 2018-02-02 12:15:02
| 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 60083 |
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