82 FR 8479 - Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the Examination Requirement for CHX Market Maker Authorized Traders

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 15 (January 25, 2017)

[Federal Register Volume 82, Number 15 (Wednesday, January 25, 2017)]
[Notices]
[Pages 8479-8481]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-01607]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79822; File No. SR-CHX-2017-01]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the Examination Requirement for CHX Market Maker Authorized 
Traders

January 18, 2017.
    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 6, 2017 the Chicago Stock Exchange, Inc. (``CHX'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CHX proposes to amend the Rules of the Exchange (``CHX Rules'') to 
modify the examination requirement for CHX Market Maker Authorized 
Traders (``MMATs''). The text of this proposed rule change is available 
on the Exchange's Web site at (www.chx.com) and in 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 CHX included statements 
concerning the purpose of and basis for the proposed rule changes [sic] 
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 CHX 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 Changes

1. Purpose
    The Exchange proposes to amend CHX Rules to modify the examination 
requirement for CHX Market Maker Authorized Traders (``MMATs''). 
Specifically, the Exchange proposes to eliminate the requirement that 
prospective MMATs successfully complete the CHX Market Maker Authorized 
Trader Exam, which is an examination currently maintained and 
administered by the Exchange for prospective MMATs. In lieu of the CHX 
Market Maker Authorized Trader Exam, the Exchange proposes to require 
prospective MMATs to successfully complete the Series 57 Securities 
Trader Examination \3\ and any other training and/or certification 
programs as may be required the Exchange.
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    \3\ A Representative (as defined under CHX Article 6, Rule 2(b)) 
that is engaged in securities trading activities, on either an 
agency or principal basis, for the Participant (as defined under CHX 
Article 1, Rule 1(s)) with which the Representative is associated, 
must register with the Exchange as a Securities Trader and pass the 
Series 57 Securities Trader Examination. See CHX Article 6, Rule 
3(a)(1).
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    The Exchange notes that the proposed rule change would harmonize 
the Exchange's MMAT examination requirement with the MMAT examination 
requirements of other national securities exchanges that require 
prospective MMATs (or equivalents) to successfully complete the Series 
57 Securities Trader Examination.\4\
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    \4\ See, e.g., NYSE Arca Equities Rule 7.21(b)(2). Other markets 
do not explicitly recognize an MMAT registration category but 
require any person engaged in the purchase or sale of securities or 
other similar instruments for the account of a member organization, 
which would include market maker traders, to be registered as a 
Securities Trader and pass the Series 57 Securities Trader 
Examination. See e.g., paragraph .10 of the Supplementary Material 
under NYSE Rule 345; see also, e.g., NASDAQ PHLX Rule 613(f)(2).
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Background
    Current Article 16, Rule 3(b) provides the registration 
requirements for MMATs. Thereunder, current paragraph (b)(2) provides 
that to be eligible for registration as an MMAT, a person must be 
registered with the Exchange as provided in Article 6 and complete any 
other training and/or certification programs as may be required. 
Moreover, current paragraph .01(b) of the Interpretations and Policies 
of Article 6, Rule 3 provides that prior to the Exchange approving a 
Participant's request to register an individual as an MMAT, such 
individual must successfully complete the Market Maker Authorized 
Trader Exam.
    In order to further streamline and bring consistency to the 
qualification and registration requirements for MMATs (or equivalents) 
across different markets, the Exchange now proposes to eliminate the 
Market Maker Authorized Trader Exam and instead require prospective 
MMATs to successfully complete the Series 57 Securities Trader 
Examination in order to satisfy the Exchange's MMAT examination 
requirement. To this end, the Exchange proposes to delete current 
paragraph .01(b) of the Interpretations and Policies of Article 6, Rule 
3 in its entirety and amend current Article 16, Rule 3(b)(2) to provide 
as follows:

    To be eligible for registration as a MMAT, a person must 
successfully complete the Series 57 Securities Trader Examination 
and any other training and/or certification programs as may be 
required by the Exchange.

The Exchange does not propose to amend or modify any other requirements 
related to MMATs or Market Makers in general.

[[Page 8480]]

2. Statutory Basis
    The Exchange believes that proposed rule change is consistent with 
Section 6(b) of the Act \5\ in general and Section 6(b)(5) of the Act 
\6\ in particular, which requires, among other things, that the 
Exchange's rules be designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, and to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and, in general, protect investors and the public 
interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes that the proposed rule change 
will remove impediments to and perfect the mechanism of a free and open 
market and a national market system by promoting consistency and 
uniformity among different markets \7\ regarding the qualification and 
registration requirements for individuals engaged in market making 
activities. For those individuals that are engaged in market making 
activities across different markets, the proposed rule change will 
result in efficiencies with respect to such individuals' registration 
and compliance efforts.
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    \7\ See supra note 4.
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B. Self-Regulatory Organization's Statement of Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes that 
the proposed rule change will reduce the regulatory burden placed on 
market participants engaged in market making activities across 
different markets. The Exchange believes that the harmonization of the 
MMAT examination requirements across the various markets will reduce 
burdens on competition by removing impediments to participation in the 
national market system.

C. Self-Regulatory Organization's Statement on Comments Regarding the 
Proposed Rule Changes Received From Members, Participants or Others

    No written comments were either solicited or received.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6)(iii) thereunder.\9\ 
Because the foregoing proposed rule change does not: (i) Significantly 
affect the protection of investors or the public interest; (ii) impose 
any significant burden on competition; and (iii) become operative for 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, it has become effective pursuant to 
Section 19(b)(3)(A)(iii) of the Act \10\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ In addition, Rule 19b-4(f)(6) requires a self-regulatory 
organization to give the Commission written notice of its intent to 
file the proposed rule change at least five business days prior to 
the date of filing of the proposed rule change, or such shorter time 
as designated by the Commission. The Exchange has satisfied this 
requirement. 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. In this filing, the 
Exchange has asked that the Commission waive the requirement that the 
proposed rule change not become operative for 30 days after the date of 
the filing so that it may become operative on January 9, 2017.
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    \12\ Id.
    \13\ Id.
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    The Exchange notes that the proposal meets the required 
qualifications for effectiveness on filing under Section 19(b)(3)(A) of 
the Act \14\ and paragraph (f)(6) of Rule 19b-4 thereunder.\15\ As 
such, the Exchange has designated this rule filing as non-controversial 
under Section 19(b)(3)(A) of the Act \16\ and paragraph (f)(6) of Rule 
19b-4 thereunder.\17\ Specifically, the Exchange notes that the waiver 
is appropriate as it would be unduly burdensome to prospective MMATs, 
especially those who have already passed the Series 57 Securities 
Trader Examination, to require them to take the CHX Market Maker 
Authorized Trader Exam weeks or days before the proposed rule change is 
to become operative. Moreover, based on the same reasons, waiver of the 
30-day operative delay is consistent with the protection of investors 
and the public interest.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4.
    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4.
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
while not imposing any significant burden on competition because it 
will make the Chx's qualification and registration requirements for 
MMATs consistent with the qualification requirements of the other 
markets. Therefore, the Commission hereby waives the 30-day operative 
delay and designates the proposed rule change to be operative on 
January 9, 2017.\18\
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    \18\ 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).
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    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 under 
Section 19(b)(2)(B) of the Act 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 proposal is 
consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File No. SR-CHX-2017-01 on the subject line.

Paper Comments

     Send paper comments in triplicate to Robert W. Errett, 
Deputy Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-CHX-2017-01. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the

[[Page 8481]]

Commission, and all written communications relating to the proposed 
rule changes 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 CHX. 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 No. SR-CHX-2017-01 and should be submitted on or 
before February 15, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01607 Filed 1-24-17; 8:45 am]
 BILLING CODE 8011-01-P