83 FR 47654 - Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Rules Relating to Categories of Registration and Respective Qualification Examinations Required for Members That Engage in Trading Activities on the Exchange
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 183 (September 20, 2018)
Federal Register Volume 83, Issue 183 (September 20, 2018)
| Page Range | 47654-47657 | |
| FR Document | 2018-20438 |
[Federal Register Volume 83, Number 183 (Thursday, September 20, 2018)] [Notices] [Pages 47654-47657] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-20438] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84140; File No. SR-CboeEDGA-2018-015] Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Rules Relating to Categories of Registration and Respective Qualification Examinations Required for Members That Engage in Trading Activities on the Exchange September 14, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on September 7, 2018, Cboe EDGA Exchange, Inc. (the ``Exchange'' or ``EDGA'') 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. --------------------------------------------------------------------------- \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 to amend its rules relating to categories of registration and respective qualification examinations required for Members that engage in trading activities on the Exchange. The text of the proposed rule change is available at the Exchange's website at www.markets.cboe.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. [[Page 47655]] A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The SEC recently approved a proposed rule change to restructure the FINRA representative-level qualification examination program.\3\ The rule change, which will become effective on October 1, 2018, restructures the examination program into a more efficient format whereby all new representative-level applicants will be required to take a general knowledge examination (the Securities Industry Essentials Examination (``SIE'')) and a tailored, specialized knowledge examination (a revised representative-level qualification examination) for their particular registered role. Individuals are not required to be associated with an Exchange or any other self-regulatory organization (``SRO'') member to be eligible to take the SIE. However, passing the SIE alone will not qualify an individual for registration with the Exchange. To be eligible for registration, an individual must also be associated with a firm, pass an appropriate qualification examination for a representative or principal and satisfy the other requirements relating to the registration process. --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 81098 (July 7, 2017), 82 FR 32419 (July 13, 2017) (Order Approving File No. SR- FINRA-2017-007). --------------------------------------------------------------------------- The SIE would assess basic product knowledge; the structure and function of the securities industry markets, regulatory agencies and their functions; and regulated and prohibited practices. In particular, the SIE will cover four major areas. The first, ``Knowledge of Capital Markets,'' focuses on topics such as types of markets and offerings, broker-dealers and depositories, and economic cycles. The second, ``Understanding Products and Their Risks,'' covers securities products at a high level as well as associated investment risks. The third, ``Understanding Trading, Customer Accounts and Prohibited Activities,'' focuses on accounts, orders, settlement and prohibited activities. The final area, ``Overview of the Regulatory Framework,'' encompasses topics such as SROs, registration requirements and specified conduct rules. It's anticipated that the SIE would include 75 scored questions plus an additional 10 unscored pretest questions. The passing score would be determined through methodologies compliant with testing industry standards used to develop examinations and set passing standards. The restructured program eliminates duplicative testing of general securities knowledge on the current representative-level qualification examinations by moving such content into the SIE. The SIE will test fundamental securities related knowledge, including knowledge of basic products, the structure and function of the securities industry, the regulatory agencies and their functions and regulated and prohibited practices, whereas the revised representative-level qualification examinations will test knowledge relevant to day-to-day activities, responsibilities and job functions of representatives. The SIE was developed in consultation with a committee of industry representatives and representatives of several other SROs. Each of the current representative-level examinations covers general securities knowledge, with the exception of the Research Analyst (Series 86 and 87) examinations. The Exchange proposes to require that effective October 1, 2018, new applicants seeking to register in a representative capacity with the Exchange must pass the SIE examination [sic] before their registrations can become effective. The Exchange proposes to make the requirement operative on October 1, 2018 to coincide with the effective date of FINRA's requirement. The Exchange notes that individuals who are registered as of October 1, 2018 are eligible to maintain their registrations without being subject to any additional requirements. Individuals who had been registered within the past two years prior to October 1, 2018, would also be eligible to maintain those registrations without being subject to any additional requirements, provided they register within two years from the date of their last registration. However, with respect to an individual who is not registered on the effective date of the proposed rule change but was registered within the past two years prior to the effective date of the proposed rule change, the individual's SIE status in the CRD system would be administratively terminated if such individual does not register with the Exchange within four years from the date of the individual's last registration. The Exchange also notes that consistent with Interpretation and Policy .01(b) of Rule 2.5, the Exchange will consider waivers of the SIE alone or the SIE and the representative or principal-level examination(s) for Members who are seeking registration in a representative- or principal-level registration category.\4\ --------------------------------------------------------------------------- \4\ Pursuant to a Regulatory Services Agreement between FINRA and the Exchange, FINRA provides the Exchange certain exam waiver services in responding to exam waiver requests from Exchange Members. --------------------------------------------------------------------------- Lastly, the Exchange proposes to eliminate references in its rules to alternative foreign examination modules, along with specific references to the Series 17, 37 and 38 examinations. Particularly, the Exchange notes that FINRA recently announced it was eliminating the United Kingdom Securities Representative and the Canadian Securities Representative registration categories, along with the respective associated exams (i.e., Series 17, Series 37 and Series 38).\5\ FINRA also stated that it intended to provide individuals who are associated persons of firms and who hold foreign registrations an alternative, more flexible, process to obtain an Exchange representative-level registration.\6\ The Exchange believes that there is sufficient overlap between the SIE and foreign qualification requirements to permit them to act as exemptions to the SIE. As such, the Exchange proposes to provide that individuals who are in good standing as representatives with the Financial Conduct Authority in the United Kingdom or with a Canadian stock exchange or securities regulator would be exempt from the requirement to pass the SIE, and thus would be required only to pass a specialized knowledge examination to register with the Exchange as a representative. The proposed approach would provide individuals with a United Kingdom or Canadian qualification more flexibility to obtain an Exchange representative-level registration. The Exchange notes that FINRA has adopted a similar rule.\7\ --------------------------------------------------------------------------- \5\ See Securities Exchange Act Release No. 81098 (July 7, 2017), 82 FR 32419 (July 13, 2017) (Order Approving File No. SR- FINRA-2017-007). \6\ Id. \7\ Id. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ``Act'') and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.\8\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \9\ requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable [[Page 47656]] principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, 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) \10\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78f(b). \9\ 15 U.S.C. 78f(b)(5). \10\ Id. --------------------------------------------------------------------------- The Exchange believes that the proposed rule change will improve the efficiency of the Exchange's examination requirements, without compromising the qualification standards, by eliminating duplicative testing of general securities knowledge on examinations. FINRA has indicated that the SIE was developed in an effort to adopt an examination that would assess basic product knowledge; the structure and function of the securities industry markets, regulatory agencies and their functions; and regulated and prohibited practices. The Exchange also notes that the introduction of the SIE and expansion of the pool of individuals who are eligible to take the SIE, has the potential of enhancing the pool of prospective securities industry professionals by introducing them to securities laws, rules and regulations and appropriate conduct before they join the industry in a registered capacity. Lastly, the Exchange notes adopting the SIE requirement is consistent with the requirement recently adopted by FINRA.\11\ --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release No. 81098 (July 7, 2017), 82 FR 32419 (July 13, 2017) (Order Approving File No. SR- FINRA-2017-007). --------------------------------------------------------------------------- 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 believes that the proposed rule change, which harmonizes its rules with recent rule changes adopted by FINRA and which is being filed in conjunction with similar filings by the other national securities exchanges, will reduce the regulatory burden placed on market participants engaged in trading activities across different markets. The Exchange believes that the harmonization of these registration requirements across the various markets will reduce burdens on competition by removing impediments to participation in the national market system and promoting competition among participants across the multiple national securities exchanges. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b- 4(f)(6) thereunder. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78s(b)(3)(A). --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days from the date of filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative on October 1, 2018 to coincide with the effective date of FINRA's proposed rule change on which the proposal is based.\14\ The waiver of the operative delay would make the Exchange's qualification requirements consistent with those of FINRA at the same time that FINRA does. Therefore, the Commission believes that the waiver of the 30-day operative delay is consistent with the protection of investors and the public interest and hereby waives the 30-day operative delay and designates the proposal operative on October 1, 2018.\15\ --------------------------------------------------------------------------- \13\ 17 CFR 240.19b-4(f)(6)(iii). \14\ See supra note 5. \15\ 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. 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 CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File No. SR-CboeEDGA-2018-015 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 No. SR-CboeEDGA-2018-015. 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 website (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 website 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 such filing will also be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-CboeEDGA-2018-015 and should [[Page 47657]] be submitted on or before October 11, 2018. --------------------------------------------------------------------------- \16\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-20438 Filed 9-19-18; 8:45 am] BILLING CODE 8011-01-P
![47654 Federal Register / Vol. 83, No. 183 / Thursday, September 20, 2018 / Notices
number should be included on the of 1934 (‘‘Act’’) 1 and Rule 19b–4 SECURITIES AND EXCHANGE
subject line if email is used. To help the thereunder,2 a proposed rule change to COMMISSION
Commission process and review your modify investments of the First Trust
comments more efficiently, please use TCW Unconstrained Plus Bond ETF, the [Release No. 34–84140; File No. SR–
only one method. The Commission will shares of which are currently listed and CboeEDGA–2018–015]
post all comments on the Commission’s traded on the Exchange pursuant to
internet website (http://www.sec.gov/ NYSE Arca Rule 8.600–E. The proposed Self-Regulatory Organizations; Cboe
rules/sro.shtml). Copies of the rule change was published for comment EDGA Exchange, Inc.; Notice of Filing
submission, all subsequent in the Federal Register on August 1, and Immediate Effectiveness of a
amendments, all written statements 2018.3 The Commission has received no Proposed Rule Change To Amend Its
with respect to the proposed rule comment letters on the proposed rule Rules Relating to Categories of
change that are filed with the change. Registration and Respective
Commission, and all written Qualification Examinations Required
communications relating to the Section 19(b)(2) of the Act 4 provides for Members That Engage in Trading
proposed rule change between the that within 45 days of the publication of Activities on the Exchange
Commission and any person, other than notice of the filing of a proposed rule
those that may be withheld from the change, or within such longer period up September 14, 2018.
public in accordance with the to 90 days as the Commission may Pursuant to Section 19(b)(1) of the
provisions of 5 U.S.C. 552, will be designate if it finds such longer period Securities Exchange Act of 1934 (the
available for website viewing and to be appropriate and publishes its ‘‘Act’’),1 and Rule 19b–4 thereunder,2
printing in the Commission’s Public reasons for so finding, or as to which the notice is hereby given that on
Reference Room, 100 F Street NE, self-regulatory organization consents, September 7, 2018, Cboe EDGA
Washington, DC 20549 on official the Commission shall either approve the Exchange, Inc. (the ‘‘Exchange’’ or
business days between the hours of proposed rule change, disapprove the ‘‘EDGA’’) filed with the Securities and
10:00 a.m. and 3:00 p.m. Copies of the proposed rule change, or institute Exchange Commission (‘‘Commission’’)
filing also will be available for proceedings to determine whether the the proposed rule change as described
inspection and copying at the principal proposed rule change should be in Items I and II below, which Items
office of the Exchange. All comments disapproved. The 45th day after have been prepared by the Exchange.
received will be posted without change. publication of the notice for this The Commission is publishing this
Persons submitting comments are proposed rule change is September 15, notice to solicit comments on the
cautioned that we do not redact or edit 2018. The Commission is extending this proposed rule change from interested
personal identifying information from persons.
45-day time period.
comment submissions. You should
submit only information that you wish The Commission finds it appropriate I. Self-Regulatory Organization’s
to make available publicly. All to designate a longer period within Statement of the Terms of Substance of
submissions should refer to File which to take action on the proposed the Proposed Rule Change
Number SR–C2–2018–020 and should rule change so that it has sufficient time
be submitted on or before October 11, to consider the proposed rule change. The Exchange is proposing to amend
2018. Accordingly, the Commission, pursuant its rules relating to categories of
registration and respective qualification
For the Commission, by the Division of to Section 19(b)(2) of the Act,5
examinations required for Members that
Trading and Markets, pursuant to delegated designates October 30, 2018 as the date
engage in trading activities on the
authority.16 by which the Commission shall either
Exchange.
Eduardo A. Aleman, approve or disapprove, or institute
Assistant Secretary. proceedings to determine whether to The text of the proposed rule change
disapprove, the proposed rule change is available at the Exchange’s website at
[FR Doc. 2018–20431 Filed 9–19–18; 8:45 am]
(File No. SR–NYSEArca–2018–43). www.markets.cboe.com, at the principal
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office of the Exchange, and at the
For the Commission, by the Division of Commission’s Public Reference Room.
Trading and Markets, pursuant to delegated
SECURITIES AND EXCHANGE authority.6 II. Self-Regulatory Organization’s
COMMISSION Statement of the Purpose of, and
Eduardo A. Aleman,
[Release No. 34–84123; File No. SR– Statutory Basis for, the Proposed Rule
Assistant Secretary.
NYSEArca–2018–43] Change
[FR Doc. 2018–20437 Filed 9–19–18; 8:45 am]
Self-Regulatory Organizations; NYSE BILLING CODE 8011–01–P In its filing with the Commission, the
Arca, Inc.; Notice of Designation of a Exchange included statements
Longer Period for Commission Action concerning the purpose of and basis for
on a Proposed Rule Change Regarding the proposed rule change and discussed
Investments of the First Trust TCW any comments it received on the
Unconstrained Plus Bond ETF proposed rule change. The text of these
statements may be examined at the
September 14, 2018. places specified in Item IV below. The
amozie on DSK3GDR082PROD with NOTICES1
On July 11, 2018, NYSE Arca, Inc. 1 15 U.S.C. 78s(b)(1). Exchange has prepared summaries, set
(‘‘Exchange’’) filed with the Securities 2 17 CFR 240.19b–4. forth in Sections A, B, and C below, of
and Exchange Commission 3 See Securities Exchange Act Release No. 83720 the most significant parts of such
(‘‘Commission’’), pursuant to Section (July 26, 2018), 83 FR 37560. statements.
19(b)(1) of the Securities Exchange Act 4 15 U.S.C. 78s(b)(2).
5 Id. 1 15 U.S.C. 78s(b)(1).
16 17 CFR 200.30–3(a)(12). 6 17 CFR 200.30–3(a)(31). 2 17 CFR 240.19b–4.
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A. Self-Regulatory Organization’s The restructured program eliminates seeking registration in a representative-
Statement of the Purpose of, and duplicative testing of general securities or principal-level registration category.4
Statutory Basis for, the Proposed Rule knowledge on the current Lastly, the Exchange proposes to
Change representative-level qualification eliminate references in its rules to
examinations by moving such content alternative foreign examination
1. Purpose modules, along with specific references
into the SIE. The SIE will test
The SEC recently approved a fundamental securities related to the Series 17, 37 and 38
proposed rule change to restructure the knowledge, including knowledge of examinations. Particularly, the
FINRA representative-level qualification basic products, the structure and Exchange notes that FINRA recently
examination program.3 The rule change, function of the securities industry, the announced it was eliminating the
which will become effective on October regulatory agencies and their functions United Kingdom Securities
1, 2018, restructures the examination and regulated and prohibited practices, Representative and the Canadian
program into a more efficient format whereas the revised representative-level Securities Representative registration
whereby all new representative-level qualification examinations will test categories, along with the respective
applicants will be required to take a knowledge relevant to day-to-day associated exams (i.e., Series 17, Series
general knowledge examination (the activities, responsibilities and job 37 and Series 38).5 FINRA also stated
Securities Industry Essentials functions of representatives. The SIE that it intended to provide individuals
Examination (‘‘SIE’’)) and a tailored, was developed in consultation with a who are associated persons of firms and
specialized knowledge examination (a committee of industry representatives who hold foreign registrations an
revised representative-level alternative, more flexible, process to
and representatives of several other
qualification examination) for their obtain an Exchange representative-level
SROs. Each of the current
particular registered role. Individuals registration.6 The Exchange believes
representative-level examinations
are not required to be associated with an that there is sufficient overlap between
covers general securities knowledge,
Exchange or any other self-regulatory the SIE and foreign qualification
with the exception of the Research
organization (‘‘SRO’’) member to be requirements to permit them to act as
Analyst (Series 86 and 87)
eligible to take the SIE. However, exemptions to the SIE. As such, the
examinations. Exchange proposes to provide that
passing the SIE alone will not qualify an
individual for registration with the The Exchange proposes to require that individuals who are in good standing as
Exchange. To be eligible for registration, effective October 1, 2018, new representatives with the Financial
an individual must also be associated applicants seeking to register in a Conduct Authority in the United
with a firm, pass an appropriate representative capacity with the Kingdom or with a Canadian stock
qualification examination for a Exchange must pass the SIE exchange or securities regulator would
representative or principal and satisfy examination [sic] before their be exempt from the requirement to pass
the other requirements relating to the registrations can become effective. The the SIE, and thus would be required
registration process. Exchange proposes to make the only to pass a specialized knowledge
The SIE would assess basic product requirement operative on October 1, examination to register with the
knowledge; the structure and function 2018 to coincide with the effective date Exchange as a representative. The
of the securities industry markets, of FINRA’s requirement. proposed approach would provide
regulatory agencies and their functions; The Exchange notes that individuals individuals with a United Kingdom or
and regulated and prohibited practices. who are registered as of October 1, 2018 Canadian qualification more flexibility
In particular, the SIE will cover four to obtain an Exchange representative-
are eligible to maintain their
major areas. The first, ‘‘Knowledge of level registration. The Exchange notes
registrations without being subject to
Capital Markets,’’ focuses on topics such that FINRA has adopted a similar rule.7
any additional requirements.
as types of markets and offerings, Individuals who had been registered 2. Statutory Basis
broker-dealers and depositories, and within the past two years prior to
economic cycles. The second, The Exchange believes the proposed
October 1, 2018, would also be eligible rule change is consistent with the
‘‘Understanding Products and Their to maintain those registrations without
Risks,’’ covers securities products at a Securities Exchange Act of 1934 (the
being subject to any additional ‘‘Act’’) and the rules and regulations
high level as well as associated requirements, provided they register
investment risks. The third, thereunder applicable to the Exchange
within two years from the date of their and, in particular, the requirements of
‘‘Understanding Trading, Customer last registration. However, with respect
Accounts and Prohibited Activities,’’ Section 6(b) of the Act.8 Specifically,
to an individual who is not registered the Exchange believes the proposed rule
focuses on accounts, orders, settlement on the effective date of the proposed
and prohibited activities. The final area, change is consistent with the Section
rule change but was registered within 6(b)(5) 9 requirements that the rules of
‘‘Overview of the Regulatory the past two years prior to the effective
Framework,’’ encompasses topics such an exchange be designed to prevent
date of the proposed rule change, the fraudulent and manipulative acts and
as SROs, registration requirements and individual’s SIE status in the CRD practices, to promote just and equitable
specified conduct rules. It’s anticipated system would be administratively
that the SIE would include 75 scored terminated if such individual does not 4 Pursuant to a Regulatory Services Agreement
questions plus an additional 10 register with the Exchange within four between FINRA and the Exchange, FINRA provides
unscored pretest questions. The passing years from the date of the individual’s the Exchange certain exam waiver services in
amozie on DSK3GDR082PROD with NOTICES1
score would be determined through responding to exam waiver requests from Exchange
last registration. The Exchange also Members.
methodologies compliant with testing notes that consistent with Interpretation 5 See Securities Exchange Act Release No. 81098
industry standards used to develop and Policy .01(b) of Rule 2.5, the (July 7, 2017), 82 FR 32419 (July 13, 2017) (Order
examinations and set passing standards. Exchange will consider waivers of the Approving File No. SR–FINRA–2017–007).
6 Id.
3 See Securities Exchange Act Release No. 81098
SIE alone or the SIE and the 7 Id.
(July 7, 2017), 82 FR 32419 (July 13, 2017) (Order
representative or principal-level 8 15 U.S.C. 78f(b).
Approving File No. SR–FINRA–2017–007). examination(s) for Members who are 9 15 U.S.C. 78f(b)(5).
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be submitted on or before October 11, FOR FURTHER INFORMATION CONTACT: activities. Applicant does not invest in
2018. Rochelle Kauffman Plesset, Senior securities for short-term speculative
For the Commission, by the Division of Counsel, at (202) 551–6840, or Nadya B. purposes.
Trading and Markets, pursuant to delegated Roytblat, Assistant Chief Counsel, at
Applicant’s Legal Analysis
authority.16 (202) 551–6825 (Division of Investment
Eduardo A. Aleman, Management, Chief Counsel’s Office). 1. Applicant seeks an order under
Assistant Secretary. SUPPLEMENTARY INFORMATION: The Section 3(b)(2) of the Act declaring that
following is a summary of the it is primarily engaged in a business
[FR Doc. 2018–20438 Filed 9–19–18; 8:45 am]
application. The complete application other than that of investing, reinvesting,
BILLING CODE 8011–01–P
may be obtained via the Commission’s owning, holding or trading in securities
website by searching for the file and therefore is not an investment
number, or applicant using the company as defined in the Act.
SECURITIES AND EXCHANGE
Company name box, at http:// 2. Section 3(a)(l)(A) of the Act defines
COMMISSION
www.sec.gov/search/search.htm or by the term ‘‘investment company’’ to
[Investment Company Act Release No. calling (202) 551–8090. include an issuer that is or holds itself
33228; File No. 812–14875] out as being engaged primarily, or
Applicant’s Representations proposes to engage primarily, in the
Exact Sciences Corporation business of investing, reinvesting or
1. Formed in 1995, Applicant is a
September 14, 2018. Delaware corporation that is in the trading in securities. Section 3(a)(l)(C) of
AGENCY: Securities and Exchange business of developing, clinical testing, the Act further defines an investment
Commission (‘‘Commission’’). marketing and commercializing cancer company as an issuer that is engaged or
ACTION: Notice. and pre-cancer screening and diagnostic proposes to engage in the business of
tests. Applicant currently manufactures investing, reinvesting, owning, holding
Notice of application for an order a non-invasive, patient-friendly or trading in securities, and owns or
under Section 3(b)(2) of the Investment screening test called Cologuard and proposes to acquire investment
Company Act of 1940 (‘‘Act’’). provides it to patients on a prescription- securities having a value in excess of
Applicant: Exact Sciences only basis through its clinical 40% of the value of the issuer’s total
Corporation. laboratory. Applicant is also currently assets (exclusive of Government
Summary of Application: Applicant working on the development of securities and cash items) on an
seeks an order under Section 3(b)(2) of additional tests for other types of unconsolidated basis. Section 3(a)(2) of
the Act declaring it to be primarily cancers. the Act defines ‘‘investment securities’’
engaged in a business other than that of 2. Applicant states that companies in to include all securities except
investing, reinvesting, owning, holding the heathcare sector such as itself Government securities, securities issued
or trading in securities. Applicant is in generally need significant liquid capital by employees’ securities companies,
the business of producing and to finance their operations and meet and securities issued by majority-owned
developing screening and diagnostic high production, commercialization and subsidiaries of the owner which (a) are
tests for the early detection and regulatory costs. Such companies often not investment companies and (b) are
prevention of certain cancers. spend a significant proportion of their not relying on the exclusions from the
Filing Dates: The application was revenues on research and development definition of investment company in
filed on January 30, 2018 and amended (‘‘R&D’’) in order to bring a product to Section 3(c)(1) or Section 3(c)(7) of the
on June 1, 2018, July 6, 2018 and August market and to bring products through Act. While Applicant states that it does
24, 2018. the Food and Drug Administration’s not hold itself out as being engaged
Hearing or Notification of Hearing: An (‘‘FDA’’) approval process. primarily in the business of investing,
order granting the requested relief will 3. Applicant states that it currently reinvesting or trading in securities,
be issued unless the Commission orders depends on raised capital to finance Applicant states that it consistently
a hearing. Interested persons may operations and continued growth but holds investment securities that exceed
request a hearing by writing to the ultimately seeks to generate cash from 40% of its total assets on an
Commission’s Secretary and serving its operations to support its business. unconsolidated basis (exclusive of
applicant with a copy of the request, Applicant states that it has successfully Government securities and cash items).
personally or by mail. Hearing requests raised capital to finance its operations Applicant states that it therefore falls
should be received by the Commission and commercialization of Cologuard in within the definition of investment
by 5:30 p.m. on October 10, 2018 and large part through various public company under Section 3(a)(l)(C) of the
should be accompanied by proof of offerings of its debt and equity Act.
service on Applicant, in the form of an securities. Applicant seeks to preserve 3. Rule 3a–8 under the Act provides
affidavit or, for lawyers, a certificate of its capital and maintain liquidity, an exclusion from the definition of
service. Hearing requests should state pending the use of such capital to investment company if, among other
the nature of the writer’s interest, the support its business operations, by factors, a company’s R&D expenses are
reason for the request, and the issues investing in short-term investment grade a substantial percentage of its total
contested. Persons who wish to be and liquid fixed income and money expenses for the last four fiscal quarters
notified of a hearing may request market instruments that earn combined. While Applicant believes
notification by writing to the competitive market returns and provide that it complies with the conditions of
Commission’s Secretary. a low level of credit risk (‘‘Capital Rule 3a–8, Applicant is concerned that
amozie on DSK3GDR082PROD with NOTICES1
ADDRESSES: Secretary, Securities and Preservation Investments’’). Applicant its R&D expenses, while substantial in
Exchange Commission, 100 F Street NE, also, to a limited extent, makes strategic absolute terms, may not be substantial
Washington, DC 20549–1090. investments in companies that are as a ratio of overall expenses,
Applicant, 441 Charmany Drive, complementary to its core business. particularly given the expense increase
Madison, Wisconsin 53719. Applicant’s board of directors oversees in connection with the
Applicant’s investment practices and commercialization of Cologuard.
16 17 CFR 200.30–3(a)(12). defines the parameters for investment Applicant’s R&D expenses as a ratio of
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Document Created: 2018-09-20 02:08:17
Document Modified: 2018-09-20 02:08:17
| 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 | 83 FR 47654 |
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