Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Proprietary Trader Examination, 45629-45631 [2011-19191]
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Federal Register / Vol. 76, No. 146 / Friday, July 29, 2011 / Notices
applicable to the Exchange’s members,
which renders the proposed rule change
effective upon filing.
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.
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–2011–
19 and should be submitted on or before
August 19, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–19189 Filed 7–28–11; 8:45 am]
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–CHX–2011–19 on the
subject line.
mstockstill on DSK4VPTVN1PROD with NOTICES
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:
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to the
Proprietary Trader Examination
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64958; File No. SR–
NASDAQ–2011–095]
July 25, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
Paper Comments
(‘‘Act’’) 1, and Rule 19b–4 2 thereunder,
notice is hereby given that on July 12,
• Send paper comments in triplicate
2011, The NASDAQ Stock Market LLC
to Elizabeth M. Murphy, Secretary,
(the ‘‘Exchange’’ or ‘‘NASDAQ’’) filed
Securities and Exchange Commission,
with the Securities and Exchange
100 F Street, NE., Washington, DC
Commission (‘‘SEC’’ or ‘‘Commission’’)
20549–1090.
the proposed rule change as described
All submissions should refer to File
in Items I, II, and III, below, which Items
Number SR–CHX–2011–19. This file
have been prepared by the Exchange.
number should be included on the
subject line if e-mail is used. To help the The Commission is publishing this
notice to solicit comments on the
Commission process and review your
proposed rule change from interested
comments more efficiently, please use
only one method. The Commission will persons.
post all comments on the Commission’s I. Self-Regulatory Organization’s
Internet Web site (https://www.sec.gov/
Statement of the Terms of Substance of
rules/sro/shtml). Copies of the
the Proposed Rule Change
submission, all subsequent
NASDAQ is filing with the Securities
amendments, all written statements
and Exchange Commission
with respect to the proposed rule
(‘‘Commission’’) a proposal for the
change that are filed with the
NASDAQ Options Market (‘‘NOM’’) to
Commission, and all written
amend its Rule 1032, Categories of
communications relating to the
Representative Registration, to adopt a
proposed rule change between the
Commission and any person, other than new limited category of representative
registration for proprietary traders, as
those that may be withheld from the
described further below. NASDAQ
public in accordance with the
intends to implement the proposal upon
provisions of 5 U.S.C. 552, will be
Commission approval 3 and availability
available for Web site viewing and
in WebCRD; NASDAQ will
printing in the Commission’s Public
communicate the applicable dates to
Reference Room, 100 F Street, NE.,
NASDAQ members.
Washington, DC 20549, on official
The text of the proposed rule change
business days between the hours of
is available at https://
10 a.m. and 3 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; the
Commission does not edit personal
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CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The Commission notes that this filing is
effective on filing.
PO 00000
15 17
1 15
Frm 00126
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45629
nasdaq.cchwallstreet.com/, at
NASDAQ’s principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to recognize a new category of
limited representative registration for
proprietary traders. Currently, under
NASDAQ rules, persons performing
proprietary trading functions fall within
the definition of representative in Rule
1011, because Rule 1011 includes
persons who are engaged in the
investment banking or securities
business of a member. Specifically, a
‘‘Representative’’ means an Associated
Person 4 of a registered broker or dealer
who is engaged in the investment
banking or securities business for the
member including the functions of
supervision, solicitation or conduct of
business in securities or who is engaged
in the training of persons associated
with a broker or dealer for any of these
functions are designated as
representatives. As provided in Rule
1031, all Representatives of NASDAQ
Members are required to be registered
with NASDAQ, and Representatives that
are so registered are referred to as
‘‘Registered Representatives.’’
NASDAQ has been working with
FINRA and certain other exchanges,
many of which have recently enhanced
their registration requirements to
4 Pursuant to Rule 1011(b), the term ‘‘Associated
Person’’ means any partner, officer, director, or
branch manager of a NASDAQ member or
Applicant (or person occupying a similar status or
performing similar functions), any person directly
or indirectly controlling, controlled by, or under
common control with such NASDAQ member or
Applicant, or any employee of such NASDAQ
member or Applicant, except that any person
associated with a NASDAQ member or Applicant
whose functions are solely clerical or ministerial
shall not be included in the meaning of such term
for purposes of the NASDAQ Rules.
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Federal Register / Vol. 76, No. 146 / Friday, July 29, 2011 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
require the registration of associated
persons,5 to develop the content outline
and qualification examination that
would be applicable to proprietary
traders. This new qualification
examination, the Series 56, was recently
filed with the Commission; 6 NASDAQ
expects to file the content outline with
the Commission as well and make it
available upon availability in WebCRD.
Accordingly, NASDAQ is amending its
rules to recognize the new registration
category ‘‘Proprietary Trader’’ and the
new examination, the Series 56.
Specifically, NASDAQ proposes to
adopt new subparagraph (c) to Rule
1032 to recognize the ‘‘Proprietary
Trader’’ category of registration. Like
other categories of limited
representative registration currently
available, the new Proprietary Trader
category would be limited to persons
performing the functions specified in
new Rule 1032(c), which is proprietary
trading. The proposed rule expressly
provides that such person’s activities in
the investment banking or securities
business are limited solely to
proprietary trading, that he passes the
Series 56 and that he is an associated
person of a proprietary trading firm as
defined in Rule 1011(o).7
Persons who deal with the public do
not fit in this registration category and
must continue to register as General
Securities Representatives. NASDAQ
believes that the new limited
registration category and qualification
examination are appropriate, because
they are tailored to proprietary trading
functions. Today, these persons are
required to register as a General
Securities Representative and pass the
Series 7 examination, which the
Exchange believes covers a great deal of
material that is not relevant to
proprietary trading functions. Instead,
5 See Securities Exchange Act Release Nos. 63843
(February 4, 2011), 76 FR 7884 (February 11, 2011)
(SR–ISE–2010–115); and 63314 (November 12,
2010), 75 FR 70957 (November 19, 2010) (SR–
CBOE–2010–084).
6 One exchange has thus far filed a proposed rule
change respecting the Series 56, which has become
effective. See Securities Exchange Act Release No.
64699 (June 17, 2011) (SR–CBOE–2011–056).
7 Rule 1011(o) defines a proprietary trading firm
as an Applicant with the following characteristics:
(1) The Applicant is not required by Section
15(b)(8) of the Act to become a FINRA member but
is a member of another registered securities
exchange not registered solely under Section 6(g) of
the Act; (2) all funds used or proposed to be used
by the Applicant for trading are the Applicant’s
own capital, traded through the Applicant’s own
accounts; (3) the Applicant does not, and will not
have ‘‘customers,’’ as that term is defined in Nasdaq
Rule 0120(g); and (4) all Principals and
Representatives of the Applicant acting or to be
acting in the capacity of a trader must be owners
of, employees of, or contractors to the Applicant.
‘‘Applicant’’ is defined in Rule 1011(a).
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the Series 56 covers both equities and
options trading rules, but not all of the
rules that are applicable to firms and
persons conducting a public business.
As stated above, NASDAQ will describe
the Series 56 in greater detail in a
separate proposed rule change.
Of course, persons registered in the
new category would be subject to the
continuing education requirements of
Rule 1120. In addition, the process for
registering continues to be covered by
Rule 1140, which provides that
WebCRD must be used.
Today, because NASDAQ rules
require it, persons associated with
NASDAQ members are already
registered as General Securities
Representatives and have passed the
Series 7 examination. This proposal
does not require proprietary traders who
have already registered as General
Securities Representatives and have
passed the Series 7 examination to
register under the new category as
Proprietary Traders or to pass the Series
56, because NASDAQ believes this
would be redundant. Persons who are
registered as General Securities
Representatives and have passed the
Series 7 may, of course, perform the
functions of a Proprietary Trader,
because the new Proprietary Trader
registration category is a limited
registration category. This proposal does
not preclude associated persons from
registering as General Securities
Representatives and passing the Series 7
examination and then functioning as a
Proprietary Trader.
NASDAQ expects that new members
might consider the new category when
applying for NASDAQ membership,
once the new category and examination
become available to NASDAQ members
in WebCRD. Accordingly, NASDAQ
believes that the new category should be
helpful to attracting new members to
NASDAQ, while at the same time
preserving the important goals of
appropriate registration and
qualification for persons in the
securities business. Additionally,
members who hire new associated
persons might choose to register in the
new category.
Unlike the associated persons of
proprietary trading firms covered by this
proposal, associated persons of firms
that are NOT proprietary trading firms
continue to be subject to registration as
General Securities Representatives and
have to pass the Series 7 examination.8
8 Such persons may also be subject to registration
as an Equity Trader pursuant to Rule 1032(f), which
requires successful completion of the Series 55
exam (for which the prerequisite is the Series 7
examination).
PO 00000
Frm 00127
Fmt 4703
Sfmt 4703
They are not eligible for the new
registration category and examination.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 9 in general, and furthers the
objectives of: (1) Section 6(c)(3)(B) of the
Act,10 pursuant to which a national
securities exchange prescribes standards
of training, experience and competence
for members and their associated
persons; and (2) Section 6(b)(5) of the
Act,11 in that it is designed, among other
things, to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest, by
offering a new, limited registration
category to NASDAQ members. The
Exchange believes that these new
requirements should help ensure that all
associated persons engaged in a
securities business are, and will
continue to be, properly trained and
qualified to perform their functions,
because the new category and
examination are limited and tailored to
persons performing proprietary trading
functions.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the 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 after the date of
the filing, or such shorter time as the
Commission may designate, it has
become effective pursuant to 19(b)(3)(A)
9 15
U.S.C. 78f(b).
U.S.C. 78(c)(3)(B).
11 15 U.S.C. 78f(b)(5).
10 15
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29JYN1
Federal Register / Vol. 76, No. 146 / Friday, July 29, 2011 / Notices
of the Act 12 and Rule 19b–4(f)(6) 13
thereunder.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
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. Copies of such filing
also will be available for inspection and
copying at the principal office of
NASDAQ. 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
publicly available. All submissions
should refer to File Number SR–
NASDAQ–2011–095 and should be
submitted on or before August 19, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Elizabeth M. Murphy,
Secretary.
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2011–095 on the
subject line.
[FR Doc. 2011–19191 Filed 7–28–11; 8:45 am]
Paper Comments
[Release No. 34–64954; File No. SR–FINRA–
2010–036]
mstockstill on DSK4VPTVN1PROD with NOTICES
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2011–095. This
file number should be included on the
subject line if e-mail 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 (https://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
12 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). 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.
13 17
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing
Proposed Rule Change and
Amendment No. 1 To Amend the
Codes of Arbitration Procedure To
Permit Arbitrators To Make Mid-Case
Referrals
July 25, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b-4 thereunder,2
notice is hereby given that on July 12,
2010, the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by FINRA. On July 7, 2011,
FINRA filed Amendment No. 1.3 The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as modified by Amendment No.
1, from interested persons.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
3 Amendment No. 1 to SR–FINRA–2010–036
replaces and supersedes the original rule filing.
PO 00000
14 17
1 15
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45631
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend Rule
12104 of the Code of Arbitration
Procedure for Customer Disputes
(‘‘Customer Code’’) and Rule 13104 of
the Code of Arbitration Procedure for
Industry Disputes (‘‘Industry Code’’) to
broaden arbitrators’ authority to make
referrals during an arbitration
proceeding.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA 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,
FINRA 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. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
(a) Background
In light of well publicized securities
frauds that resulted in harm to
investors, FINRA has reviewed the
Customer and Industry Codes (together,
Codes) and determined that its rules on
arbitrator referrals should be amended
to permit arbitrators to make referrals
during an arbitration proceeding, rather
than solely at the conclusion of a matter
as is currently the case.
Currently, Rule 12104(b) of the
Customer Code and Rule 13104(b) of the
Industry Code state, in relevant part,
that any arbitrator may refer to FINRA
for disciplinary investigation any matter
that has come to the arbitrator’s
attention during and in connection with
the arbitration only at the conclusion of
an arbitration (emphasis added). FINRA
is concerned that the current rule’s
requirement that arbitrators in all
instances must wait until a case is
concluded before making a referral
could hamper FINRA’s efforts to
uncover fraud as early as possible.
FINRA is proposing, therefore, to
broaden the arbitrators’ authority under
the Codes to make referrals, in limited
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]]>Agencies
[Federal Register Volume 76, Number 146 (Friday, July 29, 2011)]
[Notices]
[Pages 45629-45631]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19191]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64958; File No. SR-NASDAQ-2011-095]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to the Proprietary Trader Examination
July 25, 2011.
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 July 12, 2011, The NASDAQ Stock Market LLC (the ``Exchange'' or
``NASDAQ'') filed with the Securities and Exchange Commission (``SEC''
or ``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
NASDAQ is filing with the Securities and Exchange Commission
(``Commission'') a proposal for the NASDAQ Options Market (``NOM'') to
amend its Rule 1032, Categories of Representative Registration, to
adopt a new limited category of representative registration for
proprietary traders, as described further below. NASDAQ intends to
implement the proposal upon Commission approval \3\ and availability in
WebCRD; NASDAQ will communicate the applicable dates to NASDAQ members.
---------------------------------------------------------------------------
\3\ The Commission notes that this filing is effective on
filing.
---------------------------------------------------------------------------
The text of the proposed rule change is available at https://nasdaq.cchwallstreet.com/, at NASDAQ's principal office, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to recognize a new
category of limited representative registration for proprietary
traders. Currently, under NASDAQ rules, persons performing proprietary
trading functions fall within the definition of representative in Rule
1011, because Rule 1011 includes persons who are engaged in the
investment banking or securities business of a member. Specifically, a
``Representative'' means an Associated Person \4\ of a registered
broker or dealer who is engaged in the investment banking or securities
business for the member including the functions of supervision,
solicitation or conduct of business in securities or who is engaged in
the training of persons associated with a broker or dealer for any of
these functions are designated as representatives. As provided in Rule
1031, all Representatives of NASDAQ Members are required to be
registered with NASDAQ, and Representatives that are so registered are
referred to as ``Registered Representatives.''
---------------------------------------------------------------------------
\4\ Pursuant to Rule 1011(b), the term ``Associated Person''
means any partner, officer, director, or branch manager of a NASDAQ
member or Applicant (or person occupying a similar status or
performing similar functions), any person directly or indirectly
controlling, controlled by, or under common control with such NASDAQ
member or Applicant, or any employee of such NASDAQ member or
Applicant, except that any person associated with a NASDAQ member or
Applicant whose functions are solely clerical or ministerial shall
not be included in the meaning of such term for purposes of the
NASDAQ Rules.
---------------------------------------------------------------------------
NASDAQ has been working with FINRA and certain other exchanges,
many of which have recently enhanced their registration requirements to
[[Page 45630]]
require the registration of associated persons,\5\ to develop the
content outline and qualification examination that would be applicable
to proprietary traders. This new qualification examination, the Series
56, was recently filed with the Commission; \6\ NASDAQ expects to file
the content outline with the Commission as well and make it available
upon availability in WebCRD. Accordingly, NASDAQ is amending its rules
to recognize the new registration category ``Proprietary Trader'' and
the new examination, the Series 56.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release Nos. 63843 (February 4,
2011), 76 FR 7884 (February 11, 2011) (SR-ISE-2010-115); and 63314
(November 12, 2010), 75 FR 70957 (November 19, 2010) (SR-CBOE-2010-
084).
\6\ One exchange has thus far filed a proposed rule change
respecting the Series 56, which has become effective. See Securities
Exchange Act Release No. 64699 (June 17, 2011) (SR-CBOE-2011-056).
---------------------------------------------------------------------------
Specifically, NASDAQ proposes to adopt new subparagraph (c) to Rule
1032 to recognize the ``Proprietary Trader'' category of registration.
Like other categories of limited representative registration currently
available, the new Proprietary Trader category would be limited to
persons performing the functions specified in new Rule 1032(c), which
is proprietary trading. The proposed rule expressly provides that such
person's activities in the investment banking or securities business
are limited solely to proprietary trading, that he passes the Series 56
and that he is an associated person of a proprietary trading firm as
defined in Rule 1011(o).\7\
---------------------------------------------------------------------------
\7\ Rule 1011(o) defines a proprietary trading firm as an
Applicant with the following characteristics: (1) The Applicant is
not required by Section 15(b)(8) of the Act to become a FINRA member
but is a member of another registered securities exchange not
registered solely under Section 6(g) of the Act; (2) all funds used
or proposed to be used by the Applicant for trading are the
Applicant's own capital, traded through the Applicant's own
accounts; (3) the Applicant does not, and will not have
``customers,'' as that term is defined in Nasdaq Rule 0120(g); and
(4) all Principals and Representatives of the Applicant acting or to
be acting in the capacity of a trader must be owners of, employees
of, or contractors to the Applicant. ``Applicant'' is defined in
Rule 1011(a).
---------------------------------------------------------------------------
Persons who deal with the public do not fit in this registration
category and must continue to register as General Securities
Representatives. NASDAQ believes that the new limited registration
category and qualification examination are appropriate, because they
are tailored to proprietary trading functions. Today, these persons are
required to register as a General Securities Representative and pass
the Series 7 examination, which the Exchange believes covers a great
deal of material that is not relevant to proprietary trading functions.
Instead, the Series 56 covers both equities and options trading rules,
but not all of the rules that are applicable to firms and persons
conducting a public business. As stated above, NASDAQ will describe the
Series 56 in greater detail in a separate proposed rule change.
Of course, persons registered in the new category would be subject
to the continuing education requirements of Rule 1120. In addition, the
process for registering continues to be covered by Rule 1140, which
provides that WebCRD must be used.
Today, because NASDAQ rules require it, persons associated with
NASDAQ members are already registered as General Securities
Representatives and have passed the Series 7 examination. This proposal
does not require proprietary traders who have already registered as
General Securities Representatives and have passed the Series 7
examination to register under the new category as Proprietary Traders
or to pass the Series 56, because NASDAQ believes this would be
redundant. Persons who are registered as General Securities
Representatives and have passed the Series 7 may, of course, perform
the functions of a Proprietary Trader, because the new Proprietary
Trader registration category is a limited registration category. This
proposal does not preclude associated persons from registering as
General Securities Representatives and passing the Series 7 examination
and then functioning as a Proprietary Trader.
NASDAQ expects that new members might consider the new category
when applying for NASDAQ membership, once the new category and
examination become available to NASDAQ members in WebCRD. Accordingly,
NASDAQ believes that the new category should be helpful to attracting
new members to NASDAQ, while at the same time preserving the important
goals of appropriate registration and qualification for persons in the
securities business. Additionally, members who hire new associated
persons might choose to register in the new category.
Unlike the associated persons of proprietary trading firms covered
by this proposal, associated persons of firms that are NOT proprietary
trading firms continue to be subject to registration as General
Securities Representatives and have to pass the Series 7
examination.\8\ They are not eligible for the new registration category
and examination.
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\8\ Such persons may also be subject to registration as an
Equity Trader pursuant to Rule 1032(f), which requires successful
completion of the Series 55 exam (for which the prerequisite is the
Series 7 examination).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \9\ in general, and furthers the objectives of: (1)
Section 6(c)(3)(B) of the Act,\10\ pursuant to which a national
securities exchange prescribes standards of training, experience and
competence for members and their associated persons; and (2) Section
6(b)(5) of the Act,\11\ in that it is designed, among other things, to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general, to protect investors and the public interest, by
offering a new, limited registration category to NASDAQ members. The
Exchange believes that these new requirements should help ensure that
all associated persons engaged in a securities business are, and will
continue to be, properly trained and qualified to perform their
functions, because the new category and examination are limited and
tailored to persons performing proprietary trading functions.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78(c)(3)(B).
\11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the 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 after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A)
[[Page 45631]]
of the Act \12\ and Rule 19b-4(f)(6) \13\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). 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.
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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 to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2011-095 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2011-095. This
file number should be included on the subject line if e-mail 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 (https://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. Copies of such filing also will be
available for inspection and copying at the principal office of NASDAQ.
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 publicly
available. All submissions should refer to File Number SR-NASDAQ-2011-
095 and should be submitted on or before August 19, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-19191 Filed 7-28-11; 8:45 am]
BILLING CODE 8011-01-P
