Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify BATS Registration and Continuing Education Requirements, 52814-52818 [2013-20746]

Download as PDF 52814 Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Notices the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–BYX– 2013–028 and should be submitted on or before September 16,2013. requirements necessary or acceptable for different registration categories. The text of the proposed rule change is available at the Exchange’s Web site at https://www.batstrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Kevin M. O’Neill, Deputy Secretary. 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. [FR Doc. 2013–20745 Filed 8–23–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70237; File No. SR–BATS– 2013–046] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify BATS Registration and Continuing Education Requirements August 20, 2013. ehiers on DSK2VPTVN1PROD with NOTICES 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 August 15, 2013, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) 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 Exchange has designated this proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6)(iii) thereunder,4 which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend BATS Rule 2.5, entitled ‘‘Restrictions,’’ and BATS Rule 11.4, entitled ‘‘Authorized Traders,’’ to recognize a new category of limited representative registration for proprietary traders and Proprietary Trader Principals and clarify the qualification and continuing education 26 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6)(iii). 1 15 VerDate Mar<15>2010 13:45 Aug 23, 2013 Jkt 229001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Proprietary Trader Registration The Exchange proposes to amend Rules 2.5 and 11.4 to recognize a new category of limited representative registration for proprietary traders. The Exchange will also expand its registration requirements to include the Proprietary Traders Qualification Examination (‘‘Series 56’’) among the applicable qualification examinations as determined by the Exchange. Further, the Exchange proposes to permit Authorized Traders 5 of Members who engage solely in proprietary trading to obtain the Series 56 license in order to effect transactions on the Exchange. The Series 56 was developed by a number of self-regulatory organizations (‘‘SROs’’) to test a candidate’s knowledge of proprietary trading generally and the industry rules applicable to the trading of equity securities and listed options contracts.6 5 An ‘‘Authorized Trader’’ is a person who may submit orders (or who supervises a routing engine that may automatically submit orders) to the Exchange’s trading facilities on behalf of his or her Member or Sponsored Participant. BATS Rule 1.5(d). 6 See Securities Exchange Act Release No. 64699 (June 17, 2011), 76 FR 36945 (June 23, 2011) (SR– CBOE–2011–056) (explaining the development of the Series 56 examination and the examination’s content). The Series 56 examination program was developed in conjunction with FINRA, and is shared by the Boston Options Exchange, C2 Options Exchange, Inc.; Chicago Board Options Exchange, Inc.; Chicago Stock Exchange, Inc.; International Securities Exchange, LLC; NASDAQ OMX BX, Inc.; PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 The Series 56 covers, among other things, recordkeeping and recording requirements, types and characteristics of securities and investments, trading practices, display, execution, and trading systems. While the Series 56 is primarily dedicated to topics related to proprietary trading, it also covers some general concepts relating to customers. The qualification examination consists of 100 multiple choice questions, which candidates have 150 minutes to complete. The content outline describes the following topical sections comprising the examination: Personnel, Business Conduct, Recordkeeping and Reporting Requirements—9 questions; Markets, Market Participants, Exchanges, and Self-Regulatory Organizations—8 questions; Types and Characteristics of Securities and Investments—20 questions; Trading Practices and Prohibited Acts—50 questions; and Display, Execution, and Trading Systems, 13 questions. The examination is already available in the Central Registration Depository (Web CRD), and thus, the rule change can be implemented immediately upon filing the proposed rule changes. The Exchange believes that acceptance of the Series 56 qualification examination will benefit both the Exchange and the applicable proprietary traders affected by the proposal because the examination would allow an individual who wishes to transact business on BATS in a limited capacity to qualify by passing an examination tailored to that limited capacity. The Series 56 specifically addresses industry topics that establish the appropriate regulatory and procedural knowledge base necessary for individuals required to register as a Proprietary Trader. As such, the Exchange proposes to modify Interpretation and Policy .01(c) of Rule 2.5 to include the Series 56 examination among the examinations accepted by the Exchange. The Exchange also proposes to replace existing Interpretation and Policy .01(f) of Rule 2.5 to set forth the registration requirements for a Proprietary Trader and modify Interpretation and Policy .01(g) to include a cross-reference to this new provision. Further, the Exchange proposes to modify Interpretation and Policy .02(a) of Rule 2.5 to clarify that persons registered as Proprietary Traders must comply with the continuing education requirements applicable to the Series 56 license, NASDAQ OMX PHLX LLC; NASDAQ Stock Market LLC; National Stock Exchange, Inc.; New York Stock Exchange, LLC; NYSE Amex, Inc.; and NYSE Arca, Inc. E:\FR\FM\26AUN1.SGM 26AUN1 Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Notices while other Registered Representatives must comply with the continuing education requirements applicable to their particular registration and license. These continuing education requirements are listed in proposed Interpretation and Policy .02(e) to Rule 2.5. Finally, the Exchange also proposes to amend Rule 11.4(e) to include Series 56 among the examinations necessary for an individual to be eligible for registration as an Authorized Trader. Interpretation and Policy .01(f) of Rule 2.5 currently sets forth a date by which Members were to comply with previous changes to the Rule, which date has already long since passed. The Exchange proposes to eliminate this text and replace it with new text as described below. Under proposed Interpretation and Policy .01(f) of Rule 2.5, an Authorized Trader that is considered to be a proprietary trader can qualify for limited representative registration. An Authorized Trader will be considered to be a proprietary trader if: (1) The Authorized Trader’s activities in the investment banking or securities business are limited solely to proprietary trading; (2) the Authorized Trader passes the Series 56; and (3) the Authorized Trader is an associated person of a proprietary trading firm. Under paragraph (g) of this provision, a ‘‘proprietary trading firm’’ is a Member that trades its own capital, does not have customers, and is not a member of the Financial Industry Regulatory Authority (FINRA). In addition, to qualify for this definition, the funds used by a proprietary trading firm must be exclusively firm funds, all trading must be in the firm’s accounts, and traders must be owners of, employees of, or contractors to the firm.7 Thus, the Proprietary Trader registration expressly excludes associated persons that deal with the public.8 ehiers on DSK2VPTVN1PROD with NOTICES Principal Registration The Exchange proposes to amend Interpretation and Policy .01(d) of Rule 2.5 to state that the Exchange will accept the New York Stock Exchange (‘‘NYSE’’) Series 14 Compliance Official Examination (‘‘Series 14’’) in lieu of the Series 24 General Securities Principal Examination (‘‘Series 24’’) to satisfy the registration requirement for Principals that have been designated Chief 7 BATS Rule 2.5, Interpretation and Policy .01(g). Traders that deal with the public should continue to register as General Securities Representatives after obtaining the Series 7 license. An Authorized Trader who is qualified as a General Securities Representative by passing the Series 7 may function as a proprietary trader; however, such person should register as a General Securities Representative rather than a Proprietary Trader. 8 Authorized VerDate Mar<15>2010 13:45 Aug 23, 2013 Jkt 229001 Compliance Officers on Schedule A of Form BD. This examination is designed to establish that the applicant has the knowledge and skill necessary for compliance officials.9 The Exchange notes that acceptance of this alternative examination is consistent with other SROs’ registration requirements 10 and will provide an alternate, appropriate examination requirement for certain individuals associated with Exchange Members. In addition, to accommodate the new Proprietary Trader registration category, the Exchange proposes to add language to Interpretation and Policy .01(d) of Rule 2.5 that will create a new category of limited representative Principal—the Proprietary Trader Principal—and clarify the prerequisites necessary for Proprietary Trader Principals as opposed to General Securities Principals. Registration as a Proprietary Trader Principal will be restricted to individuals whose supervisory responsibilities are limited to proprietary traders, as defined in amended Interpretation and Policy .01(f) of Rule 2.5. The Exchange will permit the Series 56 as a prerequisite to the General Securities Principal Examination (‘‘Series 24’’) or Compliance Official Examination (‘‘Series 14’’).11 The Exchange also proposes to add language to Interpretation and Policy .01(d) of Rule 2.5 to clarify the appropriate prerequisites for registration as a General Securities Principals.12 The Exchange will continue to require General Securities Principals to successfully complete the General Securities Representative Registration (‘‘Series 7’’) or an equivalent foreign examination module (‘‘Series 17’’ or ‘‘Series 37/38’’). 9 For details about the Series 14, see Financial Industry Regulatory Authority, Compliance Official Qualification Examination (Test Series 14): Content Outline, (2012), available at https://www.finra.org/ web/groups/industry/@ip/@comp/@regis/ documents/industry/p117564.pdf. 10 See, e.g., CBOE Rule 3.6A.08(b); NASD Notice to Members 01–51 (August 2001), available at https://www.finra.org/web/groups/industry/@ip/@ reg/@notice/documents/notices/p003809.pdf; Chicago Stock Exchange, Inc. Member Regulation Department Information Memorandum (May 8, 2013), available at https://www.chx.com/content/ Participant_Information/Downloadable_Docs/ MarketRegulation/1_InformationMemoranda/2013/ MR-13-04_New_Registration_C Categories_and_ Related_Qualification_Exams.pdf; NYSE Information Memo 07–43 (May 9, 2007), available at https://www.nyse.com/nysenotices/nyse/ information-memos/pdf?memo_id=07-43. 11 As noted, the Exchange will only permit the Series 14 for those designated as Chief Compliance Officers on Schedule A of Form BD. 12 General Securities Principals are individuals that supervise the activities of General Securities Representatives. PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 52815 The Exchange believes that the prerequisite examination requirement for registration as a Proprietary Trader Principal is appropriate because, as noted above, the Series 56 is specifically designed to address industry topics and establish the appropriate regulatory and procedural knowledge base relevant to proprietary trading. Moreover, the Exchange will continue to require successful completion of either the Series 24 or Series 14 for both Proprietary Trader Principals and General Securities Principals, thereby ensuring that all Principals have the necessary knowledge and skill to act in a supervisory capacity. Additionally, the Exchange notes that creating the registration category of Proprietary Trader Principal is consistent with registration requirements of other national securities exchanges.13 Acceptable Qualification Examinations The Exchange proposes to add Interpretation and Policy .01(h) of Rule 2.5, which will include a chart that sets forth the relevant qualification requirements for each registration category described in the rule. This chart will not change the qualification requirements in any way. It will merely clarify the requirements described in the Rule, thereby avoiding any confusion regarding qualification examinations the Exchange deems acceptable for each registration category. Acceptable Continuing Education Programs The Exchange also proposes to add language to Interpretation and Policy .02(e) to Rule 2.5 that will clarify the different continuing education (‘‘CE’’) requirements for registered persons based upon their registration with the Exchange. Specifically, the Exchange proposes to introduce a chart that enumerates the Regulatory Element programs necessary for each registration category and introduce a new Regulatory Element program for those persons registered as Proprietary Traders. Existing Interpretation and Policy .02(a) of Rule 2.5 requires all registered representatives to complete the Regulatory Element of the continuing education program at specified intervals and states that the content of the Regulatory Element shall be determined by the Exchange for each registration category of persons subject to the Rule. The Regulatory Element is a computerbased education program administered 13 See, e.g., BOX Rule 2020(c)(2); CBOE Rule 3.6A.08; NASDAQ OMX BX Rule 1022(h); NASDAQ OMX PHLX Rule 612(e). E:\FR\FM\26AUN1.SGM 26AUN1 52816 Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Notices ehiers on DSK2VPTVN1PROD with NOTICES by the Financial Industry Regulatory Authority (‘‘FINRA’’) to help ensure that registered persons are kept up to date on regulatory, compliance and sales practice matters in the industry. Currently, there are there two Regulatory Element programs: The S201 Supervisor Program for registered principals and supervisors and the S101 General Program for Series 7 and all other registered persons.14 The Exchange is proposing to enumerate these existing programs in Interpretation and Policy .02(e) to Rule 2.5, as well as the new S501 Series 56 Proprietary Trader Continuing Education Program for those persons registered as Proprietary Traders. The Exchange is also proposing to introduce a new CE program for persons registered with the Exchange solely as Proprietary Traders by passing the Series 56. Proposed Interpretation and Policy .01(f) to Rule 2.5 outlines the registration and qualification requirements for those wishing to register with the Exchange as a Proprietary Trader, making clear that the Series 56 is a prerequisite for this registration category. The Proprietary Trader Continuing Education Program (S501) is a computer-based education program developed by many of the selfregulatory organizations that worked to develop the Series 56 (‘‘Participating SROs’’) 15 and administered by FINRA to ensure that registered persons are kept current on regulatory, compliance, and trading practice matters in the industry. Unlike the other offered CE programs, the S501 is not part of the Uniform Continuing Education Program, which is developed and maintained by the Securities Industry Regulatory Council on Continuing Education. The S501 will logistically operate as the currently offered CE programs do. Specifically, registered persons will be required, through CRD, to complete the Regulatory Element of the CE on the second anniversary of the base date and then every three years thereafter. While creating the S501, the Participating SROs believe that the current 14 The Commission notes that there are three Regulatory Element programs. The S106 is the Regulatory Element program for persons who are Series 6 qualified. 15 The Participating SROs that have assisted with the development of, and plan to administer, the Series 56 and S501 are the Exchange, Chicago Board Options Exchange, C2 Options Inc., the Chicago Stock Exchange, Inc., the New York Stock Exchange, LLC, NYSE Arca, Inc., NYSE Amex, LLC, the NASDAQ Stock Market LLC, the National Stock Exchange, Inc., NASDAQ OMX BX, Inc., NASDAQ OMX PHLX, LLC, EDGA Exchange, Inc., EDGX Exchange, Inc., International Securities Exchange, LLC, and BOX Options Exchange, LLC. VerDate Mar<15>2010 13:45 Aug 23, 2013 Jkt 229001 procedures of the other CE programs work well. The Securities Industry Regulatory Council on Continuing Education has tailored the process of the other CE programs since its inception and made it successful. Thus, as proposed, the S501 will work in the same manner. In addition, consistency between the different programs will avoid creating confusion among registered persons and FINRA. The S501 is required for registrants who are registered as Proprietary Traders and do not maintain any other registration through CRD.16 Individuals that are registered under any other registration are required to maintain the CE obligations associated with such registrations. For example, an individual that engages solely in proprietary trading activities yet continues to maintain a Series 7 registration will be required to continue taking the Series 7 Continuing Education Program (S101).17 Although such an individual may be engaging in the same activities as an individual registered as a Proprietary Trader, the Series 7 Examination is more comprehensive and covers topics that the Series 56 does not. Thus, the Exchange believes that this individual should complete the CE associated with the Series 7 because this covers all aspects of the individual’s registration. The introduction of the S501 allows the Exchange to tailor its CE requirements more closely to the duties of individuals who have registered with the Exchange as Proprietary Traders after passing the Series 56. More specifically, the Exchange believes allowing individuals engaging in proprietary trading and registered under the Series 56 to complete a separate CE program than those maintaining a Series 7 registration is appropriate given that all individuals have the option of taking either test. In comparison to the more comprehensive Series 7, the Series 56 Examination is more closely tailored to the practice of proprietary trading. As such, the Exchange believes a Series 56 CE program should be tailored as well. At the same time, if an individual would like to retain a Series 7 license, the Exchange believes it is appropriate 16 Any registered person who receives a waiver of the Series 56 under Rule 2.5.01(b), and does not maintain any other registrations in CRD, will be required to complete the Proprietary Trader Continuing Education Program (S501). 17 See id. If a registered person has received a Series 56 waiver under Rule 2.5.01(b) but continues to maintain a Series 7 registration (that predates the introduction of the Series 56 on the Exchange), that registered individual will only be required to take the Series 7 CE Program (S101). Through CRD, FINRA will recognize the Series 56 as waived while still requiring the Series 7 CE completion. PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 they continue to be required to complete the broader CE program, which covers all aspects of this registration. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,18 in general, and furthers the objectives of Section 6(c)(3)(B) of the Act in particular.19 Under Section 6(c)(3)(B), it is the Exchange’s responsibility to prescribe standards of training, experience, and competence for Exchange Members and their associated persons.20 The Exchange proposes to recognize a new category of limited representative registration for proprietary traders and to permit Authorized Traders of Members who engage solely in proprietary trading to obtain the Series 56 license in lieu of the more general Series 7 license. The Exchange believes the Series 56 establishes that Authorized Traders of Members have attained specified levels of competence and knowledge generally applicable to proprietary trading. Additionally, the Exchange is offering an alternative qualification examination, the Series 14, for Principals designated as Chief Compliance Officers. The Exchange believes this examination establishes the skill and knowledge base necessary for a compliance official. Moreover, acceptance of this alternative examination will provide an alternate, appropriate examination requirement for certain individuals associated with Exchange Members. To accommodate recognition of limited representative registration as proprietary Traders, the Exchange proposes to recognize a new category of limited representative principal registration for individuals whose supervisory responsibilities are restricted to proprietary traders. The Exchange will accept the Series 56 as a prerequisite to the successful completion of a permissible Principal Examination. The Exchange will continue to require successful completion of either the Series 24 or Series 14 examination for all Principals because the Exchange believes that these examinations establish the skill and knowledge base appropriate for individuals responsible for supervising the activities of a member’s Authorized Traders. Finally, the Exchange proposes to codify existing CE requirements for persons registered with the Exchange, while also introducing a new CE program that prescribes a standard for 18 15 19 15 U.S.C. 78f(b). U.S.C. 78(c)(3)(B). 20 Id. E:\FR\FM\26AUN1.SGM 26AUN1 Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Notices Series 56 registered persons. The Exchange believes the proposed changes are reasonable and set forth the appropriate CE requirements for an individual required to register under Rule 2.5. The Exchange believes the proposed changes are also consistent with Section 6(b)(5) of the Act 21 because they would promote just and equitable principles of trade, 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. The Exchange believes the rule changes accomplish these objectives by enabling individuals to qualify for registration with the Exchange by passing a qualification examination that specifically addresses industry topics that establish the foundation for the regulatory and procedural knowledge necessary for such persons electing to register as Proprietary Traders and/or Proprietary Trader Principals. Furthermore, the Exchange is clarifying the continuing education requirements necessary for individuals that choose to register as Proprietary Traders, as well as the basic qualification requirements necessary for all categories of registration, thereby avoiding any unnecessary investor with regard to such requirements. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed rule changes related to registration requirements will align Exchange Rules with those of many other national securities exchanges.22 Unifying the qualification requirements for registration as a Proprietary Trader and Proprietary Trader Principal across exchanges promotes clarity for investors and promotes competition among 21 15 U.S.C. 78f(b)(5). e.g., BOX Rule 2020(b)(2), (c)(2); CBOE Rule 3.6A.08; NASDAQ OMX BX Rules 1022(h), 1032(b); NASDAQ OMX PHLX Rules 612(e), 613(f); NYSE Arca Options Rule 2.23(b)(2); EDGX Rule 2.5.06; see also NASD Notice to Members 01–51 (August 2001), available at https://www.finra.org/ web/groups/industry/@ip/@reg/@notice/documents/ notices/p003809.pdf; Chicago Stock Exchange, Inc. Member Regulation Department Information Memorandum (May 8, 2013), available at https:// www.chx.com/content/Participant_Information/ Downloadable_Docs/MarketRegulation/1_ InformationMemoranda/2013/MR-13-04_New_ Registration_Categories_and_Related_ Qualification_Exams.pdf; NYSE Information Memo 07–43 (May 9, 2007), available at https:// www.nyse.com/nysenotices/nyse/informationmemos/pdf?memo_id=07-43. ehiers on DSK2VPTVN1PROD with NOTICES 22 See, VerDate Mar<15>2010 13:45 Aug 23, 2013 Jkt 229001 exchanges for trading volume. Similarly, accepting an alternative examination for Principals designated as Chief Compliance Officers on Form BD will avoid duplicative examination requirements among exchanges, thereby furthering competition among these exchanges and reducing the burden on individuals that are well-qualified to act in a supervisory capacity. In addition, the proposed rule change clarifying the specific CE requirements for all registration categories will align Exchange Rules with those of the Chicago Board Option Exchange (‘‘CBOE’’).23 The Exchange does not believe that these proposed rule changes will affect intermarket competition because the Exchange believes that all exchanges that impose the same CE requirements will file similar rule changes addressing these CE programs. Furthermore, the Exchange does not believe the proposed change will affect intramarket competition because all similarly situated registered persons (e.g. registered persons maintaining the same registrations) are required to complete the same CE requirements. For example, all individuals maintaining a Series 7 registration will be required to complete the Series 7 CE, while all individuals maintaining a Series 56 registration (and no other registrations) will be required to complete the new Series 56 CE. 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 52817 recognize a new category of limited representative registration for Proprietary Traders and Proprietary Trader Principals, as well as the Series 56 examination. The proposed rule change also aligns the Exchange’s registration and examination requirements for Proprietary Traders and Chief Compliance Officers with those of other exchanges, and specifies the qualification examinations and continuing education requirements for the different registration categories. Waiver of the operative delay would allow the Exchange to implement the proposed rule change without delay, enabling the Authorized Traders of its Members to comply with their registration, examination and continuing education requirements in a timely manner, and thus is consistent with the protection of investors and the public interest. Therefore, the Commission designates the proposal operative upon filing.25 At any time within 60 days of the filing of this 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 will institute proceedings to determine whether the proposed rule change 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: 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, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 24 and Rule 19b–4(f)(6) thereunder. The Exchange has requested that the Commission waive the 30-day operative delay. The proposed rule change will allow the Exchange to formally Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BATS–2013–046 on the subject line. 23 See Securities Exchange Act Release No. 70027 (July 23, 2013), 78 FR 45584 (July 29, 2013) (SR– CBOE–2013–076). 24 15 U.S.C. 78s(b)(3)(A). 25 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 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–BATS–2013–046. This file E:\FR\FM\26AUN1.SGM 26AUN1 52818 Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Notices 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 (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 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–BATS– 2013–046 and should be submitted on or before September 16, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–20746 Filed 8–23–13; 8:45 am] BILLING CODE 8011–01–P For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Kevin M. O’Neill, Deputy Secretary. SECURITIES AND EXCHANGE COMMISSION Release No. 34–70235; File No. SR– NYSEMKT–2013–59] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Designation of a Longer Period for Commission Action on Proposed Rule Change Amending Rule 965NY, Which Governs NDX and RUT Combination Orders ehiers on DSK2VPTVN1PROD with NOTICES August 20, 2013. On June 21, 2013, NYSE MKT LLC (‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 26 17 1 15 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). VerDate Mar<15>2010 13:45 Aug 23, 2013 Jkt 229001 thereunder,2 a proposed rule change to amend Rule 965NY, which governs NDX and RUT Combination Orders. The proposed rule change was published for comment in the Federal Register on July 9, 2013.3 The Commission received two comment letters on this proposal 4 and a response letter from the Exchange.5 Section 19(b)(2) of the Act 6 provides that within 45 days of the publication of notice of the filing of a proposed rule change, or within such longer period up to 90 days as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or as to which the self-regulatory organization consents, the Commission shall either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved. The 45th day for this filing is August 23, 2013. The Commission is now extending the time period for Commission action. The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider this proposed rule change, the comment letters that have been submitted in connection with this proposed rule change, and the Exchange’s response letter. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,7 designates October 7, 2013 as the date by which the Commission should either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change (File No. SR–NYSEMKT–2013–59). [FR Doc. 2013–20678 Filed 8–23–13; 8:45 am] BILLING CODE 8011–01–P 2 17 CFR 240.19b–4. Securities Exchange Act Release No. 69919 (July 2, 2013), 78 FR 41168. 4 See comment letters to Elizabeth M. Murphy, Secretary, Commission, from Darren Story, CFA, Student Options, LLC, dated July 12, 2013; and from David Spack, Chief Compliance Officer, Casey Securities, LLC, dated August 2, 2013. 5 See comment letter to Elizabeth M. Murphy, Secretary, Commission, from Janet McGinness, EVP & Corporate Secretary, NYSE Euronext, dated August 19, 2013. 6 15 U.S.C. 78s(b)(2). 7 15 U.S.C. 78s(b)(2). 8 17 CFR 200.30–3(a)(31). 3 See PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Notice of Meeting of the National Parks Overflights Advisory Group Aviation Rulemaking Committee Federal Aviation Administration, Transportation. ACTION: Notice of meeting. AGENCY: The Federal Aviation Administration (FAA) and the National Park Service (NPS), in accordance with the National Parks Air Tour Management Act of 2000, as amended, announce the next meeting of the National Parks Overflights Advisory Group (NPOAG) Aviation Rulemaking Committee (ARC). This notification provides the date, format, and agenda for the meeting. Date and Location: The NPOAG ARC will hold a meeting on September 19, 2013. The meeting will be conducted as a telephone conference call. The meeting will be held from 10:00 a.m. to 12:00 p.m. Pacific Daylight Time. This NPOAG meeting will be open to the public. Interested persons may listen in on the conference call (see Public Participation at the Meeting). FOR FURTHER INFORMATION CONTACT: Keith Lusk, AWP–1SP, Special Programs Staff, Federal Aviation Administration, Western-Pacific Region Headquarters, P.O. Box 92007, Los Angeles, CA 90009–2007, telephone: (310) 725–3808, email: Keith.Lusk@ faa.gov. SUPPLEMENTARY INFORMATION: SUMMARY: Background The National Parks Air Tour Management Act of 2000 (NPATMA), enacted on April 5, 2000, as Public Law 106–181, required the establishment of the NPOAG within one year after its enactment. The Act requires that the NPOAG be a balanced group of representatives of general aviation, commercial air tour operations, environmental concerns, and Native American tribes. The Administrator of the FAA and the Director of NPS (or their designees) serve as ex officio members of the group. Representatives of the Administrator and Director serve alternating 1-year terms as chairman of the advisory group. The duties of the NPOAG include providing advice, information, and recommendations to the FAA Administrator and the NPS Director on: Implementation of Public Law 106–181; quiet aircraft technology; other measures that might accommodate interests to visitors of national parks; E:\FR\FM\26AUN1.SGM 26AUN1

Agencies

[Federal Register Volume 78, Number 165 (Monday, August 26, 2013)]
[Notices]
[Pages 52814-52818]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-20746]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70237; File No. SR-BATS-2013-046]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
BATS Registration and Continuing Education Requirements

August 20, 2013.
    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 August 15, 2013, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') 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 Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with 
the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend BATS Rule 2.5, entitled 
``Restrictions,'' and BATS Rule 11.4, entitled ``Authorized Traders,'' 
to recognize a new category of limited representative registration for 
proprietary traders and Proprietary Trader Principals and clarify the 
qualification and continuing education requirements necessary or 
acceptable for different registration categories.
    The text of the proposed rule change is available at the Exchange's 
Web site at https://www.batstrading.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
Proprietary Trader Registration
    The Exchange proposes to amend Rules 2.5 and 11.4 to recognize a 
new category of limited representative registration for proprietary 
traders. The Exchange will also expand its registration requirements to 
include the Proprietary Traders Qualification Examination (``Series 
56'') among the applicable qualification examinations as determined by 
the Exchange. Further, the Exchange proposes to permit Authorized 
Traders \5\ of Members who engage solely in proprietary trading to 
obtain the Series 56 license in order to effect transactions on the 
Exchange.
---------------------------------------------------------------------------

    \5\ An ``Authorized Trader'' is a person who may submit orders 
(or who supervises a routing engine that may automatically submit 
orders) to the Exchange's trading facilities on behalf of his or her 
Member or Sponsored Participant. BATS Rule 1.5(d).
---------------------------------------------------------------------------

    The Series 56 was developed by a number of self-regulatory 
organizations (``SROs'') to test a candidate's knowledge of proprietary 
trading generally and the industry rules applicable to the trading of 
equity securities and listed options contracts.\6\ The Series 56 
covers, among other things, recordkeeping and recording requirements, 
types and characteristics of securities and investments, trading 
practices, display, execution, and trading systems. While the Series 56 
is primarily dedicated to topics related to proprietary trading, it 
also covers some general concepts relating to customers.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 64699 (June 17, 
2011), 76 FR 36945 (June 23, 2011) (SR-CBOE-2011-056) (explaining 
the development of the Series 56 examination and the examination's 
content). The Series 56 examination program was developed in 
conjunction with FINRA, and is shared by the Boston Options 
Exchange, C2 Options Exchange, Inc.; Chicago Board Options Exchange, 
Inc.; Chicago Stock Exchange, Inc.; International Securities 
Exchange, LLC; NASDAQ OMX BX, Inc.; NASDAQ OMX PHLX LLC; NASDAQ 
Stock Market LLC; National Stock Exchange, Inc.; New York Stock 
Exchange, LLC; NYSE Amex, Inc.; and NYSE Arca, Inc.
---------------------------------------------------------------------------

    The qualification examination consists of 100 multiple choice 
questions, which candidates have 150 minutes to complete. The content 
outline describes the following topical sections comprising the 
examination: Personnel, Business Conduct, Recordkeeping and Reporting 
Requirements--9 questions; Markets, Market Participants, Exchanges, and 
Self-Regulatory Organizations--8 questions; Types and Characteristics 
of Securities and Investments--20 questions; Trading Practices and 
Prohibited Acts--50 questions; and Display, Execution, and Trading 
Systems, 13 questions. The examination is already available in the 
Central Registration Depository (Web CRD), and thus, the rule change 
can be implemented immediately upon filing the proposed rule changes.
    The Exchange believes that acceptance of the Series 56 
qualification examination will benefit both the Exchange and the 
applicable proprietary traders affected by the proposal because the 
examination would allow an individual who wishes to transact business 
on BATS in a limited capacity to qualify by passing an examination 
tailored to that limited capacity. The Series 56 specifically addresses 
industry topics that establish the appropriate regulatory and 
procedural knowledge base necessary for individuals required to 
register as a Proprietary Trader. As such, the Exchange proposes to 
modify Interpretation and Policy .01(c) of Rule 2.5 to include the 
Series 56 examination among the examinations accepted by the Exchange. 
The Exchange also proposes to replace existing Interpretation and 
Policy .01(f) of Rule 2.5 to set forth the registration requirements 
for a Proprietary Trader and modify Interpretation and Policy .01(g) to 
include a cross-reference to this new provision. Further, the Exchange 
proposes to modify Interpretation and Policy .02(a) of Rule 2.5 to 
clarify that persons registered as Proprietary Traders must comply with 
the continuing education requirements applicable to the Series 56 
license,

[[Page 52815]]

while other Registered Representatives must comply with the continuing 
education requirements applicable to their particular registration and 
license. These continuing education requirements are listed in proposed 
Interpretation and Policy .02(e) to Rule 2.5. Finally, the Exchange 
also proposes to amend Rule 11.4(e) to include Series 56 among the 
examinations necessary for an individual to be eligible for 
registration as an Authorized Trader.
    Interpretation and Policy .01(f) of Rule 2.5 currently sets forth a 
date by which Members were to comply with previous changes to the Rule, 
which date has already long since passed. The Exchange proposes to 
eliminate this text and replace it with new text as described below. 
Under proposed Interpretation and Policy .01(f) of Rule 2.5, an 
Authorized Trader that is considered to be a proprietary trader can 
qualify for limited representative registration. An Authorized Trader 
will be considered to be a proprietary trader if: (1) The Authorized 
Trader's activities in the investment banking or securities business 
are limited solely to proprietary trading; (2) the Authorized Trader 
passes the Series 56; and (3) the Authorized Trader is an associated 
person of a proprietary trading firm. Under paragraph (g) of this 
provision, a ``proprietary trading firm'' is a Member that trades its 
own capital, does not have customers, and is not a member of the 
Financial Industry Regulatory Authority (FINRA). In addition, to 
qualify for this definition, the funds used by a proprietary trading 
firm must be exclusively firm funds, all trading must be in the firm's 
accounts, and traders must be owners of, employees of, or contractors 
to the firm.\7\ Thus, the Proprietary Trader registration expressly 
excludes associated persons that deal with the public.\8\
---------------------------------------------------------------------------

    \7\ BATS Rule 2.5, Interpretation and Policy .01(g).
    \8\ Authorized Traders that deal with the public should continue 
to register as General Securities Representatives after obtaining 
the Series 7 license. An Authorized Trader who is qualified as a 
General Securities Representative by passing the Series 7 may 
function as a proprietary trader; however, such person should 
register as a General Securities Representative rather than a 
Proprietary Trader.
---------------------------------------------------------------------------

Principal Registration
    The Exchange proposes to amend Interpretation and Policy .01(d) of 
Rule 2.5 to state that the Exchange will accept the New York Stock 
Exchange (``NYSE'') Series 14 Compliance Official Examination (``Series 
14'') in lieu of the Series 24 General Securities Principal Examination 
(``Series 24'') to satisfy the registration requirement for Principals 
that have been designated Chief Compliance Officers on Schedule A of 
Form BD. This examination is designed to establish that the applicant 
has the knowledge and skill necessary for compliance officials.\9\ The 
Exchange notes that acceptance of this alternative examination is 
consistent with other SROs' registration requirements \10\ and will 
provide an alternate, appropriate examination requirement for certain 
individuals associated with Exchange Members.
---------------------------------------------------------------------------

    \9\ For details about the Series 14, see Financial Industry 
Regulatory Authority, Compliance Official Qualification Examination 
(Test Series 14): Content Outline, (2012), available at https://www.finra.org/web/groups/industry/@ip/@comp/@regis/documents/industry/p117564.pdf.
    \10\ See, e.g., CBOE Rule 3.6A.08(b); NASD Notice to Members 01-
51 (August 2001), available at https://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p003809.pdf; Chicago 
Stock Exchange, Inc. Member Regulation Department Information 
Memorandum (May 8, 2013), available at https://www.chx.com/content/Participant_Information/Downloadable_Docs/MarketRegulation/1_InformationMemoranda/2013/MR-13-04_New_Registration_ Categories_
and_Related_Qualification_Exams.pdf; NYSE Information Memo 07-43 
(May 9, 2007), available at https://www.nyse.com/nysenotices/nyse/information-memos/pdf?memo_id=07-43.
---------------------------------------------------------------------------

    In addition, to accommodate the new Proprietary Trader registration 
category, the Exchange proposes to add language to Interpretation and 
Policy .01(d) of Rule 2.5 that will create a new category of limited 
representative Principal--the Proprietary Trader Principal--and clarify 
the prerequisites necessary for Proprietary Trader Principals as 
opposed to General Securities Principals. Registration as a Proprietary 
Trader Principal will be restricted to individuals whose supervisory 
responsibilities are limited to proprietary traders, as defined in 
amended Interpretation and Policy .01(f) of Rule 2.5. The Exchange will 
permit the Series 56 as a prerequisite to the General Securities 
Principal Examination (``Series 24'') or Compliance Official 
Examination (``Series 14'').\11\
---------------------------------------------------------------------------

    \11\ As noted, the Exchange will only permit the Series 14 for 
those designated as Chief Compliance Officers on Schedule A of Form 
BD.
---------------------------------------------------------------------------

    The Exchange also proposes to add language to Interpretation and 
Policy .01(d) of Rule 2.5 to clarify the appropriate prerequisites for 
registration as a General Securities Principals.\12\ The Exchange will 
continue to require General Securities Principals to successfully 
complete the General Securities Representative Registration (``Series 
7'') or an equivalent foreign examination module (``Series 17'' or 
``Series 37/38'').
---------------------------------------------------------------------------

    \12\ General Securities Principals are individuals that 
supervise the activities of General Securities Representatives.
---------------------------------------------------------------------------

    The Exchange believes that the prerequisite examination requirement 
for registration as a Proprietary Trader Principal is appropriate 
because, as noted above, the Series 56 is specifically designed to 
address industry topics and establish the appropriate regulatory and 
procedural knowledge base relevant to proprietary trading. Moreover, 
the Exchange will continue to require successful completion of either 
the Series 24 or Series 14 for both Proprietary Trader Principals and 
General Securities Principals, thereby ensuring that all Principals 
have the necessary knowledge and skill to act in a supervisory 
capacity. Additionally, the Exchange notes that creating the 
registration category of Proprietary Trader Principal is consistent 
with registration requirements of other national securities 
exchanges.\13\
---------------------------------------------------------------------------

    \13\ See, e.g., BOX Rule 2020(c)(2); CBOE Rule 3.6A.08; NASDAQ 
OMX BX Rule 1022(h); NASDAQ OMX PHLX Rule 612(e).
---------------------------------------------------------------------------

Acceptable Qualification Examinations
    The Exchange proposes to add Interpretation and Policy .01(h) of 
Rule 2.5, which will include a chart that sets forth the relevant 
qualification requirements for each registration category described in 
the rule. This chart will not change the qualification requirements in 
any way. It will merely clarify the requirements described in the Rule, 
thereby avoiding any confusion regarding qualification examinations the 
Exchange deems acceptable for each registration category.
Acceptable Continuing Education Programs
    The Exchange also proposes to add language to Interpretation and 
Policy .02(e) to Rule 2.5 that will clarify the different continuing 
education (``CE'') requirements for registered persons based upon their 
registration with the Exchange. Specifically, the Exchange proposes to 
introduce a chart that enumerates the Regulatory Element programs 
necessary for each registration category and introduce a new Regulatory 
Element program for those persons registered as Proprietary Traders.
    Existing Interpretation and Policy .02(a) of Rule 2.5 requires all 
registered representatives to complete the Regulatory Element of the 
continuing education program at specified intervals and states that the 
content of the Regulatory Element shall be determined by the Exchange 
for each registration category of persons subject to the Rule. The 
Regulatory Element is a computer-based education program administered

[[Page 52816]]

by the Financial Industry Regulatory Authority (``FINRA'') to help 
ensure that registered persons are kept up to date on regulatory, 
compliance and sales practice matters in the industry. Currently, there 
are there two Regulatory Element programs: The S201 Supervisor Program 
for registered principals and supervisors and the S101 General Program 
for Series 7 and all other registered persons.\14\ The Exchange is 
proposing to enumerate these existing programs in Interpretation and 
Policy .02(e) to Rule 2.5, as well as the new S501 Series 56 
Proprietary Trader Continuing Education Program for those persons 
registered as Proprietary Traders.
---------------------------------------------------------------------------

    \14\ The Commission notes that there are three Regulatory 
Element programs. The S106 is the Regulatory Element program for 
persons who are Series 6 qualified.
---------------------------------------------------------------------------

    The Exchange is also proposing to introduce a new CE program for 
persons registered with the Exchange solely as Proprietary Traders by 
passing the Series 56. Proposed Interpretation and Policy .01(f) to 
Rule 2.5 outlines the registration and qualification requirements for 
those wishing to register with the Exchange as a Proprietary Trader, 
making clear that the Series 56 is a prerequisite for this registration 
category.
    The Proprietary Trader Continuing Education Program (S501) is a 
computer-based education program developed by many of the self-
regulatory organizations that worked to develop the Series 56 
(``Participating SROs'') \15\ and administered by FINRA to ensure that 
registered persons are kept current on regulatory, compliance, and 
trading practice matters in the industry. Unlike the other offered CE 
programs, the S501 is not part of the Uniform Continuing Education 
Program, which is developed and maintained by the Securities Industry 
Regulatory Council on Continuing Education.
---------------------------------------------------------------------------

    \15\ The Participating SROs that have assisted with the 
development of, and plan to administer, the Series 56 and S501 are 
the Exchange, Chicago Board Options Exchange, C2 Options Inc., the 
Chicago Stock Exchange, Inc., the New York Stock Exchange, LLC, NYSE 
Arca, Inc., NYSE Amex, LLC, the NASDAQ Stock Market LLC, the 
National Stock Exchange, Inc., NASDAQ OMX BX, Inc., NASDAQ OMX PHLX, 
LLC, EDGA Exchange, Inc., EDGX Exchange, Inc., International 
Securities Exchange, LLC, and BOX Options Exchange, LLC.
---------------------------------------------------------------------------

    The S501 will logistically operate as the currently offered CE 
programs do. Specifically, registered persons will be required, through 
CRD, to complete the Regulatory Element of the CE on the second 
anniversary of the base date and then every three years thereafter. 
While creating the S501, the Participating SROs believe that the 
current procedures of the other CE programs work well. The Securities 
Industry Regulatory Council on Continuing Education has tailored the 
process of the other CE programs since its inception and made it 
successful. Thus, as proposed, the S501 will work in the same manner. 
In addition, consistency between the different programs will avoid 
creating confusion among registered persons and FINRA.
    The S501 is required for registrants who are registered as 
Proprietary Traders and do not maintain any other registration through 
CRD.\16\ Individuals that are registered under any other registration 
are required to maintain the CE obligations associated with such 
registrations. For example, an individual that engages solely in 
proprietary trading activities yet continues to maintain a Series 7 
registration will be required to continue taking the Series 7 
Continuing Education Program (S101).\17\ Although such an individual 
may be engaging in the same activities as an individual registered as a 
Proprietary Trader, the Series 7 Examination is more comprehensive and 
covers topics that the Series 56 does not. Thus, the Exchange believes 
that this individual should complete the CE associated with the Series 
7 because this covers all aspects of the individual's registration.
---------------------------------------------------------------------------

    \16\ Any registered person who receives a waiver of the Series 
56 under Rule 2.5.01(b), and does not maintain any other 
registrations in CRD, will be required to complete the Proprietary 
Trader Continuing Education Program (S501).
    \17\ See id. If a registered person has received a Series 56 
waiver under Rule 2.5.01(b) but continues to maintain a Series 7 
registration (that predates the introduction of the Series 56 on the 
Exchange), that registered individual will only be required to take 
the Series 7 CE Program (S101). Through CRD, FINRA will recognize 
the Series 56 as waived while still requiring the Series 7 CE 
completion.
---------------------------------------------------------------------------

    The introduction of the S501 allows the Exchange to tailor its CE 
requirements more closely to the duties of individuals who have 
registered with the Exchange as Proprietary Traders after passing the 
Series 56. More specifically, the Exchange believes allowing 
individuals engaging in proprietary trading and registered under the 
Series 56 to complete a separate CE program than those maintaining a 
Series 7 registration is appropriate given that all individuals have 
the option of taking either test. In comparison to the more 
comprehensive Series 7, the Series 56 Examination is more closely 
tailored to the practice of proprietary trading. As such, the Exchange 
believes a Series 56 CE program should be tailored as well. At the same 
time, if an individual would like to retain a Series 7 license, the 
Exchange believes it is appropriate they continue to be required to 
complete the broader CE program, which covers all aspects of this 
registration.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\18\ in general, and furthers the objectives of Section 
6(c)(3)(B) of the Act in particular.\19\ Under Section 6(c)(3)(B), it 
is the Exchange's responsibility to prescribe standards of training, 
experience, and competence for Exchange Members and their associated 
persons.\20\ The Exchange proposes to recognize a new category of 
limited representative registration for proprietary traders and to 
permit Authorized Traders of Members who engage solely in proprietary 
trading to obtain the Series 56 license in lieu of the more general 
Series 7 license. The Exchange believes the Series 56 establishes that 
Authorized Traders of Members have attained specified levels of 
competence and knowledge generally applicable to proprietary trading.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78(c)(3)(B).
    \20\ Id.
---------------------------------------------------------------------------

    Additionally, the Exchange is offering an alternative qualification 
examination, the Series 14, for Principals designated as Chief 
Compliance Officers. The Exchange believes this examination establishes 
the skill and knowledge base necessary for a compliance official. 
Moreover, acceptance of this alternative examination will provide an 
alternate, appropriate examination requirement for certain individuals 
associated with Exchange Members.
    To accommodate recognition of limited representative registration 
as proprietary Traders, the Exchange proposes to recognize a new 
category of limited representative principal registration for 
individuals whose supervisory responsibilities are restricted to 
proprietary traders. The Exchange will accept the Series 56 as a 
prerequisite to the successful completion of a permissible Principal 
Examination. The Exchange will continue to require successful 
completion of either the Series 24 or Series 14 examination for all 
Principals because the Exchange believes that these examinations 
establish the skill and knowledge base appropriate for individuals 
responsible for supervising the activities of a member's Authorized 
Traders.
    Finally, the Exchange proposes to codify existing CE requirements 
for persons registered with the Exchange, while also introducing a new 
CE program that prescribes a standard for

[[Page 52817]]

Series 56 registered persons. The Exchange believes the proposed 
changes are reasonable and set forth the appropriate CE requirements 
for an individual required to register under Rule 2.5.
    The Exchange believes the proposed changes are also consistent with 
Section 6(b)(5) of the Act \21\ because they would promote just and 
equitable principles of trade, 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. The Exchange 
believes the rule changes accomplish these objectives by enabling 
individuals to qualify for registration with the Exchange by passing a 
qualification examination that specifically addresses industry topics 
that establish the foundation for the regulatory and procedural 
knowledge necessary for such persons electing to register as 
Proprietary Traders and/or Proprietary Trader Principals. Furthermore, 
the Exchange is clarifying the continuing education requirements 
necessary for individuals that choose to register as Proprietary 
Traders, as well as the basic qualification requirements necessary for 
all categories of registration, thereby avoiding any unnecessary 
investor with regard to such requirements.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange notes that the 
proposed rule changes related to registration requirements will align 
Exchange Rules with those of many other national securities 
exchanges.\22\ Unifying the qualification requirements for registration 
as a Proprietary Trader and Proprietary Trader Principal across 
exchanges promotes clarity for investors and promotes competition among 
exchanges for trading volume. Similarly, accepting an alternative 
examination for Principals designated as Chief Compliance Officers on 
Form BD will avoid duplicative examination requirements among 
exchanges, thereby furthering competition among these exchanges and 
reducing the burden on individuals that are well-qualified to act in a 
supervisory capacity.
---------------------------------------------------------------------------

    \22\ See, e.g., BOX Rule 2020(b)(2), (c)(2); CBOE Rule 3.6A.08; 
NASDAQ OMX BX Rules 1022(h), 1032(b); NASDAQ OMX PHLX Rules 612(e), 
613(f); NYSE Arca Options Rule 2.23(b)(2); EDGX Rule 2.5.06; see 
also NASD Notice to Members 01-51 (August 2001), available at https://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p003809.pdf; Chicago Stock Exchange, Inc. Member Regulation 
Department Information Memorandum (May 8, 2013), available at https://www.chx.com/content/Participant_Information/Downloadable_Docs/MarketRegulation/1_InformationMemoranda/2013/MR-13-04_New_Registration_Categories_and_Related_Qualification_Exams.pdf; 
NYSE Information Memo 07-43 (May 9, 2007), available at https://www.nyse.com/nysenotices/nyse/information-memos/pdf?memo_id=07-43.
---------------------------------------------------------------------------

    In addition, the proposed rule change clarifying the specific CE 
requirements for all registration categories will align Exchange Rules 
with those of the Chicago Board Option Exchange (``CBOE'').\23\ The 
Exchange does not believe that these proposed rule changes will affect 
intermarket competition because the Exchange believes that all 
exchanges that impose the same CE requirements will file similar rule 
changes addressing these CE programs. Furthermore, the Exchange does 
not believe the proposed change will affect intramarket competition 
because all similarly situated registered persons (e.g. registered 
persons maintaining the same registrations) are required to complete 
the same CE requirements. For example, all individuals maintaining a 
Series 7 registration will be required to complete the Series 7 CE, 
while all individuals maintaining a Series 56 registration (and no 
other registrations) will be required to complete the new Series 56 CE.
---------------------------------------------------------------------------

    \23\ See Securities Exchange Act Release No. 70027 (July 23, 
2013), 78 FR 45584 (July 29, 2013) (SR-CBOE-2013-076).
---------------------------------------------------------------------------

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, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\24\ and Rule 19b-4(f)(6) thereunder.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(3)(A).
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day 
operative delay. The proposed rule change will allow the Exchange to 
formally recognize a new category of limited representative 
registration for Proprietary Traders and Proprietary Trader Principals, 
as well as the Series 56 examination. The proposed rule change also 
aligns the Exchange's registration and examination requirements for 
Proprietary Traders and Chief Compliance Officers with those of other 
exchanges, and specifies the qualification examinations and continuing 
education requirements for the different registration categories. 
Waiver of the operative delay would allow the Exchange to implement the 
proposed rule change without delay, enabling the Authorized Traders of 
its Members to comply with their registration, examination and 
continuing education requirements in a timely manner, and thus is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission designates the proposal operative upon 
filing.\25\
---------------------------------------------------------------------------

    \25\ For purposes only of waiving the 30-day operative delay, 
the Commission has 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 this 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 will institute proceedings to 
determine whether the proposed rule change 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 email to rule-comments@sec.gov. Please include 
File Number SR-BATS-2013-046 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-BATS-2013-046. This file

[[Page 52818]]

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 (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 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BATS-2013-046 and should be 
submitted on or before September 16, 2013.
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    \26\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20746 Filed 8-23-13; 8:45 am]
BILLING CODE 8011-01-P
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