Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 604, Continuing Education for Registered Persons, and To Adopt a Corresponding Fee, 57907-57909 [2013-22881]
Download as PDF
Federal Register / Vol. 78, No. 183 / Friday, September 20, 2013 / Notices
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–
NASDAQ–2013–118 and should be
submitted on or before October 11,
2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–22884 Filed 9–19–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Amend Rule 604,
Continuing Education for Registered
Persons, and To Adopt a
Corresponding Fee
September 16, 2013.
mstockstill on DSK4VPTVN1PROD 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
September 13, 2013, the International
Securities Exchange, LLC (the
‘‘Exchange’’ or the ‘‘ISE’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to amend
Rule 604 to clarify the current
continuing education requirements for
registered persons based upon their
registration with the Exchange, and to
adopt a new continuing education
requirement for Series 56 registered
persons, including a corresponding fee.
The text of the proposed rule change
is available on the Exchange’s Internet
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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17:24 Sep 19, 2013
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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
self-regulatory organization 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
[Release No. 34–70417; File No. SR–ISE–
2013–48]
13 17
Web site at http://www.ise.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
1. Purpose
The purpose of the proposed rule
change is to clarify the current
continuing education requirements for
registered persons based upon their
registration with the Exchange, and to
adopt a new continuing education
requirement for Series 56 registered
persons (‘‘Proprietary Traders’’). The
Exchange also proposes to adopt a fee
for the new continuing education
program applicable to Proprietary
Traders.
The Exchange adopted the Proprietary
Trader registration in 2011, working
with various other exchanges and the
Financial Industry Regulatory Authority
(‘‘FINRA’’). At this time, the Exchange
is proposing a new Proprietary Trader
continuing education program which
will be administered by FINRA. The
new program, the S501, is intended to
address the specific continuing
education of Proprietary Traders, based
on the content outline for the Series 56
exam, which covers the main categories
of rules and regulations generally
applicable to such persons.3
The S501 is required for persons who
are registered as Proprietary Traders and
do not maintain any other registration.
Individuals that are registered under
any other registration are required to
maintain the continuing educations [sic]
obligations associated with such
registrations. For example, an
3 These generally include recordkeeping and
recording requirements, types and characteristics of
securities and investments, trading practices and
display execution and trading systems. See
Securities Exchange Act Release No. 65054 (Aug. 8,
2011), 76 FR 50277 (Aug. 12, 2011) (SR–ISE–2011–
36).
PO 00000
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Fmt 4703
Sfmt 4703
57907
individual that engages solely in
proprietary trading activities but has
passed the Series 7 and is registered as
a General Securities Representative will
be required to continue taking the Series
7 continuing education program (S101).
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 continuing
education 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 continuing
education 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 solely in proprietary trading
who take the Series 56 and register as
Proprietary Traders to complete a
separate continuing education program
than those Proprietary Traders who
passed the Series 7 and maintain a
General Securities Representative
registration is appropriate given that all
individuals who engage solely in
proprietary trading 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
continuing education program should
be tailored as well. At the same time, if
an individual who has passed the Series
7 would like to retain a General
Securities Representative registration,
the Exchange believes it is appropriate
they [sic] continue to be required to
complete the broader continuing
education program, which covers all
aspects of this registration.
The Exchange also proposes to amend
Rule 604(a) to specify the required
Regulatory Element for each category of
registered persons. Currently, Rule
604(a) provides that no Member shall
permit any registered person to continue
to, and no registered person shall
continue to, perform duties as a
registered person, unless such person
has complied with the continuing
education requirements of paragraph (a).
Each registered person shall complete
the Regulatory Element of the
continuing education program on the
occurrence of their [sic] second
registration anniversary date(s), and
every three years thereafter or as
otherwise prescribed by the Exchange.
On each occasion, the Regulatory
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mstockstill on DSK4VPTVN1PROD with NOTICES
Element must be completed within 120
days after the person’s registration
anniversary date. A person’s initial
registration date, also known as the
‘‘base date,’’ shall establish the cycle of
anniversary dates for purposes of this
Rule. This applies to persons registered
as Proprietary Traders as well.
The Rule further provides that the
content of the Regulatory Element of the
program shall be determined by the
Exchange for each registration category
of persons subject to the Rule. The
Exchange now proposes to make clear
which specific programs are required,
including both existing programs (S101
and S201) as well as the new
Proprietary Trader continuing education
program (S501). The following
Regulatory Elements administered by
FINRA shall be required:
The S201 Supervisor Program for
registered principals and supervisors;
The S501 Series 56 Proprietary Trader
Continuing Education Program for
Series 56 registered persons; and
The S101 General Program for Series
7 and all other registered persons.
The Exchange believes that specifying
the applicable Regulatory Element in
the Rule should be helpful to Members
in complying with the Rule. Only one
Regulatory Element is required. For
example, members registered as
supervisors are subject to the S201 only;
they do not also have to complete the
Regulatory Element applicable to their
prerequisite registration, such as the
S501 or the S101.4 This proposal does
not change the registration
requirements.
The Exchange also proposes to adopt
a $60 fee for the S501 continuing
education program, which will be used
for the administration of the S501.
FINRA administers this program on
behalf of the exchanges and therefore
the fees are payable directly to FINRA.5
The Exchange expects that the
exchanges that recognize the Proprietary
Trader registration either have or will
adopt the same fee for continuing
education.
4 As stated above, in the event that a person is
registered both as a Proprietary Trader (Series 56)
and a General Securities Representative (Series 7),
only one Regulatory Element is required—the
‘‘higher’’ of the two, which is the S101.
5 The S501 was established for those registrants
who have passed the Series 56 Qualification Exam
as reflected in WebCRD. WebCRD is the central
licensing and registration system for the U.S.
securities industry. The CRD system enables
individuals and firms seeking registration with
multiple states and self-regulatory organizations to
do so by submitting a single form, fingerprint card
and a combined payment of fees to FINRA. Through
the CRD system, FINRA maintains the qualification,
employment and disciplinary histories of registered
associated persons of broker-dealers.
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17:24 Sep 19, 2013
Jkt 229001
The Exchange’s Schedule of Fees does
not currently set forth the session fees
for other continuing education programs
required by the Exchange because these
programs are within the jurisdiction of
the Financial Industry Regulatory
Authority (‘‘FINRA’’), which collects
these session fees from its members. The
Series 56, however, applies to ISE
Members that are not required by
Section 15(b)(8) 6 of the Act to become
members of FINRA. Therefore, the
Exchange believes it is appropriate to
include the Series 56 continuing
education fee within the Exchange’s
Schedule of Fees to make the cost of this
program clear to ISE Members.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 7 in general, and furthers the
objectives of: (1) Section 6(c)(3)(B) of the
Act,8 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,9 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
requiring registered persons to complete
the applicable continuing education
program. The Exchange believes that a
strong continuing education program
should bolster the integrity of the
Exchange by helping to ensure that all
associated persons engaged in a
securities business are, and will
continue to be, properly trained and
qualified to perform their functions.
The Exchange does not believe that
the proposal is unfairly discriminatory
with respect to persons registered as a
General Securities Representative who
function in their current job as a
Proprietary Trader, even though these
persons are subject to the more stringent
S101 rather than the S501. Such persons
are registered and qualified (Series 7) in
a ‘‘higher’’ capacity and are therefore
qualified to function in a capacity other
than a Proprietary Trader, whether they
choose to or not. Accordingly, requiring
the S101 for such persons is appropriate
and facilitates them being able to
maintain their ‘‘higher’’ registration.
Moreover, the Exchange believes that
6 15
U.S.C. 78o(b)(8).
U.S.C. 78f(b).
8 15 U.S.C. 78(c)(3)(B).
9 15 U.S.C. 78f(b)(5).
7 15
PO 00000
Frm 00072
Fmt 4703
Sfmt 4703
permitting General Securities
Representatives functioning as
Proprietary Traders to complete the
S501 would be confusing and difficult
to monitor.
The Exchange also believes that the
proposal furthers the objectives of
Section 6(b)(4) of the Act,10 in that it
provides for an equitable allocation of
reasonable fees and other charges among
Exchange Members and other persons
using its facilities. The proposed fee is
equitable, because it applies equally to
all persons registered solely as
Proprietary Traders. The Exchange notes
that it will not invoice or collect funds
from Members that are subject to these
fees because these fees will be paid
directly to FINRA as administrator of
the continuing education program. The
proposed fees are reasonably designed
to allow FINRA to cover its cost of
administering the Series 56 continuing
education program on behalf of the
Exchange, and the Exchange believes it
is reasonable and equitable to include
these fees in its Schedule of Fees to
make the costs of the Series 56
continuing education requirement clear
to Members. Moreover, the Exchange
believes other exchanges will be
assessing the same fees for this
continuing education program.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. All
Proprietary Traders, regardless of where
they are registered, will be subject to
same continuing education
requirements and fees. Thus, the
proposal treats similarly situated
persons in the same way. In addition, all
of the exchanges that recognize the
Proprietary Trader registration category
are expected to adopt the same
continuing education requirements 11
and fee.12
The proposed rule change will merely
align Exchange Rules with those of
other exchanges. The Exchange does not
believe that these proposed rule changes
10 15
U.S.C. 78f(b)(4).
e.g. Securities Exchange Act Release Nos.
70237 (Aug. 20, 2013), 78 FR 52814 (Aug. 26, 2013)
(SR–BATS–2013–046); 70027 (July 23, 2013), 78 FR
45584 (July 29, 2013) (SR–CBOE–2013–076); 70327
(Sept. 5, 2013), 78 FR 55766 (Sept. 11, 2013) (SR–
Phlx–2013–85).
12 See e.g. Securities Exchange Act Release Nos.
70257 (Aug. 26, 2013), 78 FR 53814 (Aug. 30, 2013)
(SR–BATS–2013–047); 70064 (July 30, 2013), 78 FR
47469 (Aug. 5, 2013) (SR–CBOE–2013–078); 70194
(Aug. 14, 2013) 78 FR 51259 (Aug. 20, 2013) (SR–
C2–2013–030); 70327 (Sept. 5, 2013), 78 FR 55766
(Sept. 11, 2013) (SR–Phlx–2013–85).
11 See
E:\FR\FM\20SEN1.SGM
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Federal Register / Vol. 78, No. 183 / Friday, September 20, 2013 / Notices
will affect intermarket competition
because the Exchange believes that all
exchanges that impose the same
continuing education requirements will
file similar rule changes addressing
these continuing education 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 continuing education
requirements. For example, all
individuals maintaining a Series 7
registration as a General Securities
Representative will be required to
complete the S101 continuing education
program, while all individuals
maintaining a Series 56 registration (and
no other registrations) will be required
to complete the new S501 continuing
education program.
mstockstill on DSK4VPTVN1PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
members or other interested parties.
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 13 and Rule 19b–4(f)(6)
thereunder.
The Exchange has requested that the
Commission waive the 30-day operative
delay. The proposed rule change
specifies the continuing education
requirements that currently apply to
registered persons, and adopts a
continuing education requirement, the
S501, and a related fee for persons
registered as Proprietary Traders.
Waiver of the operative delay would
allow the Exchange to clarify its rules
and implement the proposed rule
change at once, enabling its members to
clearly understand which continuing
education program applies to their
registered persons and to comply with
the continuing education requirements
13 15
U.S.C. 78s(b)(3)(A).
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17:24 Sep 19, 2013
Jkt 229001
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.14
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 (http://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
ISE–2013–48 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–ISE–2013–48. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
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
14 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 00073
Fmt 4703
Sfmt 4703
57909
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–ISE–
2013–48 and should be submitted on or
before October 11, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–22881 Filed 9–19–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–70418; File No. SR–
NASDAQ–2013–115]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Adopt Fees
and Fee Waivers for Certain Exchange
Traded Products
September 16, 2013.
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
September 3, 2013 The NASDAQ Stock
Market LLC (‘‘NASDAQ’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to adopt fees
for certain exchange traded products
and to expand existing fee waivers to
include these securities.
The text of the proposed rule change
is available at the Exchange’s Web site
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\20SEN1.SGM
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Agencies
[Federal Register Volume 78, Number 183 (Friday, September 20, 2013)]
[Notices]
[Pages 57907-57909]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-22881]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70417; File No. SR-ISE-2013-48]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Amend Rule 604, Continuing Education for Registered Persons,
and To Adopt a Corresponding Fee
September 16, 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 September 13, 2013, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which items have been prepared by
the Exchange. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend Rule 604 to clarify the current
continuing education requirements for registered persons based upon
their registration with the Exchange, and to adopt a new continuing
education requirement for Series 56 registered persons, including a
corresponding fee.
The text of the proposed rule change is available on the Exchange's
Internet Web site at http://www.ise.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 self-regulatory organization 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 clarify the current
continuing education requirements for registered persons based upon
their registration with the Exchange, and to adopt a new continuing
education requirement for Series 56 registered persons (``Proprietary
Traders''). The Exchange also proposes to adopt a fee for the new
continuing education program applicable to Proprietary Traders.
The Exchange adopted the Proprietary Trader registration in 2011,
working with various other exchanges and the Financial Industry
Regulatory Authority (``FINRA''). At this time, the Exchange is
proposing a new Proprietary Trader continuing education program which
will be administered by FINRA. The new program, the S501, is intended
to address the specific continuing education of Proprietary Traders,
based on the content outline for the Series 56 exam, which covers the
main categories of rules and regulations generally applicable to such
persons.\3\
---------------------------------------------------------------------------
\3\ These generally include recordkeeping and recording
requirements, types and characteristics of securities and
investments, trading practices and display execution and trading
systems. See Securities Exchange Act Release No. 65054 (Aug. 8,
2011), 76 FR 50277 (Aug. 12, 2011) (SR-ISE-2011-36).
---------------------------------------------------------------------------
The S501 is required for persons who are registered as Proprietary
Traders and do not maintain any other registration. Individuals that
are registered under any other registration are required to maintain
the continuing educations [sic] obligations associated with such
registrations. For example, an individual that engages solely in
proprietary trading activities but has passed the Series 7 and is
registered as a General Securities Representative will be required to
continue taking the Series 7 continuing education program (S101).
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 continuing education 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
continuing education 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 solely in proprietary trading
who take the Series 56 and register as Proprietary Traders to complete
a separate continuing education program than those Proprietary Traders
who passed the Series 7 and maintain a General Securities
Representative registration is appropriate given that all individuals
who engage solely in proprietary trading 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
continuing education program should be tailored as well. At the same
time, if an individual who has passed the Series 7 would like to retain
a General Securities Representative registration, the Exchange believes
it is appropriate they [sic] continue to be required to complete the
broader continuing education program, which covers all aspects of this
registration.
The Exchange also proposes to amend Rule 604(a) to specify the
required Regulatory Element for each category of registered persons.
Currently, Rule 604(a) provides that no Member shall permit any
registered person to continue to, and no registered person shall
continue to, perform duties as a registered person, unless such person
has complied with the continuing education requirements of paragraph
(a). Each registered person shall complete the Regulatory Element of
the continuing education program on the occurrence of their [sic]
second registration anniversary date(s), and every three years
thereafter or as otherwise prescribed by the Exchange. On each
occasion, the Regulatory
[[Page 57908]]
Element must be completed within 120 days after the person's
registration anniversary date. A person's initial registration date,
also known as the ``base date,'' shall establish the cycle of
anniversary dates for purposes of this Rule. This applies to persons
registered as Proprietary Traders as well.
The Rule further provides that the content of the Regulatory
Element of the program shall be determined by the Exchange for each
registration category of persons subject to the Rule. The Exchange now
proposes to make clear which specific programs are required, including
both existing programs (S101 and S201) as well as the new Proprietary
Trader continuing education program (S501). The following Regulatory
Elements administered by FINRA shall be required:
The S201 Supervisor Program for registered principals and
supervisors;
The S501 Series 56 Proprietary Trader Continuing Education Program
for Series 56 registered persons; and
The S101 General Program for Series 7 and all other registered
persons.
The Exchange believes that specifying the applicable Regulatory
Element in the Rule should be helpful to Members in complying with the
Rule. Only one Regulatory Element is required. For example, members
registered as supervisors are subject to the S201 only; they do not
also have to complete the Regulatory Element applicable to their
prerequisite registration, such as the S501 or the S101.\4\ This
proposal does not change the registration requirements.
---------------------------------------------------------------------------
\4\ As stated above, in the event that a person is registered
both as a Proprietary Trader (Series 56) and a General Securities
Representative (Series 7), only one Regulatory Element is required--
the ``higher'' of the two, which is the S101.
---------------------------------------------------------------------------
The Exchange also proposes to adopt a $60 fee for the S501
continuing education program, which will be used for the administration
of the S501. FINRA administers this program on behalf of the exchanges
and therefore the fees are payable directly to FINRA.\5\ The Exchange
expects that the exchanges that recognize the Proprietary Trader
registration either have or will adopt the same fee for continuing
education.
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\5\ The S501 was established for those registrants who have
passed the Series 56 Qualification Exam as reflected in WebCRD.
WebCRD is the central licensing and registration system for the U.S.
securities industry. The CRD system enables individuals and firms
seeking registration with multiple states and self-regulatory
organizations to do so by submitting a single form, fingerprint card
and a combined payment of fees to FINRA. Through the CRD system,
FINRA maintains the qualification, employment and disciplinary
histories of registered associated persons of broker-dealers.
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The Exchange's Schedule of Fees does not currently set forth the
session fees for other continuing education programs required by the
Exchange because these programs are within the jurisdiction of the
Financial Industry Regulatory Authority (``FINRA''), which collects
these session fees from its members. The Series 56, however, applies to
ISE Members that are not required by Section 15(b)(8) \6\ of the Act to
become members of FINRA. Therefore, the Exchange believes it is
appropriate to include the Series 56 continuing education fee within
the Exchange's Schedule of Fees to make the cost of this program clear
to ISE Members.
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\6\ 15 U.S.C. 78o(b)(8).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \7\ in general, and furthers the objectives of: (1)
Section 6(c)(3)(B) of the Act,\8\ 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,\9\ 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
requiring registered persons to complete the applicable continuing
education program. The Exchange believes that a strong continuing
education program should bolster the integrity of the Exchange by
helping to ensure that all associated persons engaged in a securities
business are, and will continue to be, properly trained and qualified
to perform their functions.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78(c)(3)(B).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange does not believe that the proposal is unfairly
discriminatory with respect to persons registered as a General
Securities Representative who function in their current job as a
Proprietary Trader, even though these persons are subject to the more
stringent S101 rather than the S501. Such persons are registered and
qualified (Series 7) in a ``higher'' capacity and are therefore
qualified to function in a capacity other than a Proprietary Trader,
whether they choose to or not. Accordingly, requiring the S101 for such
persons is appropriate and facilitates them being able to maintain
their ``higher'' registration. Moreover, the Exchange believes that
permitting General Securities Representatives functioning as
Proprietary Traders to complete the S501 would be confusing and
difficult to monitor.
The Exchange also believes that the proposal furthers the
objectives of Section 6(b)(4) of the Act,\10\ in that it provides for
an equitable allocation of reasonable fees and other charges among
Exchange Members and other persons using its facilities. The proposed
fee is equitable, because it applies equally to all persons registered
solely as Proprietary Traders. The Exchange notes that it will not
invoice or collect funds from Members that are subject to these fees
because these fees will be paid directly to FINRA as administrator of
the continuing education program. The proposed fees are reasonably
designed to allow FINRA to cover its cost of administering the Series
56 continuing education program on behalf of the Exchange, and the
Exchange believes it is reasonable and equitable to include these fees
in its Schedule of Fees to make the costs of the Series 56 continuing
education requirement clear to Members. Moreover, the Exchange believes
other exchanges will be assessing the same fees for this continuing
education program.
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\10\ 15 U.S.C. 78f(b)(4).
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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 that is not necessary or appropriate
in furtherance of the purposes of the Act. All Proprietary Traders,
regardless of where they are registered, will be subject to same
continuing education requirements and fees. Thus, the proposal treats
similarly situated persons in the same way. In addition, all of the
exchanges that recognize the Proprietary Trader registration category
are expected to adopt the same continuing education requirements \11\
and fee.\12\
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\11\ See e.g. Securities Exchange Act Release Nos. 70237 (Aug.
20, 2013), 78 FR 52814 (Aug. 26, 2013) (SR-BATS-2013-046); 70027
(July 23, 2013), 78 FR 45584 (July 29, 2013) (SR-CBOE-2013-076);
70327 (Sept. 5, 2013), 78 FR 55766 (Sept. 11, 2013) (SR-Phlx-2013-
85).
\12\ See e.g. Securities Exchange Act Release Nos. 70257 (Aug.
26, 2013), 78 FR 53814 (Aug. 30, 2013) (SR-BATS-2013-047); 70064
(July 30, 2013), 78 FR 47469 (Aug. 5, 2013) (SR-CBOE-2013-078);
70194 (Aug. 14, 2013) 78 FR 51259 (Aug. 20, 2013) (SR-C2-2013-030);
70327 (Sept. 5, 2013), 78 FR 55766 (Sept. 11, 2013) (SR-Phlx-2013-
85).
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The proposed rule change will merely align Exchange Rules with
those of other exchanges. The Exchange does not believe that these
proposed rule changes
[[Page 57909]]
will affect intermarket competition because the Exchange believes that
all exchanges that impose the same continuing education requirements
will file similar rule changes addressing these continuing education
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 continuing
education requirements. For example, all individuals maintaining a
Series 7 registration as a General Securities Representative will be
required to complete the S101 continuing education program, while all
individuals maintaining a Series 56 registration (and no other
registrations) will be required to complete the new S501 continuing
education program.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.
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
\13\ and Rule 19b-4(f)(6) thereunder.
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\13\ 15 U.S.C. 78s(b)(3)(A).
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The Exchange has requested that the Commission waive the 30-day
operative delay. The proposed rule change specifies the continuing
education requirements that currently apply to registered persons, and
adopts a continuing education requirement, the S501, and a related fee
for persons registered as Proprietary Traders. Waiver of the operative
delay would allow the Exchange to clarify its rules and implement the
proposed rule change at once, enabling its members to clearly
understand which continuing education program applies to their
registered persons and to comply with the 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.\14\
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\14\ 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).
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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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-ISE-2013-48 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-ISE-2013-48. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the 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-ISE-2013-48 and should be
submitted on or before October 11, 2013.
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\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-22881 Filed 9-19-13; 8:45 am]
BILLING CODE 8011-01-P