Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the Securities Trader and Securities Trader Principal Registration Categories, 71847-71850 [2015-29225]
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Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices
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BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76409; File No. SR–BX–
2015–066]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Establish
the Securities Trader and Securities
Trader Principal Registration
Categories
November 10, 2015.
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 November
4, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’
or ‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to establish
the Securities Trader and Securities
Trader Principal registration categories
and to retire the Limited
Representative—Proprietary Trader and
Limited Principal—Proprietary Trader
registration categories. The Exchange is
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00078
Fmt 4703
Sfmt 4703
71847
also amending its rules to establish the
Series 57 examination as the
appropriate qualification examination
for Securities Traders and deleting the
rule referring to the S501 continuing
education program currently applicable
to Proprietary Traders.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaqomxbx.cchwall
street.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 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 Exchange is proposing to replace
the Proprietary Trader registration
category (the ‘‘Proprietary Trader’’
registration category) and Proprietary
Trader qualification examination (Series
56) with the Securities Trader
registration category and Securities
Trader qualification examination (Series
57) in its registration rules relating to
securities trading activity. Similarly, the
Exchange proposes to replace the
Limited Principal—Proprietary Trader
registration category (the ‘‘Proprietary
Trader Principal’’ registration category)
with the Securities Trader Principal
registration category.
This filing is, in all material respects,
based upon SR–FINRA–2015–017,
which was recently approved by the
Commission.3
I. Securities Trader Registration
Category
Today, BX Rule 1032(a) requires each
person associated with a member who is
included within the definition of a
3 See Securities Exchange Act Release No. 75783
(August 28, 2015), 80 FR 53369 (September 3, 2015)
(approving SR–FINRA–2015–017) (the ‘‘FINRA
Amendments’’).
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Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices
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Representative 4 to register with the
Exchange as a General Securities
Representative and to pass an
appropriate Qualification Examination
before such registration may become
effective unless his or her activities are
so limited as to qualify him for one or
more limited categories of
representative registration specified in
Rule 1032. Subparagraph (b) to Rule
1032 sets forth the Proprietary Trader
category of registration limited to
persons who are associated with a
proprietary trading firm 5 and whose
activities in the investment banking or
securities business are limited solely to
proprietary trading. Persons who deal
with the public do not fit in this
registration category and must continue
to register as General Securities
Representatives.6
The Exchange is proposing to retire
the Proprietary Trader registration
category by deleting current Rule
1032(b) and adopting proposed Rule
1032(b) establishing the new Securities
Trader registration category. Proposed
Rule 1032(b) requires that each person
associated with a member who is
included within the definition of a
representative as defined in Rule 1011
must register with the Exchange as a
Securities Trader if, with respect to
transactions in equity, preferred or
convertible debt securities, or foreign
currency options on the Exchange, such
person is engaged in proprietary trading,
the execution of transactions on an
agency basis, or the direct supervision
4 ‘‘Representative’’ is defined in Rule 1011 as an
Associated Person of a registered broker or dealer
who is engaged in the investment banking or
securities business for the member including the
functions of supervision, solicitation or conduct of
business in securities or who is engaged in the
training of persons associated with a broker or
dealer for any of these functions are designated as
representatives. As provided in Rule 1031, all
Representatives of BX members are required to be
registered with the Exchange, and Representatives
that are so registered are referred to as ‘‘Registered
Representatives’’.
5 ‘‘Proprietary trading firm’’ is defined in Rule
1011 as an Applicant with the following
characteristics: (1) The Applicant is not required by
Section 15(b)(8) of the Act to become a FINRA
member but is a member of another registered
securities exchange not registered solely under
Section 6(g) of the Act; (2) all funds used or
proposed to be used by the Applicant for trading
are the Applicant’s own capital, traded through the
Applicant’s own accounts; (3) the Applicant does
not, and will not have ‘‘customers,’’ as that term is
defined in Equity Rule 0120(g); and(4) all Principals
and Representatives of the Applicant acting or to be
acting in the capacity of a trader must be owners
of, employees of, or contractors to the Applicant.
6 Persons who are registered as General Securities
Representatives and have passed the Series 7 may
perform the functions of a Proprietary Trader.
Associated persons may register as General
Securities Representatives upon passing the Series
7 examination and then function as a Proprietary
Trader.
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of such activities, other than any person
associated with a member whose trading
activities are conducted principally on
behalf of an investment company that is
registered with the Commission
pursuant to the Investment Company
Act of 1940 and that controls, is
controlled by or is under common
control, with the member (an
‘‘investment company firm’’). The
proposed language requires applicants
to pass an appropriate Qualification
Examination for Securities Trader (the
Series 57 examination) before
registering in the new Securities Trader
category. It also provides that a person
registered as a Securities Trader shall
not be qualified to function in any other
registration category, unless he or she is
also qualified and registered in such
other registration category.
A person registered as a Proprietary
Trader in the Central Registration
Depository (CRD®) system on the
effective date of the proposed rule
change will be grandfathered as a
Securities Trader without having to take
any additional examinations and
without having to take any other
actions. In addition, individuals who
were registered as a Proprietary Trader
in the CRD system prior to the effective
date of the proposed rule change will be
eligible to register as Securities Traders
without having to take any additional
examinations, provided that no more
than two years have passed between the
date they were last registered as a
representative and the date they register
as a Securities Trader.
Persons registered in the new category
would be subject to the continuing
education requirements of Rule 1120.
The Exchange proposes to amend Rule
1120(a) by removing the option for
Series 56 registered persons to
participate in the S501 Series 56
Proprietary Trader continuing education
program in order to satisfy the
Regulatory Element. The S501 Series 56
Proprietary Trader continuing education
program is being phased out along with
the Series 56 Proprietary Trader
qualification examination. As a result,
effective January 4, 2016, the S501
Series 56 Proprietary Trader continuing
education program for Series 56
registered persons will cease to exist. In
place of the S501 Series 56 Proprietary
Trader continuing education program
for Series 56 registered persons, the
Exchange proposes that Series 57
registered persons be permitted to enroll
in the S101 General Program for Series
7 and all other registered persons.7
7 The Commission notes that amended Rule
1120(a)(1) would require Series 57 registered
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II. Securities Trader Principal
Registration Category
Currently, Exchange Rule 1021
requires all persons engaged or to be
engaged in the investment banking or
securities business of a member who are
to function as principals to be registered
as such with the Exchange in the
category of registration appropriate to
the function to be performed as
specified in Rule 1022.8 Before their
registration can become effective, they
are required to pass a Qualification
Examination for Principals appropriate
to the category of registration as
specified by the Exchange Board.
Pursuant to Rule 1021(b), persons
associated with a member as sole
proprietor, officer, partner, manager of
office of supervisory jurisdiction or
corporate director, who are actively
engaged in the management of the
member’s investment banking or
securities business, including
supervision, solicitation, conduct of
business or the training of persons
associated with a member for any of
these functions, are designated as
Principals.
Rule 1022 lists the categories of
principal registration. In addition to
‘‘General Securities Principal,’’ which is
the broadest category, there are three
limited categories of principal
registration: Financial and Operations,
General Securities Sales Supervisor, and
Proprietary Trader. Pursuant to Rule
1022(h), the Proprietary Trader
Principal category is available for
persons whose supervisory
responsibilities in the investment
banking and securities business are
limited to the activities of a member that
involve proprietary trading. Currently,
Rule 1022 requires that such persons be
registered pursuant to Exchange rules as
a Proprietary Trader, be qualified to be
so registered by passing the Series 24
examination (the same qualification
required for registration as a General
Securities Principal), and not function
in a principal capacity with
responsibility over any area of business
activity other than proprietary trading.
Under Exchange Rule 1032(b)(1)(B), the
prerequisite examination for the
persons to take the S101 General Program. See Rule
1120(a)(1).
8 Additionally, Rule 1021(e), Requirement of Two
Registered Principals for Members, establishes that
an Exchange member, except a sole proprietorship,
shall have at least two officers or partners who are
registered as principals with respect to each aspect
of the member’s investment banking and securities
business pursuant to the applicable provisions of
Rule 1022; provided, however, that a proprietary
trading firm with 25 or fewer registered
representatives shall only be required to have one
officer or partner who is registered as a principal.
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Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices
Proprietary Trader Principal category is
the Series 56 examination.
In consultation with FINRA and other
exchanges, the Exchange is now
proposing to retire the Proprietary
Trader Principal category. Accordingly,
it is deleting Rule 1022(h) in its entirety.
In its place the Exchange is adopting
new Rule 1022(h), which adds a new
Securities Trader Principal registration
category. Under the proposed rule each
person associated with a member who is
included within the definition of
principal in Rule 1021 and who will
have supervisory responsibility over the
securities trading activities described in
Rule 1032(b) must become qualified and
registered as a Securities Trader
Principal. The proposed rule change
should allow BX to more easily track
principals with supervisory
responsibility over securities trading
activities.
To qualify for registration as a
Securities Trader Principal, a candidate
would first be required to qualify and
register as a Securities Trader under
Rule 1032(b) and pass the General
Securities Principal qualification
examination. A person who is qualified
and registered as a Securities Trader
Principal under the new rule would
only have supervisory responsibility
over the securities trading activities
specified in Rule 1032(b), unless such
person were separately qualified and
registered in another appropriate
principal registration category, such as
the General Securities Principal
registration category. Finally, a
registered General Securities Principal
would not be qualified to supervise the
securities trading activities described in
Rule 1032(b), unless such person also
qualified and registered as a Securities
Trader under Rule 1032(b) by passing
the Securities Trader qualification
examination and registered as a
Securities Trader Principal.
A person registered as a Proprietary
Trader Principal in the CRD system on
the effective date of the proposed rule
change will be eligible to register as a
Securities Trader Principal without
having to take any additional
examinations. An individual who was
registered as a Proprietary Trader
Principal in the CRD system prior to the
effective date of the proposed rule
change will also be eligible to register as
a Securities Trader Principal without
having to take any additional
examinations, provided that no more
than two years have passed between the
date they [sic] were last registered as a
principal and the date they [sic] register
as a Securities Trader Principal.
Members, however, will be required to
affirmatively register persons
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transitioning to the proposed
registration category as Securities
Trader Principals on or after the
effective date of the proposed rule
change.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 9 in general, and furthers the
objectives of Section 6(b)(5) of the Act 10
in particular, in that it is designed 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. The
Exchange believes that the requirements
of the Securities Trader and Securities
Trader Principal registration categories,
as well as the new Securities Trader
qualification examination, should help
ensure that proprietary traders and the
principals who supervise proprietary
traders and proprietary trading are, and
will continue to be, properly trained
and qualified to perform their functions
which should protect investors and the
public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
Implementation of the proposed
changes to BX’s registration rules in
coordination with the FINRA
Amendments does not present any
competitive issues, but rather is
designed to provide less burdensome
and more efficient regulatory
compliance for members and enhance
the ability of the Exchange to fairly and
efficiently regulate members, which will
further enhance competition.
Additionally, the proposed rule change
should not affect intramarket
competition because all similarly
situated representatives and principals
will be required to complete the same
qualification examinations and maintain
the same registrations. Finally, the
proposed rule change does not impose
any additional examination burdens on
persons who are already registered.
There is no obligation to take the
proposed Series 57 examination in order
to continue in their present duties, so
the proposed rule change is not
expected to disadvantage current
registered persons relative to new
entrants in this regard.
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10 15
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71849
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 11 and
subparagraph (f)(6) of Rule 19b–4
thereunder.12
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BX–2015–066 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BX–2015–066. This file
11 15
U.S.C. 78s(b)(3)(a)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
12 17
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Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / 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 the
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–BX–2015–066 and should
be submitted on or before December 8,
2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–29225 Filed 11–16–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76417; File No. SR–EDGA–
2015–43]
Self-Regulatory Organizations; EDGA
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Related to Fees
mstockstill on DSK4VPTVN1PROD with NOTICES
November 10, 2015.
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 November
2, 2015, EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the Exchange. The Exchange has
designated the proposed rule change as
one establishing or changing a member
due, fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A)(ii)
of the Act 3 and Rule 19b–4(f)(2)
thereunder,4 which renders the
proposed rule change 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 its fees and rebates applicable to
Members 5 and non-members of the
Exchange pursuant to EDGA Rule
15.1(a) and (c) (‘‘Fee Schedule’’).
The text of the proposed rule change
is available at the Exchange’s Web site
at 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
The Exchange proposes to increase
the fee for orders yielding fee code D,
which results from an order routed to
the New York Stock Exchange (‘‘NYSE’’)
or routed using the RDOT routing
strategy. In securities priced at or above
$1.00, the Exchange currently assesses a
3 15
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
5 The term ‘‘Member’’ is defined as ‘‘any
registered broker or dealer, or any person associated
with a registered broker or dealer, that has been
admitted to membership in the Exchange [sic]. A
Member will have the status of a ‘‘member’’ of the
Exchange as that term is defined in Section 3(a)(3)
of the Act.’’ See Exchange Rule 1.5(n).
fee of $0.0027 per share for Members’
orders that yield fee code D. The
Exchange proposes to amend its Fee
Schedule to increase this fee to
$0.00275 per share. The proposed
change would enable the Exchange to
pass through the rate that BATS
Trading, Inc. (‘‘BATS Trading’’), the
Exchange’s affiliated routing brokerdealer, is charged for routing orders to
NYSE when it does not qualify for a
volume tiered reduced fee. The
proposed change is in response to
NYSE’s November 2015 fee change
where NYSE increased the fee to remove
liquidity via routable order types it
charges its customers, from a fee of
$0.0027 per share to a fee of $0.00275
per share.6 When BATS Trading routes
to NYSE, it will now be charged a
standard rate of $0.00275 per share.
BATS Trading will pass through this
rate to the Exchange and the Exchange,
in turn, will pass through of a rate of
$0.00275 per share to its Members. The
proposed increase to the fee under fee
code D would enable the Exchange to
equitably allocate its costs among all
Members utilizing fee code D. The
Exchange proposes to implement this
amendment to its Fee Schedule
immediately.
In addition to the change proposed
above, the Exchange proposes to change
certain references on the Fee Schedule
in connection with the launch of the
options exchange operated by the
Exchange’s affiliate, EDGX Exchange,
Inc. (‘‘EDGX Options’’). First, the
Exchange propose [sic] to modify
references in the Unicast Access section
under BATS Connect fees to refer to
‘‘BZX Options’’ instead of ‘‘BATS
Options’’. Second, the Exchange
proposes to add reference to EDGX
Options in the list of Exchange affiliates
to which such fees do not apply.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of Section 6 of the Act,7
in general, and furthers the objectives of
Section 6(b)(4),8 in particular, as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its Members and
other persons using its facilities. The
Exchange believes that its proposal to
increase the fee for Members’ orders that
yield fee code D from $0.0027 per share
to $0.00275 per share represents an
4 17
PO 00000
Frm 00081
Fmt 4703
Sfmt 4703
6 See NYSE Trader Update, Fee Changes Effective
November 2, dated October 30, 2015, available at
https://www.nyse.com/publicdocs/nyse/markets/
nyse/NYSE_Client_Notice_Fee_Change_11_
2015.pdf.
7 15 U.S.C. 78f.
8 15 U.S.C. 78f(b)(4).
E:\FR\FM\17NON1.SGM
17NON1
]]>Agencies
[Federal Register Volume 80, Number 221 (Tuesday, November 17, 2015)]
[Notices]
[Pages 71847-71850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29225]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76409; File No. SR-BX-2015-066]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Establish
the Securities Trader and Securities Trader Principal Registration
Categories
November 10, 2015.
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 November 4, 2015, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III, below,
which Items have been prepared by the Exchange. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to establish the Securities Trader and
Securities Trader Principal registration categories and to retire the
Limited Representative--Proprietary Trader and Limited Principal--
Proprietary Trader registration categories. The Exchange is also
amending its rules to establish the Series 57 examination as the
appropriate qualification examination for Securities Traders and
deleting the rule referring to the S501 continuing education program
currently applicable to Proprietary Traders.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxbx.cchwallstreet.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 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 Exchange is proposing to replace the Proprietary Trader
registration category (the ``Proprietary Trader'' registration
category) and Proprietary Trader qualification examination (Series 56)
with the Securities Trader registration category and Securities Trader
qualification examination (Series 57) in its registration rules
relating to securities trading activity. Similarly, the Exchange
proposes to replace the Limited Principal--Proprietary Trader
registration category (the ``Proprietary Trader Principal''
registration category) with the Securities Trader Principal
registration category.
This filing is, in all material respects, based upon SR-FINRA-2015-
017, which was recently approved by the Commission.\3\
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\3\ See Securities Exchange Act Release No. 75783 (August 28,
2015), 80 FR 53369 (September 3, 2015) (approving SR-FINRA-2015-017)
(the ``FINRA Amendments'').
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I. Securities Trader Registration Category
Today, BX Rule 1032(a) requires each person associated with a
member who is included within the definition of a
[[Page 71848]]
Representative \4\ to register with the Exchange as a General
Securities Representative and to pass an appropriate Qualification
Examination before such registration may become effective unless his or
her activities are so limited as to qualify him for one or more limited
categories of representative registration specified in Rule 1032.
Subparagraph (b) to Rule 1032 sets forth the Proprietary Trader
category of registration limited to persons who are associated with a
proprietary trading firm \5\ and whose activities in the investment
banking or securities business are limited solely to proprietary
trading. Persons who deal with the public do not fit in this
registration category and must continue to register as General
Securities Representatives.\6\
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\4\ ``Representative'' is defined in Rule 1011 as an Associated
Person of a registered broker or dealer who is engaged in the
investment banking or securities business for the member including
the functions of supervision, solicitation or conduct of business in
securities or who is engaged in the training of persons associated
with a broker or dealer for any of these functions are designated as
representatives. As provided in Rule 1031, all Representatives of BX
members are required to be registered with the Exchange, and
Representatives that are so registered are referred to as
``Registered Representatives''.
\5\ ``Proprietary trading firm'' is defined in Rule 1011 as an
Applicant with the following characteristics: (1) The Applicant is
not required by Section 15(b)(8) of the Act to become a FINRA member
but is a member of another registered securities exchange not
registered solely under Section 6(g) of the Act; (2) all funds used
or proposed to be used by the Applicant for trading are the
Applicant's own capital, traded through the Applicant's own
accounts; (3) the Applicant does not, and will not have
``customers,'' as that term is defined in Equity Rule 0120(g);
and(4) all Principals and Representatives of the Applicant acting or
to be acting in the capacity of a trader must be owners of,
employees of, or contractors to the Applicant.
\6\ Persons who are registered as General Securities
Representatives and have passed the Series 7 may perform the
functions of a Proprietary Trader. Associated persons may register
as General Securities Representatives upon passing the Series 7
examination and then function as a Proprietary Trader.
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The Exchange is proposing to retire the Proprietary Trader
registration category by deleting current Rule 1032(b) and adopting
proposed Rule 1032(b) establishing the new Securities Trader
registration category. Proposed Rule 1032(b) requires that each person
associated with a member who is included within the definition of a
representative as defined in Rule 1011 must register with the Exchange
as a Securities Trader if, with respect to transactions in equity,
preferred or convertible debt securities, or foreign currency options
on the Exchange, such person is engaged in proprietary trading, the
execution of transactions on an agency basis, or the direct supervision
of such activities, other than any person associated with a member
whose trading activities are conducted principally on behalf of an
investment company that is registered with the Commission pursuant to
the Investment Company Act of 1940 and that controls, is controlled by
or is under common control, with the member (an ``investment company
firm''). The proposed language requires applicants to pass an
appropriate Qualification Examination for Securities Trader (the Series
57 examination) before registering in the new Securities Trader
category. It also provides that a person registered as a Securities
Trader shall not be qualified to function in any other registration
category, unless he or she is also qualified and registered in such
other registration category.
A person registered as a Proprietary Trader in the Central
Registration Depository (CRD[supreg]) system on the effective date of
the proposed rule change will be grandfathered as a Securities Trader
without having to take any additional examinations and without having
to take any other actions. In addition, individuals who were registered
as a Proprietary Trader in the CRD system prior to the effective date
of the proposed rule change will be eligible to register as Securities
Traders without having to take any additional examinations, provided
that no more than two years have passed between the date they were last
registered as a representative and the date they register as a
Securities Trader.
Persons registered in the new category would be subject to the
continuing education requirements of Rule 1120. The Exchange proposes
to amend Rule 1120(a) by removing the option for Series 56 registered
persons to participate in the S501 Series 56 Proprietary Trader
continuing education program in order to satisfy the Regulatory
Element. The S501 Series 56 Proprietary Trader continuing education
program is being phased out along with the Series 56 Proprietary Trader
qualification examination. As a result, effective January 4, 2016, the
S501 Series 56 Proprietary Trader continuing education program for
Series 56 registered persons will cease to exist. In place of the S501
Series 56 Proprietary Trader continuing education program for Series 56
registered persons, the Exchange proposes that Series 57 registered
persons be permitted to enroll in the S101 General Program for Series 7
and all other registered persons.\7\
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\7\ The Commission notes that amended Rule 1120(a)(1) would
require Series 57 registered persons to take the S101 General
Program. See Rule 1120(a)(1).
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II. Securities Trader Principal Registration Category
Currently, Exchange Rule 1021 requires all persons engaged or to be
engaged in the investment banking or securities business of a member
who are to function as principals to be registered as such with the
Exchange in the category of registration appropriate to the function to
be performed as specified in Rule 1022.\8\ Before their registration
can become effective, they are required to pass a Qualification
Examination for Principals appropriate to the category of registration
as specified by the Exchange Board. Pursuant to Rule 1021(b), persons
associated with a member as sole proprietor, officer, partner, manager
of office of supervisory jurisdiction or corporate director, who are
actively engaged in the management of the member's investment banking
or securities business, including supervision, solicitation, conduct of
business or the training of persons associated with a member for any of
these functions, are designated as Principals.
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\8\ Additionally, Rule 1021(e), Requirement of Two Registered
Principals for Members, establishes that an Exchange member, except
a sole proprietorship, shall have at least two officers or partners
who are registered as principals with respect to each aspect of the
member's investment banking and securities business pursuant to the
applicable provisions of Rule 1022; provided, however, that a
proprietary trading firm with 25 or fewer registered representatives
shall only be required to have one officer or partner who is
registered as a principal.
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Rule 1022 lists the categories of principal registration. In
addition to ``General Securities Principal,'' which is the broadest
category, there are three limited categories of principal registration:
Financial and Operations, General Securities Sales Supervisor, and
Proprietary Trader. Pursuant to Rule 1022(h), the Proprietary Trader
Principal category is available for persons whose supervisory
responsibilities in the investment banking and securities business are
limited to the activities of a member that involve proprietary trading.
Currently, Rule 1022 requires that such persons be registered pursuant
to Exchange rules as a Proprietary Trader, be qualified to be so
registered by passing the Series 24 examination (the same qualification
required for registration as a General Securities Principal), and not
function in a principal capacity with responsibility over any area of
business activity other than proprietary trading. Under Exchange Rule
1032(b)(1)(B), the prerequisite examination for the
[[Page 71849]]
Proprietary Trader Principal category is the Series 56 examination.
In consultation with FINRA and other exchanges, the Exchange is now
proposing to retire the Proprietary Trader Principal category.
Accordingly, it is deleting Rule 1022(h) in its entirety. In its place
the Exchange is adopting new Rule 1022(h), which adds a new Securities
Trader Principal registration category. Under the proposed rule each
person associated with a member who is included within the definition
of principal in Rule 1021 and who will have supervisory responsibility
over the securities trading activities described in Rule 1032(b) must
become qualified and registered as a Securities Trader Principal. The
proposed rule change should allow BX to more easily track principals
with supervisory responsibility over securities trading activities.
To qualify for registration as a Securities Trader Principal, a
candidate would first be required to qualify and register as a
Securities Trader under Rule 1032(b) and pass the General Securities
Principal qualification examination. A person who is qualified and
registered as a Securities Trader Principal under the new rule would
only have supervisory responsibility over the securities trading
activities specified in Rule 1032(b), unless such person were
separately qualified and registered in another appropriate principal
registration category, such as the General Securities Principal
registration category. Finally, a registered General Securities
Principal would not be qualified to supervise the securities trading
activities described in Rule 1032(b), unless such person also qualified
and registered as a Securities Trader under Rule 1032(b) by passing the
Securities Trader qualification examination and registered as a
Securities Trader Principal.
A person registered as a Proprietary Trader Principal in the CRD
system on the effective date of the proposed rule change will be
eligible to register as a Securities Trader Principal without having to
take any additional examinations. An individual who was registered as a
Proprietary Trader Principal in the CRD system prior to the effective
date of the proposed rule change will also be eligible to register as a
Securities Trader Principal without having to take any additional
examinations, provided that no more than two years have passed between
the date they [sic] were last registered as a principal and the date
they [sic] register as a Securities Trader Principal. Members, however,
will be required to affirmatively register persons transitioning to the
proposed registration category as Securities Trader Principals on or
after the effective date of the proposed rule change.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \9\ in general, and furthers the objectives of Section
6(b)(5) of the Act \10\ in particular, in that it is designed 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. The Exchange believes that the requirements of the Securities
Trader and Securities Trader Principal registration categories, as well
as the new Securities Trader qualification examination, should help
ensure that proprietary traders and the principals who supervise
proprietary traders and proprietary trading are, and will continue to
be, properly trained and qualified to perform their functions which
should protect investors and the public interest.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. Implementation of the proposed
changes to BX's registration rules in coordination with the FINRA
Amendments does not present any competitive issues, but rather is
designed to provide less burdensome and more efficient regulatory
compliance for members and enhance the ability of the Exchange to
fairly and efficiently regulate members, which will further enhance
competition. Additionally, the proposed rule change should not affect
intramarket competition because all similarly situated representatives
and principals will be required to complete the same qualification
examinations and maintain the same registrations. Finally, the proposed
rule change does not impose any additional examination burdens on
persons who are already registered. There is no obligation to take the
proposed Series 57 examination in order to continue in their present
duties, so the proposed rule change is not expected to disadvantage
current registered persons relative to new entrants in this regard.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \11\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(a)(iii).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BX-2015-066 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2015-066. This file
[[Page 71850]]
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 the 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-BX-2015-066 and
should be submitted on or before December 8, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-29225 Filed 11-16-15; 8:45 am]
BILLING CODE 8011-01-P
