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]

Download as PDF Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices Units 3 and 4: Section 189a. of the Atomic Energy Act Proceeding (Public Meeting) (Contact: Tom Tai: 301–415–8484) This meeting will be webcast live at the Web address—https://www.nrc.gov/. Week of November 23, 2015—Tentative There are no meetings scheduled for the week of November 23, 2015. Week of November 30, 2015—Tentative Thursday, December 3, 2015 9:30 a.m. Briefing on Equal Employment Opportunity and Civil Rights Outreach (Public Meeting) (Contact: Larniece McKoy Moore: 301–415–1942) This meeting will be webcast live at the Web address—https://www.nrc.gov/. public meetings in another format (e.g. braille, large print), please notify Kimberly Meyer, NRC Disability Program Manager, at 301–287–0739, by videophone at 240–428–3217, or by email at Kimberly.MeyerChambers@nrc.gov. Determinations on requests for reasonable accommodation will be made on a case-by-case basis. * * * * * Members of the public may request to receive this information electronically. If you would like to be added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555 (301– 415–1969), or email Brenda.Akstulewicz@nrc.gov or Patricia.Jimenez@nrc.gov. Week of December 7, 2015—Tentative There are no meetings scheduled for the week of December 7, 2015. Dated: November 10, 2015. Denise L. McGovern, Policy Coordinator, Office of the Secretary. [FR Doc. 2015–29404 Filed 11–13–15; 11:15 am] Week of December 14, 2015—Tentative Tuesday, December 15, 2015 9:00 a.m. Hearing on Construction Permit for SHINE Medical Isotope Production Facility: Section 189a. of the Atomic Energy Act Proceeding (Public Meeting) (Contact: Steven Lynch: 301–415– 1524) This meeting will be webcast live at the Web address—https://www.nrc.gov/. Thursday, December 17, 2015 9:30 a.m. Briefing on Project AIM 2020 (Public Meeting) (Contact: John Jolicoeur 301–415– 1642) This meeting will be webcast live at the Web address—https://www.nrc.gov/. mstockstill on DSK4VPTVN1PROD with NOTICES Week of December 21, 2015—Tentative There are no meetings scheduled for the week of December 21, 2015. * * * * * The schedule for Commission meetings is subject to change on short notice. For more information or to verify the status of meetings, contact Denise McGovern at 301–415–0681 or via email at Denise.McGovern@nrc.gov. * * * * * The NRC Commission Meeting Schedule can be found on the Internet at: https://www.nrc.gov/public-involve/ public-meetings/schedule.html. * * * * * The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings, or need this meeting notice or the transcript or other information from the VerDate Sep<11>2014 18:14 Nov 16, 2015 Jkt 238001 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’’). E:\FR\FM\17NON1.SGM 17NON1 71848 Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES 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. VerDate Sep<11>2014 18:14 Nov 16, 2015 Jkt 238001 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 PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 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. E:\FR\FM\17NON1.SGM 17NON1 mstockstill on DSK4VPTVN1PROD with NOTICES 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 VerDate Sep<11>2014 18:14 Nov 16, 2015 Jkt 238001 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 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 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 E:\FR\FM\17NON1.SGM 17NON1 71850 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 VerDate Sep<11>2014 18:14 Nov 16, 2015 Jkt 238001 (‘‘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.
---------------------------------------------------------------------------

    \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 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\
---------------------------------------------------------------------------

    \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'').
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 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 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
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