Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Section (a)(6) of Rule 1120 (Continuing Education Requirements), 2925-2928 [2016-00786]
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Federal Register / Vol. 81, No. 11 / Tuesday, January 19, 2016 / Notices
a Modification to the existing Global
Expedited Package Services 3 negotiated
service agreement approved in this
docket.1 In support of its Notice, the
Postal Service includes a redacted copy
of the Modification and a certification of
compliance with 39 U.S.C. 3633(a), as
required by 39 CFR 3015.5.
The Postal Service also filed the
unredacted Modification and supporting
financial information under seal. The
Postal Service seeks to incorporate by
reference the Application for NonPublic Treatment originally filed in this
docket for the protection of information
that it has filed under seal. Id. at 1–2.
The Modification ‘‘revises a few
articles in the agreement and replaces
Annex 1 of the agreement.’’ Id. at 1.
The Postal Service states that it will
‘‘notify the Mailer of the Effective Date
of this Modification within thirty (30)
days after receiving the approval of the
entities that have oversight
responsibilities for the USPS.’’ Id.,
Attachment 1 at 2. The Postal Service
asserts that the Modification will not
impair the ability of the contract to
comply with 39 U.S.C. 3633. Id.,
Attachment 2.
II. Notice of Filings
The Commission invites comments on
whether the changes presented in the
Postal Service’s Notice are consistent
with the policies of 39 U.S.C. 3632,
3633, or 3642, 39 CFR 3015.5, and 39
CFR part 3020, subpart B. Comments are
due no later than January 20, 2016. The
public portions of these filings can be
accessed via the Commission’s Web site
(https://www.prc.gov).
The Commission appoints Curtis E.
Kidd to represent the interests of the
general public (Public Representative)
in this docket.
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III. Ordering Paragraphs
It is ordered:
1. The Commission reopens Docket
No. CP2015–104 for consideration of
matters raised by the Postal Service’s
Notice.
2. Pursuant to 39 U.S.C. 505, the
Commission appoints Curtis E. Kidd to
serve as an officer of the Commission
(Public Representative) to represent the
interests of the general public in this
proceeding.
3. Comments are due no later than
January 20, 2016.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
1 Notice of the United States Postal Service of
Filing Modification to Global Expedited Package
Services 3 Negotiated Service Agreement, January
12, 2016 (Notice).
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17:50 Jan 15, 2016
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By the Commission.
Stacy L. Ruble,
Secretary.
[FR Doc. 2016–00876 Filed 1–15–16; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76875; File No. SR–BX–
2016–002]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend
Section (a)(6) of Rule 1120 (Continuing
Education Requirements)
January 12, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 2 thereunder,
notice is hereby given that, on January
7, 2016, 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 and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
section (a)(6) of Rule 1120 (Continuing
Education Requirements) to provide for
web-based delivery of the Exchange’s
continuing education (‘‘CE’’) program.
The proposed rule change would phase
out the current option of completing the
Regulatory Element in a test center, and
eliminates the rule providing for inhouse delivery of the Regulatory
Element of the CE program. The
amendments will delete the current text
of Rule 1120(a)(6) (In-Firm Delivery of
the Regulatory Element). The
Exchange’s proposal is materially
similar to a recent FINRA filing to
amend FINRA Rule 1250, which was
recently approved by the Securities and
Exchange Commission (‘‘SEC’’ or
‘‘Commission’’).3
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 75581
(July 31, 2015), 80 FR 47018 (August 6, 2015)
(Order Approving a Proposed Rule Change to
Provide a Web-based Delivery Method for
Completing the Regulatory Element of the
Continuing Education Requirements) (SR–FINRA–
2015–015). See also Securities Exchange Act
Release No. 76107 (October 8, 2015), 80 FR 62139
(October 15, 2015) (Notice of Filing and Immediate
2 17
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2925
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 CE requirements under Rule 1120
consist of a Regulatory Element 4 and a
Firm Element.5 The Regulatory Element
applies to all registered persons 6 and
consists of periodic computer-based
training on regulatory, compliance,
ethical, and supervisory subjects and
sales practice standards, which must be
completed within prescribed
timeframes.7 In addition, a registered
person is required to retake the
Regulatory Element in the event that
such person (A) is subject to any
statutory disqualification as defined in
Section 3(a)(39) of the Act; (B) is subject
Effectiveness of a Proposed Rule Change Relating to
Delivery of the Regulatory Element of the
Exchange’s Continuing Education Program) (SR–
CBOE–2015–084).
4 See Rule 1120(a) (Regulatory Element).
5 See Rule 1120(b) (Firm Element).
6 For purposes of the Regulatory Element, a
‘‘registered person’’ means any person registered
with the Exchange as a representative, principal, or
assistant representative pursuant to the Rule 1020,
1030 and 1110 Series. See Rule 1120(a)(5).
7 Pursuant to Rule 1120(a)(1), each registered
person shall complete the Regulatory Element of the
continuing education program beginning with the
occurrence of their second registration anniversary
date and every three years thereafter, or as
otherwise prescribed by the Exchange. On each
occasion, the Regulatory Element must be
completed within 120 days after the person’s
registration anniversary date. A person’s initial
registration date, also known as the ‘‘base date’’,
shall establish the cycle of anniversary dates for
purposes of the Rule. The content of the Regulatory
Element of the program shall be determined by the
Exchange and shall be appropriate to either the
registered representative or principal status of the
person subject to the Rule.
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Federal Register / Vol. 81, No. 11 / Tuesday, January 19, 2016 / Notices
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to suspension or to the imposition of a
fine of $5,000 or more for violation of
any provision of any securities law or
regulation, or any agreement with or
rule or standard of conduct of any
securities governmental agency,
securities self-regulatory organization,
or as imposed by any such regulatory or
self-regulatory organization in
connection with a disciplinary
proceeding; or (C) is ordered as a
sanction in a disciplinary action to
retake the Regulatory Element by any
securities governmental agency or selfregulatory organization. Rule 1120(a)(1)
provides that the following Regulatory
Elements administered by FINRA shall
be required: The S201 Supervisor
Program for registered principals and
supervisors, the S501 Series 56
Proprietary Trader continuing education
program for Series 56 registered
persons, and the S101 General Program
for Series 7 and all other registered
persons. Currently, the rules state that
Regulatory Element may be
administered or in-firm subject to
specified procedures.8 The Regulatory
Element may also be administered in a
test center.
The Firm Element consists of annual,
member-developed and administered
training programs for covered registered
persons,9 which must be appropriate for
the business of the member and, at a
minimum, must cover the following
matters concerning securities products,
services and strategies offered by the
member: (i) General investment features
and associated risk factors; (ii)
suitability and sales practice
considerations; and (iii) applicable
regulatory requirements.
8 Pursuant to Rule 1120(a)(6), Exchange Members
that are also FINRA members are currently
permitted to administer the continuing education
Regulatory Element program to their registered
persons by instituting an in-firm program to the
extent such program has been deemed acceptable to
FINRA in accordance with NASD Rule 1120(a)(6).
(The Exchange notes that NASD Rule 1120 has
previously been superseded by FINRA Rule 1250
which FINRA has amended, as discussed above, to
delete the in-firm CE option on a phased basis.)
Rule 1120(a)(6) provides that the Exchange and
FINRA are parties to the Regulatory Contract
pursuant to which FINRA has agreed to perform
certain functions on behalf of the Exchange.
Therefore, Exchange members are complying with
Exchange Rule 1120(a)(6) by complying with NASD
Rule 1250. In addition, functions performed by
FINRA, FINRA departments, and FINRA staff under
Rule 1120(a)(6) are being performed by FINRA on
behalf of the Exchange. Exchange Members that are
not FINRA members are not permitted to institute
in-firm delivery of the Regulatory Element program.
9 Under Rule 1120(b)(1) (Persons Subject to the
Firm Element), a ‘‘covered registered person’’
means any person registered with a member who
has direct contact with customers in the conduct of
the member’s securities sales, trading and
investment banking activities, and to the immediate
supervisors of such persons.
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Today, most registered persons
complete the Regulatory Element in a
test center rather than in-firm. Given the
advances in Web-based technology, the
Exchange believes that there is
diminishing utility in the test center and
in-firm delivery methods. Moreover,
according to FINRA,10 registered
persons have raised concerns with the
test center delivery method because of
the travel involved, the limited time
currently available to complete a
Regulatory Element session 11 and the
use of rigorous security measures at test
centers, which are appropriate for taking
qualification examinations but onerous
for a CE program.12 Also, according to
FINRA, the test center is expensive to
operate.13
In response to the issues noted above,
FINRA engaged in extensive outreach
with the industry and completed a pilot
of a Web-based delivery system for
administering the Regulatory Element.14
According to FINRA, the proposed Webbased system performed well during the
pilot in terms of both performance and
accessibility.15 FINRA also received
positive feedback from firms and the
individual pilot participants.16 FINRA
noted that among other things, pilot
participants appreciated the expanded
time to focus on the provided learning
materials without the pressure of a
timed session and the ability to resume
or complete their session from where
they left off.17
Proposal
Based on the recent amendments to
FINRA Rule 1250,18 the Exchange
proposes to amend Rule 1120(a)(6) to
provide for a Web-based delivery
method for completing the Regulatory
Element. Specifically, the Exchange
proposes to amend Rule 1120(a)(6) to
provide that the continuing education
Regulatory Element set forth in
10 FINRA is currently responsible for the
operation of the test centers used for test center
delivery method of the Regulatory Element.
11 The current session time is three-and-a-half
hours.
12 See Securities Exchange Act Release No. 75154
(June 11, 2015), 80 FR 34777 (June 17, 2015) (Notice
of Filing of a Proposed Rule Change To Provide a
Web-Based Delivery Method for Completing the
Regulatory Element of the Continuing Education
Requirements) (SR–FINRA–2015–015).
13 Id. at 34779.
14 Id.
15 Id.
16 Id.
17 Id.
18 See FINRA Rule 1250 (Continuing Education
Requirements). See also Securities Exchange Act
Release No. 75581 (July 31, 2015) 80 FR 47018
(August 6, 2015) (Order Approving a Proposed Rule
Change to Provide a Web-based Delivery Method for
Completing the Regulatory Element of the
Continuing Education Requirements) (SR–FINRA–
2015–015).
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
paragraph (a) of Rule 1120(a) will be
administered through Web-based
delivery or such other technological
manner and format as specified by the
Exchange. Should the Exchange
determine to administer the Regulatory
Element through a delivery mechanism
other than Web-based delivery,
however, the Exchange would notify the
Commission and would need to file a
further rule change with the
Commission.
The first phase of the Web-based
delivery system was launched October
1, 2015 and includes the Regulatory
Element of the S201 Supervisor Program
for registered principals and
supervisors. The second phase of the
Web-based delivery system was
launched January 4, 2016 and includes
the Regulatory Element of the S101
General Program for Series 7 and all
other registered persons, including, but
not limited to Securities Traders.
The Exchange is proposing to phase
out test-center delivery by no later than
six months after January 4, 2016.
Registered persons will continue to have
the option of completing the Regulatory
Element in a test center, but they will
be required to use the Web-based system
after the test-center delivery is phased
out.19
Further, the Exchange is deleting the
current language in Rule 1120(a)(6)
relating to in-firm delivery of the CE
Regulatory Element. The proposed Webbased delivery method will provide
registered persons the flexibility to
complete the Regulatory Element at a
location of their choosing, including
their private residence, at any time
during their 120-day window for
completion of the Regulatory Element.20
The Exchange notes that the Webbased format will include safeguards to
authenticate the identity of the CE
candidate. For instance, prior to
commencing a Web-based session, the
candidate will be asked to provide a
portion of their [sic] SSN (either first
five or last four digits) and their [sic]
19 The Exchange has recently filed a separate
proposed rule change, SR–BX–2015–090, to amend
Rule 7003, Registration and Processing Fees, to
reduce the cost for the CE Regulatory Element from
$100 to $55 if administered by Web-delivery. Fees
for completing the CE Regulatory Element at a test
center will remain $100.
20 Although the proposed rule change provides
flexibility, firms may choose to impose their own
conditions based on their supervisory and
compliance needs. For instance, a firm that wishes
to have registered persons complete CE on the
firm’s premises can do so by having the registered
person access Web-based CE from a firm device and
location. Moreover, firms would have to update
their written policies and procedures regarding the
Regulatory Element to reflect the transition to Webbased CE and communicate the update to registered
persons.
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Federal Register / Vol. 81, No. 11 / Tuesday, January 19, 2016 / Notices
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date of birth. This information will only
be used for matching data in FINRA’s
Web-CRD system. The Web CE system
will discard this information after the
matching process. Further, before
commencing a Web-based session, each
candidate will be required to agree to
the Rules of Conduct for Web-based
delivery. Among other things, the Rules
of Conduct will require each candidate
to attest that he or she is in fact the
person who is taking the Web-based
session. The Rules of Conduct will also
require that each candidate agree that
the Regulatory Element content is
intellectual property and that the
content cannot be copied or
redistributed by any means. If the
Exchange discovers that a candidate has
violated the Rules of Conduct, the
candidate will forfeit the results of the
Web-based session and may be subject
to disciplinary action by the Exchange.
Violation of the Rules of Conduct will
be considered conduct inconsistent with
high standards of commercial honor and
just and equitable principles of trade, in
violation of Rule 2110, Standards of
Commercial Honor and Principles of
Trade. The Exchange is not proposing
any changes to the Firm Element
requirements under Rule 1120(b).
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 21 in general, and furthers the
objectives of Section 6(b)(5) of the Act 22
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.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 23 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers
and Section 6(c)(3) 24 of the Act, which
authorizes the Exchange to, among other
things, prescribe standards of financial
responsibility or operational capability
and standards of training, experience
and competence for its members and
persons associated with members.
In particular, the Exchange believes
that the proposed rule change will
improve members’ compliance efforts
and will allow registered persons to
spend a greater amount of time on the
review of CE materials and potentially
21 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
23 15 U.S.C. 78f(b)(5).
24 15 U.S.C. 78f(c)(3).
22 15
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achieve better learning outcomes, which
will in turn enhance investor protection.
Further, while the proposed rule change
will provide more flexibility to members
and registered persons, it will maintain
the integrity of the Regulatory Element
of the CE program and the CE program
in general.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange notes that the proposed rule
change is specifically intended to
reduce the burden on firms while
preserving the integrity of the CE
program. As described above, the Webbased delivery method will provide
registered persons the flexibility to
complete the Regulatory Element at any
location that they choose. Further, Webbased delivery is efficient and offers
significant cost savings over test-center
and in-firm deliveries. With respect to
the authentication process for Webbased delivery, the CE candidate’s
personal identifying information will be
masked and will be submitted to FINRA
through a secure, encrypted, network.
The personal identifying information
submitted via the Web-based system
will be used for authentication purposes
only—the information will not be stored
in the Web-based system.
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 proposed rule change
does not (i) significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 25 and Rule 19b–4(f)(6)
thereunder.26
25 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the text of 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.
26 17
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2927
The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative upon filing. The
Exchange states the Exchange believes
that the proposed rule change will
improve members’ compliance efforts
and will allow registered persons to
spend more time on the review of CE
materials and potentially achieve better
learning outcomes, which will in turn
enhance investor protection. In
addition, waiving the operative delay
will make BX’s rules consistent with
those of the other exchanges. For these
reasons, the Commission believes that
waiver of the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Therefore, the Commission designates
the proposed rule change to be operative
upon filing.27
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BX–2016–002 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BX–2016–002. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
27 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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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–
2016–002 and should be submitted on
or before February 9, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–00786 Filed 1–15–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76880; File No. SR–Phlx–
2015–118]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Section (a)(4) of Rule 640, Continuing
Education for Registered Persons
asabaliauskas on DSK5VPTVN1PROD with NOTICES
January 12, 2016.
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 December
30, 2015, NASDAQ OMX PHLX LLC
(‘‘Phlx’’ 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, of which Items I and II
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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 amend
Section (a)(4) of Rule 640, Continuing
Education for Registered Persons, to
provide for web-based delivery of the
Exchange’s continuing education (‘‘CE’’)
program. The proposed rule change
would phase out the current option of
completing the Regulatory Element in a
test center, delete the current option for
in-house delivery of the Regulatory
Element of the CE program and also
delete the existing text of Rule 640(a)(4),
In-Firm Delivery of the Regulatory
Element. The Exchange’s proposal,
which is being filed for immediate
effectiveness and will be operative
January 4, 2016, is materially similar to
a recent FINRA filing to amend FINRA
Rule 1250, which was recently
approved by the Securities and
Exchange Commission (‘‘Commission’’).
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.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 CE requirements under Rule 640
consist of a Regulatory Element 3 and a
Firm Element.4 The Regulatory Element
applies to all registered persons and
consists of periodic computer-based
training on regulatory, compliance,
28 17
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3 See
4 See
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Rule 640(a) (Regulatory Element).
Rule 640(b) (Firm Element).
Frm 00092
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ethical, and supervisory subjects and
sales practice standards, which must be
completed within prescribed
timeframes.5 In addition, unless
otherwise determined by the Exchange,
a registered person is required to re-take
the Regulatory Element of the program
and satisfy the program’s requirements
in their entirety in the event such
person: (i) Becomes subject to any
statutory disqualification as defined in
Section 3(a)(39) of the Securities
Exchange Act of 1934; (ii) becomes
subject to suspension or to the
imposition of a fine of $5,000 or more
for violation of any provision of any
securities law or regulation, or any
agreement with or rule or standard of
conduct of any securities governmental
agency, securities self-regulatory
organization, or as imposed by any such
regulatory or self-regulatory
organization in connection with a
disciplinary proceeding; or (iii) is
ordered as a sanction in a disciplinary
action to re-take the Regulatory Element
by any securities governmental agency
or securities self-regulatory
organization.
Rule 640(a)(1) provides that the
following Regulatory Elements
administered by FINRA shall be
required: The S201 Supervisor Program
for registered principals and
supervisors, the S501 Series 56
Proprietary Trader continuing education
program for Series 56 registered
persons, and the S101 General Program
for Series 7 and all other registered
persons. Currently, the Regulatory
Element may be administered in a test
center or in-firm subject to specified
procedures.6
5 Pursuant to Rule 640, each registered person
shall complete the Regulatory Element of the
continuing education program on the occurrence of
their second registration anniversary date(s), and
every three years thereafter or as otherwise
prescribed by the Exchange. On each occasion, the
Regulatory Element must be completed within 120
days after the person’s registration anniversary date.
A person’s initial registration date, also known as
the ‘‘base date,’’ shall establish the cycle of
anniversary dates for purposes of this Rule.
6 Under current Rule 640(a)(4), In-Firm Delivery
of the Regulatory Element, members and member
organizations are permitted to administer the
continuing education Regulatory Element program
to their registered persons by instituting an in-firm
program acceptable to the Exchange. Among others,
the following procedures are required in order to
administer the Regulatory Element of the CE
program in-house: (1) The firm must designate a
principal/officer-in-charge to be responsible for the
in-firm delivery of the Regulatory Element; (2) the
location of the delivery site must be under the
control of the firm; (3) the communication links and
firm delivery computer hardware must comply with
standards defined by the Exchange or its designated
vendor; (4) the firm’s written supervisory
procedures must contain the procedures
implemented to comply with requirements of infirm delivery of the Regulatory Element continuing
E:\FR\FM\19JAN1.SGM
19JAN1
]]>Agencies
[Federal Register Volume 81, Number 11 (Tuesday, January 19, 2016)]
[Notices]
[Pages 2925-2928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00786]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76875; File No. SR-BX-2016-002]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Section (a)(6) of Rule 1120 (Continuing Education Requirements)
January 12, 2016.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that, on January 7, 2016, 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 and II
below, which Items have been prepared by the Exchange. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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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 amend section (a)(6) of Rule 1120
(Continuing Education Requirements) to provide for web-based delivery
of the Exchange's continuing education (``CE'') program. The proposed
rule change would phase out the current option of completing the
Regulatory Element in a test center, and eliminates the rule providing
for in-house delivery of the Regulatory Element of the CE program. The
amendments will delete the current text of Rule 1120(a)(6) (In-Firm
Delivery of the Regulatory Element). The Exchange's proposal is
materially similar to a recent FINRA filing to amend FINRA Rule 1250,
which was recently approved by the Securities and Exchange Commission
(``SEC'' or ``Commission'').\3\
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\3\ See Securities Exchange Act Release No. 75581 (July 31,
2015), 80 FR 47018 (August 6, 2015) (Order Approving a Proposed Rule
Change to Provide a Web-based Delivery Method for Completing the
Regulatory Element of the Continuing Education Requirements) (SR-
FINRA-2015-015). See also Securities Exchange Act Release No. 76107
(October 8, 2015), 80 FR 62139 (October 15, 2015) (Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change Relating to
Delivery of the Regulatory Element of the Exchange's Continuing
Education Program) (SR-CBOE-2015-084).
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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 CE requirements under Rule 1120 consist of a Regulatory Element
\4\ and a Firm Element.\5\ The Regulatory Element applies to all
registered persons \6\ and consists of periodic computer-based training
on regulatory, compliance, ethical, and supervisory subjects and sales
practice standards, which must be completed within prescribed
timeframes.\7\ In addition, a registered person is required to retake
the Regulatory Element in the event that such person (A) is subject to
any statutory disqualification as defined in Section 3(a)(39) of the
Act; (B) is subject
[[Page 2926]]
to suspension or to the imposition of a fine of $5,000 or more for
violation of any provision of any securities law or regulation, or any
agreement with or rule or standard of conduct of any securities
governmental agency, securities self-regulatory organization, or as
imposed by any such regulatory or self-regulatory organization in
connection with a disciplinary proceeding; or (C) is ordered as a
sanction in a disciplinary action to retake the Regulatory Element by
any securities governmental agency or self-regulatory organization.
Rule 1120(a)(1) provides that the following Regulatory Elements
administered by FINRA shall be required: The S201 Supervisor Program
for registered principals and supervisors, the S501 Series 56
Proprietary Trader continuing education program for Series 56
registered persons, and the S101 General Program for Series 7 and all
other registered persons. Currently, the rules state that Regulatory
Element may be administered or in-firm subject to specified
procedures.\8\ The Regulatory Element may also be administered in a
test center.
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\4\ See Rule 1120(a) (Regulatory Element).
\5\ See Rule 1120(b) (Firm Element).
\6\ For purposes of the Regulatory Element, a ``registered
person'' means any person registered with the Exchange as a
representative, principal, or assistant representative pursuant to
the Rule 1020, 1030 and 1110 Series. See Rule 1120(a)(5).
\7\ Pursuant to Rule 1120(a)(1), each registered person shall
complete the Regulatory Element of the continuing education program
beginning with the occurrence of their second registration
anniversary date and every three years thereafter, or as otherwise
prescribed by the Exchange. On each occasion, the Regulatory Element
must be completed within 120 days after the person's registration
anniversary date. A person's initial registration date, also known
as the ``base date'', shall establish the cycle of anniversary dates
for purposes of the Rule. The content of the Regulatory Element of
the program shall be determined by the Exchange and shall be
appropriate to either the registered representative or principal
status of the person subject to the Rule.
\8\ Pursuant to Rule 1120(a)(6), Exchange Members that are also
FINRA members are currently permitted to administer the continuing
education Regulatory Element program to their registered persons by
instituting an in-firm program to the extent such program has been
deemed acceptable to FINRA in accordance with NASD Rule 1120(a)(6).
(The Exchange notes that NASD Rule 1120 has previously been
superseded by FINRA Rule 1250 which FINRA has amended, as discussed
above, to delete the in-firm CE option on a phased basis.) Rule
1120(a)(6) provides that the Exchange and FINRA are parties to the
Regulatory Contract pursuant to which FINRA has agreed to perform
certain functions on behalf of the Exchange. Therefore, Exchange
members are complying with Exchange Rule 1120(a)(6) by complying
with NASD Rule 1250. In addition, functions performed by FINRA,
FINRA departments, and FINRA staff under Rule 1120(a)(6) are being
performed by FINRA on behalf of the Exchange. Exchange Members that
are not FINRA members are not permitted to institute in-firm
delivery of the Regulatory Element program.
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The Firm Element consists of annual, member-developed and
administered training programs for covered registered persons,\9\ which
must be appropriate for the business of the member and, at a minimum,
must cover the following matters concerning securities products,
services and strategies offered by the member: (i) General investment
features and associated risk factors; (ii) suitability and sales
practice considerations; and (iii) applicable regulatory requirements.
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\9\ Under Rule 1120(b)(1) (Persons Subject to the Firm Element),
a ``covered registered person'' means any person registered with a
member who has direct contact with customers in the conduct of the
member's securities sales, trading and investment banking
activities, and to the immediate supervisors of such persons.
---------------------------------------------------------------------------
Today, most registered persons complete the Regulatory Element in a
test center rather than in-firm. Given the advances in Web-based
technology, the Exchange believes that there is diminishing utility in
the test center and in-firm delivery methods. Moreover, according to
FINRA,\10\ registered persons have raised concerns with the test center
delivery method because of the travel involved, the limited time
currently available to complete a Regulatory Element session \11\ and
the use of rigorous security measures at test centers, which are
appropriate for taking qualification examinations but onerous for a CE
program.\12\ Also, according to FINRA, the test center is expensive to
operate.\13\
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\10\ FINRA is currently responsible for the operation of the
test centers used for test center delivery method of the Regulatory
Element.
\11\ The current session time is three-and-a-half hours.
\12\ See Securities Exchange Act Release No. 75154 (June 11,
2015), 80 FR 34777 (June 17, 2015) (Notice of Filing of a Proposed
Rule Change To Provide a Web-Based Delivery Method for Completing
the Regulatory Element of the Continuing Education Requirements)
(SR-FINRA-2015-015).
\13\ Id. at 34779.
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In response to the issues noted above, FINRA engaged in extensive
outreach with the industry and completed a pilot of a Web-based
delivery system for administering the Regulatory Element.\14\ According
to FINRA, the proposed Web-based system performed well during the pilot
in terms of both performance and accessibility.\15\ FINRA also received
positive feedback from firms and the individual pilot participants.\16\
FINRA noted that among other things, pilot participants appreciated the
expanded time to focus on the provided learning materials without the
pressure of a timed session and the ability to resume or complete their
session from where they left off.\17\
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\14\ Id.
\15\ Id.
\16\ Id.
\17\ Id.
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Proposal
Based on the recent amendments to FINRA Rule 1250,\18\ the Exchange
proposes to amend Rule 1120(a)(6) to provide for a Web-based delivery
method for completing the Regulatory Element. Specifically, the
Exchange proposes to amend Rule 1120(a)(6) to provide that the
continuing education Regulatory Element set forth in paragraph (a) of
Rule 1120(a) will be administered through Web-based delivery or such
other technological manner and format as specified by the Exchange.
Should the Exchange determine to administer the Regulatory Element
through a delivery mechanism other than Web-based delivery, however,
the Exchange would notify the Commission and would need to file a
further rule change with the Commission.
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\18\ See FINRA Rule 1250 (Continuing Education Requirements).
See also Securities Exchange Act Release No. 75581 (July 31, 2015)
80 FR 47018 (August 6, 2015) (Order Approving a Proposed Rule Change
to Provide a Web-based Delivery Method for Completing the Regulatory
Element of the Continuing Education Requirements) (SR-FINRA-2015-
015).
---------------------------------------------------------------------------
The first phase of the Web-based delivery system was launched
October 1, 2015 and includes the Regulatory Element of the S201
Supervisor Program for registered principals and supervisors. The
second phase of the Web-based delivery system was launched January 4,
2016 and includes the Regulatory Element of the S101 General Program
for Series 7 and all other registered persons, including, but not
limited to Securities Traders.
The Exchange is proposing to phase out test-center delivery by no
later than six months after January 4, 2016. Registered persons will
continue to have the option of completing the Regulatory Element in a
test center, but they will be required to use the Web-based system
after the test-center delivery is phased out.\19\
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\19\ The Exchange has recently filed a separate proposed rule
change, SR-BX-2015-090, to amend Rule 7003, Registration and
Processing Fees, to reduce the cost for the CE Regulatory Element
from $100 to $55 if administered by Web-delivery. Fees for
completing the CE Regulatory Element at a test center will remain
$100.
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Further, the Exchange is deleting the current language in Rule
1120(a)(6) relating to in-firm delivery of the CE Regulatory Element.
The proposed Web-based delivery method will provide registered persons
the flexibility to complete the Regulatory Element at a location of
their choosing, including their private residence, at any time during
their 120-day window for completion of the Regulatory Element.\20\
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\20\ Although the proposed rule change provides flexibility,
firms may choose to impose their own conditions based on their
supervisory and compliance needs. For instance, a firm that wishes
to have registered persons complete CE on the firm's premises can do
so by having the registered person access Web-based CE from a firm
device and location. Moreover, firms would have to update their
written policies and procedures regarding the Regulatory Element to
reflect the transition to Web-based CE and communicate the update to
registered persons.
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The Exchange notes that the Web-based format will include
safeguards to authenticate the identity of the CE candidate. For
instance, prior to commencing a Web-based session, the candidate will
be asked to provide a portion of their [sic] SSN (either first five or
last four digits) and their [sic]
[[Page 2927]]
date of birth. This information will only be used for matching data in
FINRA's Web-CRD system. The Web CE system will discard this information
after the matching process. Further, before commencing a Web-based
session, each candidate will be required to agree to the Rules of
Conduct for Web-based delivery. Among other things, the Rules of
Conduct will require each candidate to attest that he or she is in fact
the person who is taking the Web-based session. The Rules of Conduct
will also require that each candidate agree that the Regulatory Element
content is intellectual property and that the content cannot be copied
or redistributed by any means. If the Exchange discovers that a
candidate has violated the Rules of Conduct, the candidate will forfeit
the results of the Web-based session and may be subject to disciplinary
action by the Exchange. Violation of the Rules of Conduct will be
considered conduct inconsistent with high standards of commercial honor
and just and equitable principles of trade, in violation of Rule 2110,
Standards of Commercial Honor and Principles of Trade. The Exchange is
not proposing any changes to the Firm Element requirements under Rule
1120(b).
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \21\ in general, and furthers the objectives of Section
6(b)(5) of the Act \22\ 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. Additionally, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \23\ requirement that the rules
of an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers and Section 6(c)(3) \24\ of the
Act, which authorizes the Exchange to, among other things, prescribe
standards of financial responsibility or operational capability and
standards of training, experience and competence for its members and
persons associated with members.
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\21\ 15 U.S.C. 78f(b).
\22\ 15 U.S.C. 78f(b)(5).
\23\ 15 U.S.C. 78f(b)(5).
\24\ 15 U.S.C. 78f(c)(3).
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In particular, the Exchange believes that the proposed rule change
will improve members' compliance efforts and will allow registered
persons to spend a greater amount of time on the review of CE materials
and potentially achieve better learning outcomes, which will in turn
enhance investor protection. Further, while the proposed rule change
will provide more flexibility to members and registered persons, it
will maintain the integrity of the Regulatory Element of the CE program
and the CE program in general.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange notes that the
proposed rule change is specifically intended to reduce the burden on
firms while preserving the integrity of the CE program. As described
above, the Web-based delivery method will provide registered persons
the flexibility to complete the Regulatory Element at any location that
they choose. Further, Web-based delivery is efficient and offers
significant cost savings over test-center and in-firm deliveries. With
respect to the authentication process for Web-based delivery, the CE
candidate's personal identifying information will be masked and will be
submitted to FINRA through a secure, encrypted, network. The personal
identifying information submitted via the Web-based system will be used
for authentication purposes only--the information will not be stored in
the Web-based system.
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 proposed rule change does not (i) significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \25\ and Rule 19b-4(f)(6)
thereunder.\26\
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\25\ 15 U.S.C. 78s(b)(3)(A).
\26\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of 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.
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The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative upon filing. The
Exchange states the Exchange believes that the proposed rule change
will improve members' compliance efforts and will allow registered
persons to spend more time on the review of CE materials and
potentially achieve better learning outcomes, which will in turn
enhance investor protection. In addition, waiving the operative delay
will make BX's rules consistent with those of the other exchanges. For
these reasons, the Commission believes that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest. Therefore, the Commission designates the proposed rule
change to be operative upon filing.\27\
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\27\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BX-2016-002 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2016-002. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use
[[Page 2928]]
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-2016-002 and should be
submitted on or before February 9, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00786 Filed 1-15-16; 8:45 am]
BILLING CODE 8011-01-P
