Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt the Securities Trader Registration Category and the Series 57 Securities Trader Examination Registration Requirement, 51513-51517 [2016-18472]
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Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Notices
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on August 22, 2016, and
should be accompanied by proof of
service on the applicants, in the form of
an affidavit or, for lawyers, a certificate
of service. Pursuant to Rule 0–5 under
the Act, hearing requests should state
the nature of the writer’s interest, any
facts bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
Applicants: Trust: c/o John K. Carter,
Esq., Law Office of John K. Carter, 9455
Koger Blvd., Suite 102, St. Petersburg,
Florida 33702 and Adviser: Patrick
Reinkemeyer, President, SilverPepper
LLC, 570 Oakwood Avenue, Lake
Forest, Illinois 60045.
FOR FURTHER INFORMATION CONTACT:
Emerson Davis, Senior Counsel, at (202)
551–6868, or Daniele Marchesani,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
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Summary of the Application
1. The Adviser will serve as the
investment adviser to the Subabvised SP
Series pursuant to an investment
advisory agreement with the Trust (the
‘‘Investment Management
Agreement’’).1 The Adviser will provide
the Subabvised SP Series with
1 Applicants request relief with respect to any
existing and any future series of the Trust and any
other existing or future registered open-end
management company or series thereof that: (a) Is
advised by the Adviser or its successor or by a
person controlling, controlled by, or under common
control with the Adviser or its successor (each, also
an ‘‘Adviser’’); (b) uses the manager of managers
structure described in the application; and (c)
complies with the terms and conditions of the
application (any such series, a ‘‘Subadvised SP
Series’’ and collectively, the ‘‘Subadvised SP
Series’’). For purposes of the requested order,
‘‘successor’’ is limited to an entity that results from
a reorganization into another jurisdiction or a
change in the type of business organization.
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continuous and comprehensive
investment management services subject
to the supervision of, and policies
established by, each Subabvised SP
Series’ board of trustees (‘‘Board’’). The
Investment Management Agreement
permits the Adviser, subject to the
approval of the Board, to delegate to one
or more sub-advisers (each, a ‘‘SubAdviser’’ and collectively, the ‘‘SubAdvisers’’) the responsibility to provide
the day-to-day portfolio investment
management of each Subabvised SP
Series, subject to the supervision and
direction of the Adviser. The primary
responsibility for managing the
Subabvised SP Series will remain vested
in the Adviser. The Adviser will hire,
evaluate, allocate assets to and oversee
the Sub-Advisers, including
determining whether a Sub-Adviser
should be terminated, at all times
subject to the authority of the Board.
2. Applicants request an exemption to
permit the Adviser, subject to Board
approval, to hire certain Sub-Advisers
pursuant to Sub-Advisory Agreements
and materially amend existing SubAdvisory Agreements without obtaining
the shareholder approval required under
Section 15(a) of the Act and Rule
18f–2 under the Act.2 Applicants also
seek an exemption from the Disclosure
Requirements to permit a Subabvised SP
Series to disclose (as both a dollar
amount and a percentage of the
Subadvised SP Series’ net assets): (a)
The aggregate fees paid to the Adviser;
and (b) the aggregate fees paid to NonAffiliated Sub-Advisers; and (c) the fee
paid to each Affiliated Sub-Adviser
(collectively, ‘‘Aggregate Fee
Disclosure’’).
3. Applicants agree that any order
granting the requested relief will be
subject to the terms and conditions
stated in the Application. Such terms
and conditions provide for, among other
safeguards, appropriate disclosure to
Subadvised SP Series shareholders and
notification about sub-advisory changes
and enhanced Board oversight to protect
the interests of the Subadvised SP
Series’ shareholders.
4. Section 6(c) of the Act provides that
the Commission may exempt any
person, security, or transaction or any
class or classes of persons, securities, or
transactions from any provisions of the
Act, or any rule thereunder, if such
relief is necessary or appropriate in the
public interest and consistent with the
protection of investors and purposes
2 The requested relief will not extend to any subadviser that is an affiliated person, as defined in
Section 2(a)(3) of the Act, of a Subadvised SP Series
or the Adviser, other than by reason of serving as
a sub-adviser to one or more of the Subadvised SP
Series (‘‘Affiliated Sub-Adviser’’).
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51513
fairly intended by the policy and
provisions of the Act. Applicants
believe that the requested relief meets
this standard because, as further
explained in the Application, the
Investment Management Agreements
will remain subject to shareholder
approval, while the role of the SubAdvisers is substantially similar to that
of individual portfolio managers, so that
requiring shareholder approval of SubAdvisory Agreements would impose
unnecessary delays and expenses on the
Subadvised SP Series. Applicants
believe that the requested relief from the
Disclosure Requirements meets this
standard because it will improve the
Adviser’s ability to negotiate fees paid
to the Sub-Advisers that are more
advantageous for the Subadvised SP
Series.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–18466 Filed 8–3–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78445; File No. SR–CHX–
2016–11]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change To Adopt
the Securities Trader Registration
Category and the Series 57 Securities
Trader Examination Registration
Requirement
July 29, 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 July 20,
2016, the Chicago Stock Exchange, Inc.
(‘‘CHX’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CHX proposes to amend the Rules of
the Exchange (‘‘CHX Rules’’) to adopt
the Securities Trader registration
1 15
2 17
E:\FR\FM\04AUN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Notices
category and the Series 57 Securities
Trader Examination registration
requirement.
CHX has designated this proposed
rule change as non-controversial
pursuant to Section 19(b)(3)(A) 3 of the
Act and Rule 19b–4(f)(6) 4 thereunder
and has provided the Commission with
the notice required by Rule 19b–
4(f)(6)(iii).5
The text of this proposed rule change
is available on the Exchange’s Web site
at (www.chx.com) and in 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
CHX included statements concerning
the purpose of and basis for the
proposed rule changes 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
CHX 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
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The Exchange proposes to amend
various provisions under Article 6 to
adopt the Securities Trader registration
category and the Series 57 Securities
Trader Examination registration
requirement and to eliminate references
to the Proprietary Trader registration
category and the Series 56 Proprietary
Trader Examination registration
requirement. The Series 56 exam was
discontinued by FINRA on January 4,
2016.6 Thus, the Exchange proposes the
following amendments, as discussed in
further detail below:
• Amend Rule 3(a) and Rule 3(d) to
replace references to the Proprietary
Trader registration category and the
Series 56 exam with the Securities
Trader registration category and the
Series 57 exam, respectively.
3 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
5 17 CFR 240.19b–4(f)(6)(iii).
6 See Securities Exchange Act Release No. 75783
(August 28, 2015), 80 FR 53369 (September 3, 2015)
(Order Approving a Proposed Rule Change To
Establish the Securities Trader and Securities
Trader Principal Registration Categories) (SR–
FINRA–2015–017).
4 17
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• Amend Article 6, Rule 3(a) to
require any Representative 7 that
engages in securities trading activities,
on either an agency or principal basis,
for the Participant with which the
Representative is associated, to register
with the Exchange as a Securities Trader
and to pass the Series 57 exam. The
Series 7 General Securities
Representative Examination will not be
an acceptable qualification examination
to register as a Securities Trader.
• Amend Article 6, Rule 3(b)(1) to
modify the current Proprietary Trader
Exception, which permits Chief
Compliance Officers of Participants that
engage solely in proprietary trading to
maintain the Series 14, in lieu of the
Series 24, as an expanded Securities
Trading Exception for Participants that
engage solely in securities trading
activities, on either an agency or
principal basis.
• Amend Article 6, Rule 2(c)(2) to
replace the Limited Principal—
Proprietary Trader registration category
with the Securities Trader Principal
registration category and update related
requirements.
• Amend Article 6, Rule 11 to delete
references to the S501 Series 56
Proprietary Trader Program for Series 56
registered persons and the Series 56
exam and, instead, require Securities
Traders to take the S101 General
Program to fulfill Regulatory Element
requirements.8
This filing is similar to SR–FINRA–
2015–017,9 which has been approved by
the Commission.
Proposed Representative Registration
Requirements
Current CHX Rules provide that
Representatives are required to be
registered with the Exchange in the
category of registration appropriate to
7 CHX Article 6, Rule 2(b) defines
‘‘Representatives’’ as follows:
Persons associated with a Participant who are
engaged or will be engaged in the securities
business of a Participant, or the management of
such securities business, including the functions of
supervision, solicitation, conduct of business or the
training of persons associated with a Participant for
any of these functions are Representatives.
A ‘‘Participant’’ is a ‘‘member’’ of the Exchange
for purposes of the Act. See CHX Article 1, Rule
1(s).
8 Pursuant to CHX Article 6, Rule 11(a), 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.
9 See supra note 6.
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the function to be performed.10 As CHX
Rules have not yet been updated to
reflect the new Securities Trader
registration category and the Series 57
exam registration requirement, CHX
Rules currently require the following:
• A Representative must register with
the Exchange as a General Securities
Representative (Series 7) or Proprietary
Trader (Series 56) 11 before such
registration is effective.12
• Each Representative is required to
register as a General Securities
Representative and pass the Series 7
General Securities Representative
Examination; provided that in the event
a Representative’s activities are
confined to making trading decisions
regarding, or otherwise engaging in,
proprietary trading for the broker-dealer
with which he or she is associated, the
Representative may register as a
Proprietary Trader without registering
as a General Securities Representative.13
• In order to qualify as a Proprietary
Trader, a Representative must pass
either the Series 7 exam or Series 56
exam.14
The Exchange now proposes to amend
current Article 6, Rule 3(a). Specifically,
the Exchange proposes to amend
paragraph (a)(1) to provide that each
Representative shall be required to
register with the Exchange as a General
Securities Representative and pass the
Series 7 General Securities
Representative Examination. However, a
Representative that is engaged in
securities trading activities, on either an
agency or principal basis, for the
Participant with which the
Representative is associated, must
register with the Exchange as a
Securities Trader and pass the Series 57
Securities Trader Examination, subject
to amended paragraph (a)(2).
Amended paragraph (a)(2) 15 provides
that a Representative that is engaged
solely in securities trading activities, on
either an agency or principal basis, for
the Participant with which the
Representative is associated, shall not
be required to register with the
10 See
current CHX Article 6, Rule 2(a).
Series 56 exam was discontinued on
January 4, 2016. See supra note 6.
12 See current CHX Article 6, Rule 3(a).
13 See id.
14 See id.; see also Securities Exchange Act
Release No. 70597 (October 2, 2013), 78 FR 62728
(October 22, 2013) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change Relating to
Registration, Qualification, Supervision, and
Continuing Education of Individuals Associated
with Participant Firms) (SR–CHX–2013–14).
15 The Exchange proposes to delete current
Article 6, Rule 3(a)(2) in its entirety as it defines
the Proprietary Trader registration category, which
will be eliminated pursuant to this proposed rule
change.
11 The
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Exchange as a General Securities
Representative. Moreover, a
Representative registered with the
Exchange solely as a Securities Trader
will not be qualified to function in any
other registration category.
Current Article 6, Rule 3(d) provides,
among other things, that Institutional
Broker Representatives 16 at Participant
Firms that do not hold customer
accounts and that only execute orders
from other brokers or dealers or engage
in proprietary trading only may, in the
alternative to passing the Series 7, pass
the Series 56 Proprietary Trader Exam.
The Exchange now proposes to replace
all references under current Article 6,
Rule 3(d) to the ‘‘Series 56’’ with the
‘‘Series 57.’’ The Exchange also
proposes to replace the reference to the
‘‘Proprietary Trader Exam’’ with the
‘‘Securities Trader Exam’’ and the
reference to the ‘‘Proprietary Trader
Exception’’ under current Article 6,
Rule 3(b)(1) with the proposed
‘‘Securities Trading Exception’’ under
amended Article 6, Rule 3(b)(1), as
described below. In addition, the
Exchange proposes to capitalize the
term ‘‘Customer,’’ as it is defined under
CHX Rules.17 Moreover, the Exchange
proposes to amend the third sentence
under Rule 3(d) to provide that
Institutional Broker Representatives at
Participant Firms that do not carry
Customers accounts and that only
execute orders from other brokers or
dealers or engage in proprietary trading
must pass the Series 57 Securities
Trader Exam.
The Exchange also proposes to delete
current Article 6, Rule 3(e) as it
provides obsolete compliance dates.18
Proposed Securities Trading Exception
for Certain Chief Compliance Officers
Current Article 6, Rule 3(b)(1) permits
the Chief Compliance Officer of a
Participant Firm to maintain the Series
14 Compliance Official qualification, in
lieu of the Series 24 General Securities
Principal qualification, if the Participant
Firm engages solely in proprietary
trading and otherwise meets the
requirements listed under current
Article 6, Rule 3(b) and Article 6, Rule
2(c)(1).19 The Exchange now proposes to
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16 See
CHX Article 1, Rule 1(gg) defining
‘‘Institutional Broker Representative.’’
17 See CHX Article [sic], Rule 1(hh) defining
‘‘Customer.’’
18 See supra note 14.
19 CHX Article 6, Rule 2(c)(1) provides as follows:
Definition of Principals. Persons associated with
a Participant, enumerated in subparagraphs (A)
through (E) hereafter, who are actively engaged in
the management of the Participants’ securities
business, including supervision, solicitation,
conduct of business or the training of persons
associated with a member for any of these functions
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conform the exception to apply to firms
that engage solely in securities trading
activities, on either an agency or
principal basis. Thus, the Exchange
proposes to amend Article 6, Rule 3(b)
by replacing the term ‘‘Proprietary
Trading’’ with the phrase ‘‘securities
trading activities, on either an agency or
principal basis’’ and rename the
exception as the ‘‘Securities Trading
Exception.’’
Proposed Securities Trader Principal
Current Article 6, Rule 2(c)(2)
provides for a limited principal
registration category called the ‘‘Limited
Principal—Proprietary Trader.’’
Specifically, current subparagraph (A)
provides that each person associated
with a Participant who is included
within the definition of a Principal 20
may register with the Exchange as a
Limited Principal—Proprietary Trader
if: (i) His or her supervisory
responsibilities in the securities
business are limited solely to the
activities of a Participant that involve
proprietary trading; (ii) he or she is
registered pursuant to Exchange Rules
as a Proprietary Trader; and (iii) he or
she is qualified to be so registered by
passing the Series 24 examination.
Current subparagraph (B) provides that
a person registered in this category shall
not be qualified to function in a
Principal capacity with responsibility
over any area of business activity not
described in paragraph (c)(2)(A)(i) of
this Rule.
The Exchange now proposes to amend
Article 6, Rule 2(c)(2)(A) to provide that
each Principal shall register with the
Exchange as a Securities Trader
Principal if such Principal supervises
the securities trading activities of a
Participant. Moreover, a Principal is
required to pass the Series 57 exam as
a prerequisite to registration as a
Securities Trader Principal.21
The Exchange also proposes to amend
Article 6, Rule 2(c)(2)(B) to provide that
a person registered as a Securities
Trader Principal shall only be qualified
to supervise the securities trading
activities of a Participant and shall not
be qualified to supervise any other
activities of a Participant. Moreover, a
Principal shall not be qualified to
are designated as Principals. Such persons shall
include:
(A) Sole Proprietors;
(B) Officers;
(C) Partners;
(D) Branch office managers; and
(E) Directors.
20 See id.
21 All Principals are required to pass the Series 24
or Series 14 exam, as applicable, pursuant to
current Article 6, Rule 3(b).
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supervise the trading activities of a
Participant, unless such person is
registered as a Securities Trader
Principal.
The Exchange also proposes to amend
Article 6, Rule 2(c) to provide that all
persons engaged or to be engaged in the
securities business of a Participant who
are to function as a Principal shall be
registered with the Exchange as a
General Securities Principal, unless the
Principal meets the requirements under
this Rule 2(c), so as to contemplate the
proposed Securities Trader Principal
registration requirement. Moreover, for
the purpose of clarifying the
examination requirements for all
Principals, the Exchange proposes to
amend the last sentence of current Rule
2(c) to provide that each Principal shall
pass the Series 24 or Series 14 exam, as
applicable, pursuant to Article 6, Rule
3(b).22
Proposed Continuing Education
Requirements
Current Article 6, Rule 11 provides
continuing education requirements for
registered persons, including
Proprietary Traders. The Exchange now
proposes to amend Article 6, Rule
11(a)(3) to eliminate reference to the
S501 Series 56 Proprietary Trader
continuing education program for Series
56 registered persons, as the S501 Series
56 Proprietary Trader continuing
education program was phased out
along with the Series 56 exam on
January 4, 2016.23 The Exchange now
proposes to require Series 57 registered
persons to take the S101 General
Program to fulfill the Regulatory
Element requirement. Thus, the
Exchange proposes to replace current
Article 6, Rule 11(a)(3) with new
language that provides that the
following sets forth the Regulatory
Element appropriate for each
registration category:
Catergory of
registration
General Securities
Representative.
Securities Trader .......
General Securities
Principal.
Securities Trader
Principal.
Financial and Operations Principal.
Regulatory element
S101 General Program.
S101 General Program.
S201 Supervisor
Program.
S201 Supervisor
Program.
S201 Supervisor
Program.
The Exchange also proposes to
replace a reference to ‘‘Series 56’’ with
‘‘Series 57’’ under the first sentence of
22 See
23 See
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id.
supra note 6.
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Article 6, Rule 11(b)(1), which describes
persons subject to the Firm Element
continuing education requirement.
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2. Statutory Basis
The Exchange believes that proposed
rule change is consistent with Section
6(b) of the Act 24 in general and Section
6(b)(5) of the Act 25 in particular, which
requires, among other things, that the
Exchange’s rules be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
and to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, protect
investors and the public interest.
Additionally, the Exchange believes that
the proposed rule change is consistent
with the Section 6(b)(5) requirement
that the rules of an exchange not be
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
In particular, the Exchange believes
that adoption of the Securities Trader
registration category and Series 57 exam
registration requirement is consistent
with the Act. FINRA indicated that the
Series 57 exam was being developed in
an effort to adopt a more tailored
examination. The Exchange believes
that adopting the Series 57 exam for
Representatives engaging in trading
activities will help ensure
professionalism among market
participants, prevent fraudulent and
manipulative practices, and promote
just and equitable principles of trade.
The Exchange also believes that it is in
the interests of investors and the general
public to adopt a tailored qualification
examination for proprietary traders and
that a uniform qualification standard
may help ensure fair and orderly
markets. Furthermore, the Exchange
believes that it is in the interests of all
market participants to provide
consistent qualification and registration
requirements across markets. The
Exchange believes that harmonizing the
Exchange’s qualification and
registration requirements with those of
FINRA and the other national securities
exchanges would further such interests.
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
24 15
25 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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of the purposes of the Act. The
Exchange believes that the proposed
rule change relating to Securities
Traders, which is based upon and
substantially similar to recent rule
changes adopted by FINRA, which is
similar to the filings of other national
securities exchanges, will reduce the
regulatory burden placed on market
participants engaged in trading
activities across different markets. The
Exchange believes that the
harmonization of these registration
requirements across the various markets
will reduce burdens on competition by
removing impediments to participation
in the national market 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 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) 26 of the Act and Rule 19b–
4(f)(6) thereunder.27
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 28 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 29
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has asked
the Commission to waive the 30-day
operative delay so that the proposal may
become operative upon filing.
According to the Exchange, the Series
57 exam has already replaced the Series
56 exam, which was discontinued by
FINRA as of January 4, 2016, and the
waiver of the operative delay would
permit new Representatives to register
with the Exchange under registration
26 15
U.S.C. 78s(b)(3)(A).
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, 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. The
Exchange has satisfied this requirement.
28 17 CFR 240.19b–4(f)(6).
29 17 CFR 240.19b–4(f)(6)(iii).
27 17
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standards similar to those of FINRA and
other national securities exchanges.30
Based on the foregoing, the Commission
believes the waiver of the operative
delay is consistent with the protection
of investors and the public interest.
Therefore, the Commission hereby
waives the operative delay and
designates the proposal operative upon
filing.31
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 No. SR–
CHX–2016–11 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 No.
SR–CHX–2016–11. This file number
should be included on the subject line
if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (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
30 See
supra note 6.
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).
31 For
E:\FR\FM\04AUN1.SGM
04AUN1
Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Notices
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 CHX. 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 No. SR–CHX–2016–
11 and should be submitted on or before
August 25, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–18472 Filed 8–3–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78443; File No. SR–
NASDAQ–2016–064]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Granting Approval of Proposed Rule
Change Relating to the Listing and
Trading of the Shares of the First Trust
Strategic Mortgage REIT ETF of First
Trust Exchange-Traded Fund VIII
19(b)(2) of the Act,4 the Commission
designated a longer period within which
to approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether to disapprove the proposed
rule change.5 The Commission received
no comments on the proposed rule
change. This order grants approval of
the proposed rule change.
II. Exchange’s Description of the
Proposal
The Exchange proposes to list and
trade the Shares under Nasdaq Rule
5735, which governs the listing and
trading of Managed Fund Shares on the
Exchange. The Fund will be an activelymanaged exchange-traded fund (‘‘ETF’’).
The Shares will be offered by the Trust,
which was established as a
Massachusetts business trust on
February 22, 2016.6 The Fund will be a
series of the Trust.
First Trust Advisors L.P. will be the
investment adviser (‘‘Adviser’’) to the
Fund. First Trust Portfolios L.P.
(‘‘Distributor’’) will be the principal
underwriter and distributor of the
Fund’s Shares. The Bank of New York
Mellon Corporation will act as the
administrator, accounting agent,
custodian, and transfer agent to the
Fund. The Exchange states that the
Adviser is not a broker-dealer, but it is
affiliated with the Distributor, a brokerdealer.7 The Exchange represents that
the Adviser has implemented a fire wall
with respect to its broker-dealer affiliate
regarding access to information
concerning the composition of, and
changes to, the portfolio.8 According to
the Exchange, the Fund currently does
not intend to use a sub-advisor.9
sradovich on DSK3GMQ082PROD with NOTICES
July 29, 2016.
I. Introduction
On May 3, 2016, The NASDAQ Stock
Market LLC (‘‘Exchange’’ or ‘‘Nasdaq’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’ or
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares (‘‘Shares’’) of the
First Trust Strategic Mortgage REIT ETF
(‘‘Fund’’) of First Trust ExchangeTraded Fund VIII (‘‘Trust’’) under
NASDAQ Rule 5735. The proposed rule
change was published for comment in
the Federal Register on May 12, 2016.3
On June 15, 2016, pursuant to Section
32 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 77781
(May 6, 2016), 81 FR 29590 (‘‘Notice’’).
1 15
VerDate Sep<11>2014
18:12 Aug 03, 2016
Jkt 238001
4 15
U.S.C. 78s(b)(2).
Securities Exchange Act Release No. 78078
(Jun. 21, 2016), 81 FR 40377.
6 The Exchange represents that the Trust is
registered under the Investment Company Act of
1940 (‘‘1940 Act’’). See Registration Statement on
Form N–1A for the Trust dated March 14, 2016 (File
Nos. 333–210186 and 811–23147) (‘‘Registration
Statement’’). The Exchange further states that the
Trust has obtained certain exemptive relief under
the 1940 Act. See Investment Company Act Release
No. 28468 (October 27, 2008) (File No. 812–13477).
7 See Notice, supra note 3, 81 FR at 29591.
8 See id. The Exchange further represents that, in
the event (a) the Adviser or any sub-adviser
registers as a broker-dealer, or becomes newly
affiliated with a broker-dealer, or (b) any new
adviser or sub-adviser registers is a registered
broker-dealer or becomes affiliated with another
broker-dealer, it will implement a fire wall with
respect to its relevant personnel and such brokerdealer affiliate, as applicable, regarding access to
information concerning the composition of, and
changes to, the portfolio, and will be subject to
procedures designed to prevent the use and
dissemination of material, non-public information
regarding such portfolio.
9 See id.
5 See
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
51517
The Exchange has made the following
representations and statements in
describing the Fund and its investment
strategy, including the Fund’s portfolio
holdings and investment restrictions.10
A. Exchange’s Description of the Fund’s
Principal Investments
The investment objective of the Fund
will be to generate high current income.
Under normal market conditions,11 the
Fund will seek to achieve its investment
objective by investing at least 80% of its
net assets (including investment
borrowings) in the exchange-traded
common shares of U.S. exchange-traded
mortgage real estate investment trusts
(‘‘mortgage REITs’’). In general terms, a
mortgage REIT makes loans to
developers and owners of property and
invests primarily in mortgages and
similar real estate interests, and
includes companies or trusts that are
primarily engaged in the purchasing or
servicing of commercial or residential
mortgage loans or mortgage-related
securities, which may include mortgagebacked securities issued by private
issuers and those issued or guaranteed
by U.S. Government agencies,
instrumentalities, or sponsored entities.
The Fund intends to qualify each year
as a regulated investment company
under Subchapter M of the Internal
Revenue Code of 1986, as amended.
B. Exchange’s Description of the Fund’s
Other Investments
The Fund may invest (in the
aggregate) up to 20% of its net assets in
10 The Commission notes that additional
information regarding the Fund, the Trust, and the
Shares, including investment strategies, risks,
creation and redemption procedures, fees, portfolio
holdings disclosure policies, calculation of net asset
value (‘‘NAV’’), distributions, and taxes, among
other things, can be found in the Notice and the
Registration Statement, as applicable. See Notice
and Registration Statement, supra notes 3 and 6,
respectively.
11 The term ‘‘under normal market conditions’’ as
used herein includes, but is not limited to, the
absence of adverse market, economic, political or
other conditions, including extreme volatility or
trading halts in the securities markets or the
financial markets generally; operational issues
causing dissemination of inaccurate market
information; or force majeure type events such as
systems failure, natural or man-made disaster, act
of God, armed conflict, act of terrorism, riot or labor
disruption or any similar intervening circumstance.
On a temporary basis, including for defensive
purposes, during the initial invest-up period and
during periods of high cash inflows or outflows, the
Fund may depart from its principal investment
strategies; for example, it may hold a higher than
normal proportion of its assets in cash. According
to the Exchange, during such periods, the Fund may
not be able to achieve its investment objective. The
Fund may adopt a defensive strategy when the
Adviser believes securities in which the Fund
normally invests have elevated risks due to political
or economic factors and in other extraordinary
circumstances. See Notice, supra note 3, 81 FR at
29591 n.8.
E:\FR\FM\04AUN1.SGM
04AUN1
]]>Agencies
[Federal Register Volume 81, Number 150 (Thursday, August 4, 2016)]
[Notices]
[Pages 51513-51517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18472]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78445; File No. SR-CHX-2016-11]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Adopt the Securities Trader Registration Category and the Series 57
Securities Trader Examination Registration Requirement
July 29, 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 July 20, 2016, the Chicago Stock Exchange, Inc. (``CHX'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CHX proposes to amend the Rules of the Exchange (``CHX Rules'') to
adopt the Securities Trader registration
[[Page 51514]]
category and the Series 57 Securities Trader Examination registration
requirement.
CHX has designated this proposed rule change as non-controversial
pursuant to Section 19(b)(3)(A) \3\ of the Act and Rule 19b-4(f)(6) \4\
thereunder and has provided the Commission with the notice required by
Rule 19b-4(f)(6)(iii).\5\
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
\5\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
The text of this proposed rule change is available on the
Exchange's Web site at (www.chx.com) and in 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 CHX included statements
concerning the purpose of and basis for the proposed rule changes 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 CHX 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 proposes to amend various provisions under Article 6
to adopt the Securities Trader registration category and the Series 57
Securities Trader Examination registration requirement and to eliminate
references to the Proprietary Trader registration category and the
Series 56 Proprietary Trader Examination registration requirement. The
Series 56 exam was discontinued by FINRA on January 4, 2016.\6\ Thus,
the Exchange proposes the following amendments, as discussed in further
detail below:
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 75783 (August 28,
2015), 80 FR 53369 (September 3, 2015) (Order Approving a Proposed
Rule Change To Establish the Securities Trader and Securities Trader
Principal Registration Categories) (SR-FINRA-2015-017).
---------------------------------------------------------------------------
Amend Rule 3(a) and Rule 3(d) to replace references to the
Proprietary Trader registration category and the Series 56 exam with
the Securities Trader registration category and the Series 57 exam,
respectively.
Amend Article 6, Rule 3(a) to require any Representative
\7\ that engages in securities trading activities, on either an agency
or principal basis, for the Participant with which the Representative
is associated, to register with the Exchange as a Securities Trader and
to pass the Series 57 exam. The Series 7 General Securities
Representative Examination will not be an acceptable qualification
examination to register as a Securities Trader.
---------------------------------------------------------------------------
\7\ CHX Article 6, Rule 2(b) defines ``Representatives'' as
follows:
Persons associated with a Participant who are engaged or will be
engaged in the securities business of a Participant, or the
management of such securities business, including the functions of
supervision, solicitation, conduct of business or the training of
persons associated with a Participant for any of these functions are
Representatives.
A ``Participant'' is a ``member'' of the Exchange for purposes
of the Act. See CHX Article 1, Rule 1(s).
---------------------------------------------------------------------------
Amend Article 6, Rule 3(b)(1) to modify the current
Proprietary Trader Exception, which permits Chief Compliance Officers
of Participants that engage solely in proprietary trading to maintain
the Series 14, in lieu of the Series 24, as an expanded Securities
Trading Exception for Participants that engage solely in securities
trading activities, on either an agency or principal basis.
Amend Article 6, Rule 2(c)(2) to replace the Limited
Principal--Proprietary Trader registration category with the Securities
Trader Principal registration category and update related requirements.
Amend Article 6, Rule 11 to delete references to the S501
Series 56 Proprietary Trader Program for Series 56 registered persons
and the Series 56 exam and, instead, require Securities Traders to take
the S101 General Program to fulfill Regulatory Element requirements.\8\
---------------------------------------------------------------------------
\8\ Pursuant to CHX Article 6, Rule 11(a), 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.
---------------------------------------------------------------------------
This filing is similar to SR-FINRA-2015-017,\9\ which has been
approved by the Commission.
---------------------------------------------------------------------------
\9\ See supra note 6.
---------------------------------------------------------------------------
Proposed Representative Registration Requirements
Current CHX Rules provide that Representatives are required to be
registered with the Exchange in the category of registration
appropriate to the function to be performed.\10\ As CHX Rules have not
yet been updated to reflect the new Securities Trader registration
category and the Series 57 exam registration requirement, CHX Rules
currently require the following:
---------------------------------------------------------------------------
\10\ See current CHX Article 6, Rule 2(a).
---------------------------------------------------------------------------
A Representative must register with the Exchange as a
General Securities Representative (Series 7) or Proprietary Trader
(Series 56) \11\ before such registration is effective.\12\
---------------------------------------------------------------------------
\11\ The Series 56 exam was discontinued on January 4, 2016. See
supra note 6.
\12\ See current CHX Article 6, Rule 3(a).
---------------------------------------------------------------------------
Each Representative is required to register as a General
Securities Representative and pass the Series 7 General Securities
Representative Examination; provided that in the event a
Representative's activities are confined to making trading decisions
regarding, or otherwise engaging in, proprietary trading for the
broker-dealer with which he or she is associated, the Representative
may register as a Proprietary Trader without registering as a General
Securities Representative.\13\
---------------------------------------------------------------------------
\13\ See id.
---------------------------------------------------------------------------
In order to qualify as a Proprietary Trader, a
Representative must pass either the Series 7 exam or Series 56
exam.\14\
---------------------------------------------------------------------------
\14\ See id.; see also Securities Exchange Act Release No. 70597
(October 2, 2013), 78 FR 62728 (October 22, 2013) (Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change Relating to
Registration, Qualification, Supervision, and Continuing Education
of Individuals Associated with Participant Firms) (SR-CHX-2013-14).
---------------------------------------------------------------------------
The Exchange now proposes to amend current Article 6, Rule 3(a).
Specifically, the Exchange proposes to amend paragraph (a)(1) to
provide that each Representative shall be required to register with the
Exchange as a General Securities Representative and pass the Series 7
General Securities Representative Examination. However, a
Representative that is engaged in securities trading activities, on
either an agency or principal basis, for the Participant with which the
Representative is associated, must register with the Exchange as a
Securities Trader and pass the Series 57 Securities Trader Examination,
subject to amended paragraph (a)(2).
Amended paragraph (a)(2) \15\ provides that a Representative that
is engaged solely in securities trading activities, on either an agency
or principal basis, for the Participant with which the Representative
is associated, shall not be required to register with the
[[Page 51515]]
Exchange as a General Securities Representative. Moreover, a
Representative registered with the Exchange solely as a Securities
Trader will not be qualified to function in any other registration
category.
---------------------------------------------------------------------------
\15\ The Exchange proposes to delete current Article 6, Rule
3(a)(2) in its entirety as it defines the Proprietary Trader
registration category, which will be eliminated pursuant to this
proposed rule change.
---------------------------------------------------------------------------
Current Article 6, Rule 3(d) provides, among other things, that
Institutional Broker Representatives \16\ at Participant Firms that do
not hold customer accounts and that only execute orders from other
brokers or dealers or engage in proprietary trading only may, in the
alternative to passing the Series 7, pass the Series 56 Proprietary
Trader Exam. The Exchange now proposes to replace all references under
current Article 6, Rule 3(d) to the ``Series 56'' with the ``Series
57.'' The Exchange also proposes to replace the reference to the
``Proprietary Trader Exam'' with the ``Securities Trader Exam'' and the
reference to the ``Proprietary Trader Exception'' under current Article
6, Rule 3(b)(1) with the proposed ``Securities Trading Exception''
under amended Article 6, Rule 3(b)(1), as described below. In addition,
the Exchange proposes to capitalize the term ``Customer,'' as it is
defined under CHX Rules.\17\ Moreover, the Exchange proposes to amend
the third sentence under Rule 3(d) to provide that Institutional Broker
Representatives at Participant Firms that do not carry Customers
accounts and that only execute orders from other brokers or dealers or
engage in proprietary trading must pass the Series 57 Securities Trader
Exam.
---------------------------------------------------------------------------
\16\ See CHX Article 1, Rule 1(gg) defining ``Institutional
Broker Representative.''
\17\ See CHX Article [sic], Rule 1(hh) defining ``Customer.''
---------------------------------------------------------------------------
The Exchange also proposes to delete current Article 6, Rule 3(e)
as it provides obsolete compliance dates.\18\
---------------------------------------------------------------------------
\18\ See supra note 14.
---------------------------------------------------------------------------
Proposed Securities Trading Exception for Certain Chief Compliance
Officers
Current Article 6, Rule 3(b)(1) permits the Chief Compliance
Officer of a Participant Firm to maintain the Series 14 Compliance
Official qualification, in lieu of the Series 24 General Securities
Principal qualification, if the Participant Firm engages solely in
proprietary trading and otherwise meets the requirements listed under
current Article 6, Rule 3(b) and Article 6, Rule 2(c)(1).\19\ The
Exchange now proposes to conform the exception to apply to firms that
engage solely in securities trading activities, on either an agency or
principal basis. Thus, the Exchange proposes to amend Article 6, Rule
3(b) by replacing the term ``Proprietary Trading'' with the phrase
``securities trading activities, on either an agency or principal
basis'' and rename the exception as the ``Securities Trading
Exception.''
---------------------------------------------------------------------------
\19\ CHX Article 6, Rule 2(c)(1) provides as follows:
Definition of Principals. Persons associated with a Participant,
enumerated in subparagraphs (A) through (E) hereafter, who are
actively engaged in the management of the Participants' 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. Such persons shall include:
(A) Sole Proprietors;
(B) Officers;
(C) Partners;
(D) Branch office managers; and
(E) Directors.
---------------------------------------------------------------------------
Proposed Securities Trader Principal
Current Article 6, Rule 2(c)(2) provides for a limited principal
registration category called the ``Limited Principal--Proprietary
Trader.'' Specifically, current subparagraph (A) provides that each
person associated with a Participant who is included within the
definition of a Principal \20\ may register with the Exchange as a
Limited Principal--Proprietary Trader if: (i) His or her supervisory
responsibilities in the securities business are limited solely to the
activities of a Participant that involve proprietary trading; (ii) he
or she is registered pursuant to Exchange Rules as a Proprietary
Trader; and (iii) he or she is qualified to be so registered by passing
the Series 24 examination. Current subparagraph (B) provides that a
person registered in this category shall not be qualified to function
in a Principal capacity with responsibility over any area of business
activity not described in paragraph (c)(2)(A)(i) of this Rule.
---------------------------------------------------------------------------
\20\ See id.
---------------------------------------------------------------------------
The Exchange now proposes to amend Article 6, Rule 2(c)(2)(A) to
provide that each Principal shall register with the Exchange as a
Securities Trader Principal if such Principal supervises the securities
trading activities of a Participant. Moreover, a Principal is required
to pass the Series 57 exam as a prerequisite to registration as a
Securities Trader Principal.\21\
---------------------------------------------------------------------------
\21\ All Principals are required to pass the Series 24 or Series
14 exam, as applicable, pursuant to current Article 6, Rule 3(b).
---------------------------------------------------------------------------
The Exchange also proposes to amend Article 6, Rule 2(c)(2)(B) to
provide that a person registered as a Securities Trader Principal shall
only be qualified to supervise the securities trading activities of a
Participant and shall not be qualified to supervise any other
activities of a Participant. Moreover, a Principal shall not be
qualified to supervise the trading activities of a Participant, unless
such person is registered as a Securities Trader Principal.
The Exchange also proposes to amend Article 6, Rule 2(c) to provide
that all persons engaged or to be engaged in the securities business of
a Participant who are to function as a Principal shall be registered
with the Exchange as a General Securities Principal, unless the
Principal meets the requirements under this Rule 2(c), so as to
contemplate the proposed Securities Trader Principal registration
requirement. Moreover, for the purpose of clarifying the examination
requirements for all Principals, the Exchange proposes to amend the
last sentence of current Rule 2(c) to provide that each Principal shall
pass the Series 24 or Series 14 exam, as applicable, pursuant to
Article 6, Rule 3(b).\22\
---------------------------------------------------------------------------
\22\ See id.
---------------------------------------------------------------------------
Proposed Continuing Education Requirements
Current Article 6, Rule 11 provides continuing education
requirements for registered persons, including Proprietary Traders. The
Exchange now proposes to amend Article 6, Rule 11(a)(3) to eliminate
reference to the S501 Series 56 Proprietary Trader continuing education
program for Series 56 registered persons, as the S501 Series 56
Proprietary Trader continuing education program was phased out along
with the Series 56 exam on January 4, 2016.\23\ The Exchange now
proposes to require Series 57 registered persons to take the S101
General Program to fulfill the Regulatory Element requirement. Thus,
the Exchange proposes to replace current Article 6, Rule 11(a)(3) with
new language that provides that the following sets forth the Regulatory
Element appropriate for each registration category:
---------------------------------------------------------------------------
\23\ See supra note 6.
------------------------------------------------------------------------
Catergory of registration Regulatory element
------------------------------------------------------------------------
General Securities Representative......... S101 General Program.
Securities Trader......................... S101 General Program.
General Securities Principal.............. S201 Supervisor Program.
Securities Trader Principal............... S201 Supervisor Program.
Financial and Operations Principal........ S201 Supervisor Program.
------------------------------------------------------------------------
The Exchange also proposes to replace a reference to ``Series 56''
with ``Series 57'' under the first sentence of
[[Page 51516]]
Article 6, Rule 11(b)(1), which describes persons subject to the Firm
Element continuing education requirement.
2. Statutory Basis
The Exchange believes that proposed rule change is consistent with
Section 6(b) of the Act \24\ in general and Section 6(b)(5) of the Act
\25\ in particular, which requires, among other things, that the
Exchange's rules be designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
facilitating transactions in securities, and to remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and, in general, protect investors and the public
interest. Additionally, the Exchange believes that the proposed rule
change is consistent with the Section 6(b)(5) requirement that the
rules of an exchange not be designed to permit unfair discrimination
between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In particular, the Exchange believes that adoption of the
Securities Trader registration category and Series 57 exam registration
requirement is consistent with the Act. FINRA indicated that the Series
57 exam was being developed in an effort to adopt a more tailored
examination. The Exchange believes that adopting the Series 57 exam for
Representatives engaging in trading activities will help ensure
professionalism among market participants, prevent fraudulent and
manipulative practices, and promote just and equitable principles of
trade. The Exchange also believes that it is in the interests of
investors and the general public to adopt a tailored qualification
examination for proprietary traders and that a uniform qualification
standard may help ensure fair and orderly markets. Furthermore, the
Exchange believes that it is in the interests of all market
participants to provide consistent qualification and registration
requirements across markets. The Exchange believes that harmonizing the
Exchange's qualification and registration requirements with those of
FINRA and the other national securities exchanges would further such
interests.
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 believes that
the proposed rule change relating to Securities Traders, which is based
upon and substantially similar to recent rule changes adopted by FINRA,
which is similar to the filings of other national securities exchanges,
will reduce the regulatory burden placed on market participants engaged
in trading activities across different markets. The Exchange believes
that the harmonization of these registration requirements across the
various markets will reduce burdens on competition by removing
impediments to participation in the national market 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 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) \26\ of the Act and Rule 19b-
4(f)(6) thereunder.\27\
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78s(b)(3)(A).
\27\ 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, 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. The Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \28\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \29\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay so that
the proposal may become operative upon filing. According to the
Exchange, the Series 57 exam has already replaced the Series 56 exam,
which was discontinued by FINRA as of January 4, 2016, and the waiver
of the operative delay would permit new Representatives to register
with the Exchange under registration standards similar to those of
FINRA and other national securities exchanges.\30\ Based on the
foregoing, the Commission believes the waiver of the operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission hereby waives the operative delay and
designates the proposal operative upon filing.\31\
---------------------------------------------------------------------------
\28\ 17 CFR 240.19b-4(f)(6).
\29\ 17 CFR 240.19b-4(f)(6)(iii).
\30\ See supra note 6.
\31\ 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 No. SR-CHX-2016-11 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 No. SR-CHX-2016-11. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (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
[[Page 51517]]
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 CHX. 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 No. SR-CHX-2016-11 and should be submitted on or before August 25,
2016.
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\32\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-18472 Filed 8-3-16; 8:45 am]
BILLING CODE 8011-01-P
