Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Continuing Education Requirements, 16268-16272 [2022-05976]
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Federal Register / Vol. 87, No. 55 / Tuesday, March 22, 2022 / Notices
operative delay and designates the
proposed rule change as operative upon
filing.26
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:
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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–
FINRA–2022–005 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–FINRA–2022–005. 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 website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
26 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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business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of
FINRA. All comments received will be
posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–FINRA–
2022–005 and should be submitted on
or before April 12, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–05975 Filed 3–21–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94429; File No. SR–MEMX–
2022–05]
requirements made by the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’), including a change to
require that the Regulatory Element of
continuing education be completed
annually rather than every three years
and to provide a path through
continuing education for individuals to
maintain their qualification following
the termination of a registration. The
text of the proposed rule change is
provided in Exhibit 5.
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.
Self-Regulatory Organizations; MEMX
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change Related to Continuing
Education Requirements
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
March 16, 2022.
Background
The Exchange sets forth certain
continuing education (‘‘CE’’)
requirements for its ‘‘Members,’’ 5
including requirements to participate in
the Regulatory Element of training,
which are generally based on certain
FINRA Rules.6 The Regulatory Element
of CE is administered to industry
participants by FINRA and focuses on
regulatory requirements and industry
standards. The Exchange has codified
its general registration requirements
under Interpretation and Policy .01 to
Exchange Rule 2.5 (‘‘Rule 2.5.01’’) and
its CE program, including
implementation of the Regulatory
Element under Interpretation and Policy
.02 to Exchange Rule 2.5 (‘‘Rule
2.5.02’’). The Exchange seeks to amend
its rules to more closely mirror FINRA
Rules, as amended.7 Consistent with
this goal, the Exchange also seeks to
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 10,
2022, MEMX LLC (‘‘MEMX’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing with the
Commission a proposed rule change to
amend Exchange Rule 2.5 (Restrictions).
The proposed rule change is based on
recent changes to continuing education
27 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
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1. Purpose
5 Exchange Rules define a Member to mean any
registered broker or dealer that has been admitted
to membership in the Exchange. See Exchange Rule
1.5(p).
6 See FINRA Rule 1210 (Registration
Requirements) and 1240 (Continuing Education
Requirements).
7 See Securities Exchange Act Release No. 34–
93097 (September 21, 2021), 86 FR 53358
(September 27, 2021) (Order Approving File No.
SR–FINRA–2021–015) (the ‘‘Approval Order’’).
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adopt provisions of FINRA Rules
regarding the ‘‘Firm Element,’’ as further
discussed below.
Tracking FINRA Rule 1240(a)
(Regulatory Element), Rule 2.5.02
currently requires Registered
Representatives 8 to complete the
applicable Regulatory Element initially
within 120 days after the person’s
second registration anniversary date
and, thereafter, within 120 days after
every third registration anniversary
date.9 The Exchange may extend these
time frames for good cause shown.10
Any Registered Representative that does
not complete the Regulatory Element
within the prescribed time frames will
have their respective registrations
deemed inactive, and therefore would
be prohibited from performing, or being
compensated for, any activities
requiring such registration, including
supervisory duties.
The Regulatory Element consists of a
subprogram for registered persons
generally, and a subprogram for
principals and supervisors.11 While
some of the current Regulatory Element
content is unique to particular
registration categories, most of the
content has broad application to both
representatives and principals.12
Currently, Registered Representatives
who have been terminated for two or
more years may reregister as
representatives or principals only if they
requalify by retaking and passing the
applicable representative- or principallevel examination or if they obtain a
waiver of such examination(s) (the
‘‘two-year qualification period’’).13 The
8 As defined in Exchange Rule 2.5.02, a
‘‘Registered Representative’’ is any Authorized
Trader, Principal, or Financial/Operations
Principal, as each is defined separately in the
Exchange Rules.
9 See Rule 2.5.02(a) (Requirements) and Rule
2.5.02(d) (Reassociation in a Registered Capacity).
An individual’s registration anniversary date is
generally the date they initially registered with
FINRA in the Central Registration Depository
(‘‘CRD®’’) system. However, an individual’s
registration anniversary date would be reset if the
individual has been out of the industry for two or
more years and is required to requalify by
examination, or obtain an examination waiver, in
order to reregister. An individual’s registration
anniversary date would also be reset if the
individual obtains a conditional examination
waiver that requires them to complete the
Regulatory Element by a specified date.
10 See Rule 2.5.02(b) (Failure to Complete).
11 The S101 (General Program for Registered
Persons) and the S201 (Registered Principals and
Supervisors).
12 The current content is presented in a single
format leading individuals through a case that
provides a story depicting situations that they may
encounter in the course of their work.
13 See supra note 10. Individuals must complete
the entire Regulatory Element session to be
considered to have ‘‘completed’’ the Regulatory
Element; partial completion is the same as non-
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two-year qualification period was
adopted prior to the creation of the CE
Program and was intended to ensure
that individuals who reregister are
relatively current on their regulatory
and securities knowledge.
Proposed Rule Change
The Exchange has participated in
extensive work with the Securities
Industry/Regulatory Council on
Continuing Education (‘‘CE Council’’)
and discussions with stakeholders,
including other industry participants
and the North American Securities
Administrators Association (‘‘NASAA’’),
that has resulted in amendments to
FINRA Rules 1210 and 1240.14
Following these changes, the Exchange
seeks to align its Rules to the FINRA CE
Program by making the following
changes to the Exchange Rule 2.5.01 and
Rule 2.5.02.
Transition to Annual Regulatory
Element for Registered Representatives
Currently, the Regulatory Element
prescribed in Rule 2.5.02 sets forth that
training must be completed every three
years, and the content is broad in
nature. Based on changes in technology
and learning theory, the Regulatory
Element content can be updated and
delivered in a timelier fashion and
tailored to each registration category,
which would further the goals of the
Regulatory Element.15 Therefore, to
align the Exchange’s Rules with changes
made by FINRA and to provide
registered persons with more timely and
relevant training on significant
regulatory developments, the Exchange
proposes amending Rule 2.5.02(a) to
require registered persons to complete
the Regulatory Element annually by
December 31, with the first compliance
date December 31, 2023.16 The
proposed amendment would also
completion. As described below, the Exchange also
proposes to adopt additional language based on
FINRA Rule 1210, Supplementary Material .08 as
new paragraph (j) to Rule 2.5.01.
14 See Approval Order, supra note 7.
15 When the FINRA CE Program was originally
adopted in 1995, registered persons were required
to complete the Regulatory Element on their
second, fifth and 10th registration anniversary
dates. See Securities Exchange Act Release No.
35341 (February 8, 1995), 60 FR 8426 (February 14,
1995) (Order Approving File Nos. SR–AMEX–94–
59; SR–CBOE–94–49; SR–CHX–94–27; SR–MSRB–
94–17; SR–NASD–94–72; SR–NYSE–94–43; SR–
PSE–94–35; and SR–PHLX–94–52). The change to
the current three-year cycle was made in 1998 to
provide registered persons more timely and
effective training, consistent with the overall
purpose of the Regulatory Element. See Securities
Exchange Act Release No. 39712 (March 3, 1998),
63 FR 11939 (March 11, 1998) (Order Approving
File Nos. SR–CBOE–97–68; SR–MSRB–98–02; SR–
NASD–98–03; and SR–NYSE–97–33).
16 See proposed Rule 2.5.02(a)(1).
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16269
require registered persons to complete
Regulatory Element content for each
representative or principal registration
category that they hold, which would
also further the goals of the Regulatory
Element.17 Under the proposed rule
change, Registered Representatives will
have the flexibility to complete the
Regulatory Element sooner than
December 31 of each year.18
Registered Representatives who
would be registering as a representative
or principal for the first time on or after
the implementation date of the
proposed rule change would be required
to complete their initial Regulatory
Element for that registration category in
the next calendar year following their
registration.19 In addition, subject to
specified conditions, Registered
Representatives who would be
reregistering as a representative or
principal on or after the implementation
date of the proposed rule change would
also be required to complete their initial
Regulatory Element for that registration
category in the next calendar year
following their reregistration.20
Consistent with current requirements,
Registered Representatives who fail to
complete their Regulatory Element
within the prescribed period would be
automatically designated as inactive.
However, the proposed rule change
preserves the Exchange’s ability to
extend the time by which a Registered
Representative must complete the
Regulatory Element for good cause
shown.21
The Exchange also proposes
amending Rule 2.5.02 to clarify that: (1)
Individuals who are designated as
inactive would be required to complete
all of their pending and upcoming
annual Regulatory Element, including
any annual Regulatory Element that
becomes due during their CE inactive
period, to return to active status; 22 (2)
the two-year CE inactive period is
calculated from the date individuals
become CE inactive, and it continues to
run regardless of whether individuals
terminate their registrations; 23 (3)
individuals who become subject to a
significant disciplinary action may be
required to complete assigned
continuing education content as
17 Id.
18 Id.
19 Id.
20 See
proposed Rule 2.5.02(a)(4).
proposed rule change clarifies that the
request for an extension of time must be in writing
and include supporting documentation, which is
consistent with current practice.
22 See proposed Rule 2.5.02(a)(2).
23 Id.
21 The
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prescribed by the Exchange; 24 (4)
individuals who have not completed
any Regulatory Element content for a
registration category in the calendar
year(s) prior to reregistering would not
be approved for registration for that
category until they complete that
Regulatory Element content, pass an
examination for that registration
category or obtain an unconditional
examination waiver for that registration
category, whichever is applicable; 25 and
(5) the Regulatory Element requirements
apply to individuals who are registered,
or in the process of registering, as a
representative or principal.26 The
Exchange notes that it also proposes to
add additional language to Rule
2.5.02(a)(2) to further align such Rule
with FINRA Rule 1240(a)(2).27
Under the proposed rule change, the
amount of content that registered
persons would be required to complete
in a three-year, annual cycle for a
particular registration category is
expected to be comparable to what most
registered persons are currently
completing every three years. In some
years, there may be more required
content for some registration categories
depending on the volume of rule
changes and regulatory issues. In
addition, an individual who holds
multiple registrations may be required
to complete additional content
compared to an individual who holds a
single registration because, as noted
above, individuals would be required to
complete content specific to each
registration category that they hold.
However, individuals with multiple
registrations would not be subject to
duplicative regulatory content in any
given year. The more common
registration combinations would likely
share much of their relevant regulatory
content each year. For example,
individuals registered as General
Securities Representatives and General
Securities Principals would receive the
same content as individuals solely
registered as General Securities
Representatives, supplemented with a
likely smaller amount of supervisoryspecific content on the same topics. The
24 See
25 See
proposed Rule 2.5.02(a)(3).
proposed Rule 2.5.02(a)(4).
26 Id.
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27 Specifically,
proposed Rule 2.5.02(a)(2), like
FINRA Rule 1240(a)(2), would state that a person
whose registration had been deemed inactive ‘‘may
not accept or solicit business or receive any
compensation for the purchase or sale of
securities.’’ The proposed Rule would go on to state
that ‘‘[h]owever, such person may receive trail or
residual commissions resulting from transactions
completed before the inactive status, unless the
Member with which such person is associated has
a policy prohibiting such trail or residual
commissions.’’ See proposed Rule 2.5.02(a)(2).
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less common registration combinations
may result in less topic overlap and
more content overall.
Firm Element
The Exchange proposes adopting
paragraph (b) under Rule 2.5.02 to
implement and administer a required
annual Firm Element training program
for Registered Representatives. Proposed
paragraph (b) is based on and
substantially similar to FINRA Rule
1240(b), as amended. As proposed, each
Member shall conduct an annual needs
analysis to determine the appropriate
training. At a minimum the Firm
Element training must cover ethics and
professional responsibility, as well as
applicable regulatory requirements.
In alignment with recent changes to
FINRA’s Firm Element requirements,
the Exchange, consistent with its needs
analysis, may determine to apply
toward the Firm Element other required
training. The Exchange may consider
training relating to its AML compliance
program toward satisfying an
individual’s annual Firm Element
requirement. Consistent with FINRA
amendments, the Exchange shall extend
Firm Element requirements to all
Registered Representatives, with such
training to cover topics related to the
role, activities, or responsibilities of the
individual Registered Representative
and to professional responsibility.
Maintenance of Qualification After
Termination of Registration
The Exchange proposes adopting
paragraph (d) under Rule 2.5.02 to
provide eligible individuals who
terminate any of their representative or
principal registrations the option of
maintaining their qualification for any
of the terminated registrations by
completing continuing education. The
proposed rule change would not
eliminate the two-year qualification
period set forth in Rule 2.5.02(a)(2).
Rather, it would provide such
individuals an alternative means of
staying current on their regulatory and
securities knowledge following the
termination of a registration(s). Eligible
individuals who elect not to participate
in the proposed continuing education
program would continue to be subject to
the current two-year qualification
period. The proposed rule change is
generally aligned with other
professional continuing education
programs that allow individuals to
maintain their qualification to work in
their respective fields during a period of
absence from their careers (including an
absence of more than two years) by
satisfying continuing education
requirements for their credential.
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The proposed rule change would
impose the following conditions and
limitations:
• Individuals would be required to be
registered in the terminated registration
category for at least one year
immediately prior to the termination of
that category; 28
• Individuals could elect to
participate when they terminate a
registration or within two years from the
termination of a registration; 29
• individuals would be required to
complete annually all prescribed
continuing education; 30
• individuals would have a maximum
of five years in which to reregister; 31
• individuals who have been inactive
for two consecutive years, or who
become inactive for two consecutive
years during their participation, would
not be eligible to participate or
continue; 32 and
• individuals who are subject to a
statutory disqualification, or who
become subject to a statutory
disqualification following the
termination of their registration or
during their participation, would not be
eligible to participate or continue.33
Additional Provision Based on FINRA
Rules
Finally, the Exchange proposes to
adopt new paragraph (j) to Rule 2.5.01,
entitled Lapse of Registration and
Expiration of SIE based on FINRA Rule
1210.08. Currently, Interpretation and
Policy .01(c) to Rule 2.5 states that any
person who last passed the Securities
Industry Essentials Examination (‘‘SIE’’)
or who was last registered as a
representative, whichever occurred last,
four or more years immediately
preceding the date of receipt by the
Exchange of a new application for
registration as a representative shall be
required to pass the SIE in addition to
a representative qualification
examination appropriate to his or her
category of registration. This same
language is contained in FINRA Rule
1210.08 but with additional detail. The
Exchange proposes adopting new
paragraph (j) to more closely align with
FINRA Rule 1210.08 and to move the
28 See
proposed Rule 2.5.02(d)(1).
proposed Rule 2.5.02(d)(2). Individuals
who elect to participate at the later date would be
required to complete, within two years from the
termination of their registration, any continuing
education that becomes due between the time of
their Form U5 (Uniform Termination Notice for
Securities Industry Registration) submission and
the date that they commence their participation.
30 See proposed Rule 2.5.02(d)(3).
31 See proposed Rule 2.5.02(d).
32 See proposed Rule 2.5.02(d)(4) and (d)(5).
33 See proposed Rule 2.5.02(d)(1) and (d)(6).
29 See
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existing text described above from
paragraph (c) to paragraph (j).34
As proposed, any person who was last
registered in a representative
registration category two or more years
immediately preceding the date of
receipt by FINRA of a new application
for registration in that registration
category shall be required to pass a
representative qualification examination
appropriate to that registration category
as specified in Rule 2.5.01, unless the
person has maintained his or her
qualification status for that registration
category in accordance with proposed
Rule 2.5.02(d) or as otherwise permitted
by the Exchange. Any person who was
last registered in a principal registration
category two or more years immediately
preceding the date of a new application
for registration in that registration
category shall be required to pass a
principal qualification examination
appropriate to that registration category
as specified in this Interpretation and
Policy .01, unless the person has
maintained his or her qualification
status for that registration category in
accordance with Interpretation and
Policy .02(d) to Rule 2.5 or as otherwise
permitted by the Exchange. Any person
whose registration has been revoked
pursuant to Rule 8.1 and any person
who has a continuing education
deficiency for a period of two years as
provided under Interpretation and
Policy .02 to Rule 2.5 shall be required
to pass a representative or principal
qualification examination appropriate to
his or her category of registration as
specified in this Interpretation and
Policy .01, to be eligible for registration.
Lastly, for purposes of proposed
paragraph (j), an application shall not be
considered as a new application for
registration if that application does not
result in a registration.
Implementation Dates
The Exchange proposes to announce
implementation dates of the proposed
rule change in Regulatory Notices to
Members that align with
implementation dates previously
announced by FINRA.35
2. Statutory Basis
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The Exchange believes that its
proposal is consistent with Section 6(b)
34 The Exchange notes that it also proposes to
modify paragraph (h) of Rule 2.5.01 to define the
term ‘‘SIE’’ because such term is currently first used
in the text that the Exchange proposes to relocate
to paragraph (j).
35 See FINRA Regulatory Notice 21–41 (FINRA
Amends Rules 1210 and 1240 to Enhance the
Continuing Education Program for Securities
Industry Professionals), available at: https://
www.finra.org/rules-guidance/notices/21-41.
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of the Act,36 in general, and furthers the
objectives of Section 6(b)(5) of the Act,37
in particular, in that it is designed to
prevent fraudulent and manipulative
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, 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.
As noted above, the proposed rule
change seeks to align the Exchange
Rules with recent changes to FINRA
rules which have been approved by the
Commission.38 The Exchange believes
the proposed rule change is consistent
with the provisions of Section 6(b)(5) of
the Act,39 which requires, among other
things, that Exchange Rules must be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest, and
Section 6(c)(3) of the Act,40 which
authorizes the Exchange to prescribe
standards of training, experience and
competence for persons associated with
Exchange. The proposed changes are
based on the changes approved by the
Commission in the Approval Order,41
and the Exchange is proposing to adopt
such changes substantially in the same
form proposed by FINRA with only
minor changes necessary to conform to
the Exchange’s existing rules, such as
removal of cross-references to rules that
are applicable to FINRA members but
not Members of the Exchange.42 The
Exchange believes the proposal is
consistent with the Act for the reasons
described above and for those reasons
cited in the Approval Order.43
The Exchange believes the proposed
changes to the Regulatory Element will
ensure that all Registered
36 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
38 See Approval Order, supra note 7.
39 15 U.S.C. 78f(b)(5).
40 15 U.S.C. 78f(c)(3).
41 See Approval Order, supra note 7.
42 Proposed paragraph (j) to Interpretation and
Policy .01 of Rule 2.5 is based on and substantially
similar to FINRA Rule 1210.08. The proposed
changes to Interpretation and Policy .02, including
new paragraphs (b) and (d) through (f) are based on
and substantially similar to FINRA Rules
1240(a)(1)–(4), FINRA Rule 1240(b), FINRA Rule
1240(c) and Supplementary Materials .01 and .02 to
FINRA Rule 1240. The Exchange does not currently
have a provisions analogous to FINRA Rules
1210.02, 1210.09, or Rule 3110 and thus has
omitted language referring to such provisions in its
proposed Rules.
43 Id.
37 15
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16271
Representatives receive timely and
relevant training, which will, in turn,
enhance compliance and investor
protection. The Exchange believes that
establishing a path for individuals to
maintain their qualification following
the termination of a registration will
reduce unnecessary impediments to
requalification and promote greater
diversity and inclusion in the securities
industry without diminishing investor
protection.
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, which harmonizes its rules
with recent rule changes adopted by
FINRA, will reduce the regulatory
burden placed on market participants
engaged in trading activities across
different markets.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
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) of the Act 44 and Rule 19b–
4(f)(6) thereunder.45
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days after the
date of filing. However, pursuant to
Rule 19b–4(f)(6)(iii), the Commission
may 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
this proposed rule change may become
operative immediately upon filing. In
addition, Rule 19b–4(f)(6)(iii) 46 requires
a self-regulatory organization to give the
Commission written notice of its intent
44 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
46 17 CFR 240.19b–4(f)(6)(iii).
45 17
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16272
Federal Register / Vol. 87, No. 55 / Tuesday, March 22, 2022 / Notices
to file a proposed rule change under that
subsection at least five business days
prior to the date of filing, or such
shorter time as designated by the
Commission. The Exchange has
provided such notice.
Waiver of the 30-day operative delay
would allow the Exchange to implement
proposed changes to its Continuing
Education Rules by March 15, 2022 to
coincide with one of FINRA’s
announced implementation dates,
thereby eliminating the possibility of a
significant regulatory gap between the
FINRA and MEMX rules, providing
more uniform standards across the
securities industry, and helping to avoid
confusion for Members of the Exchange
that are also FINRA members. For this
reason, the Commission believes that
waiver of the 30-day operative delay for
this proposal is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
hereby waives the 30-day operative
delay and designates the proposal
operative upon filing.47
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
change should be approved or
disapproved.
All submissions should refer to File
Number SR–MEMX–2022–05. 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 website (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 website 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–MEMX–2022–05 and
should be submitted on or before April
12, 2022.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.48
J. Matthew DeLesDernier,
Assistant Secretary.
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–
MEMX–2022–05 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
[FR Doc. 2022–05976 Filed 3–21–22; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–94436; File No. SRCboeEDGA–2022–003]
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fees Applicable to Various Market
Data Products
March 16, 2022.
47 For
purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule change’s impact on efficiency,
competition, and capital formation. See 15 U.S.C.
78c(f).
VerDate Sep<11>2014
18:24 Mar 21, 2022
Jkt 256001
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
48 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00111
Fmt 4703
Sfmt 4703
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 3,
2022, Cboe EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGA Exchange, Inc. (‘‘EDGA’’
or the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposed rule
change to amend the fees applicable to
various market data products. The text
of the proposed rule change is provided
in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/edga/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Market Data section applicable to its
equities trading platform (‘‘EDGA
Equities’’). Particularly, the Exchange
proposes to (i) adopt a New External
Distributor Credit applicable to Cboe
One Premium, and (ii) extend the New
External Distributor Credit applicable to
EDGA Summary Depth Feed from one
(1) month to three (3) months.3
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The Exchange initially filed the proposed fee
changes on January 3, 2022 (SR-CboeEDGA–2022–
2 17
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]]>Agencies
[Federal Register Volume 87, Number 55 (Tuesday, March 22, 2022)]
[Notices]
[Pages 16268-16272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05976]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94429; File No. SR-MEMX-2022-05]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change Related to Continuing
Education Requirements
March 16, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 10, 2022, MEMX LLC (``MEMX'' or the ``Exchange'') filed
with the Securities and Exchange Commission (the ``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Exchange filed the proposal as
a ``non-controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing with the Commission a proposed rule change
to amend Exchange Rule 2.5 (Restrictions). The proposed rule change is
based on recent changes to continuing education requirements made by
the Financial Industry Regulatory Authority, Inc. (``FINRA''),
including a change to require that the Regulatory Element of continuing
education be completed annually rather than every three years and to
provide a path through continuing education for individuals to maintain
their qualification following the termination of a registration. The
text of the proposed rule change is provided in Exhibit 5.
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
Background
The Exchange sets forth certain continuing education (``CE'')
requirements for its ``Members,'' \5\ including requirements to
participate in the Regulatory Element of training, which are generally
based on certain FINRA Rules.\6\ The Regulatory Element of CE is
administered to industry participants by FINRA and focuses on
regulatory requirements and industry standards. The Exchange has
codified its general registration requirements under Interpretation and
Policy .01 to Exchange Rule 2.5 (``Rule 2.5.01'') and its CE program,
including implementation of the Regulatory Element under Interpretation
and Policy .02 to Exchange Rule 2.5 (``Rule 2.5.02''). The Exchange
seeks to amend its rules to more closely mirror FINRA Rules, as
amended.\7\ Consistent with this goal, the Exchange also seeks to
[[Page 16269]]
adopt provisions of FINRA Rules regarding the ``Firm Element,'' as
further discussed below.
---------------------------------------------------------------------------
\5\ Exchange Rules define a Member to mean any registered broker
or dealer that has been admitted to membership in the Exchange. See
Exchange Rule 1.5(p).
\6\ See FINRA Rule 1210 (Registration Requirements) and 1240
(Continuing Education Requirements).
\7\ See Securities Exchange Act Release No. 34-93097 (September
21, 2021), 86 FR 53358 (September 27, 2021) (Order Approving File
No. SR-FINRA-2021-015) (the ``Approval Order'').
---------------------------------------------------------------------------
Tracking FINRA Rule 1240(a) (Regulatory Element), Rule 2.5.02
currently requires Registered Representatives \8\ to complete the
applicable Regulatory Element initially within 120 days after the
person's second registration anniversary date and, thereafter, within
120 days after every third registration anniversary date.\9\ The
Exchange may extend these time frames for good cause shown.\10\ Any
Registered Representative that does not complete the Regulatory Element
within the prescribed time frames will have their respective
registrations deemed inactive, and therefore would be prohibited from
performing, or being compensated for, any activities requiring such
registration, including supervisory duties.
---------------------------------------------------------------------------
\8\ As defined in Exchange Rule 2.5.02, a ``Registered
Representative'' is any Authorized Trader, Principal, or Financial/
Operations Principal, as each is defined separately in the Exchange
Rules.
\9\ See Rule 2.5.02(a) (Requirements) and Rule 2.5.02(d)
(Reassociation in a Registered Capacity). An individual's
registration anniversary date is generally the date they initially
registered with FINRA in the Central Registration Depository
(``CRD[supreg]'') system. However, an individual's registration
anniversary date would be reset if the individual has been out of
the industry for two or more years and is required to requalify by
examination, or obtain an examination waiver, in order to
reregister. An individual's registration anniversary date would also
be reset if the individual obtains a conditional examination waiver
that requires them to complete the Regulatory Element by a specified
date.
\10\ See Rule 2.5.02(b) (Failure to Complete).
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The Regulatory Element consists of a subprogram for registered
persons generally, and a subprogram for principals and supervisors.\11\
While some of the current Regulatory Element content is unique to
particular registration categories, most of the content has broad
application to both representatives and principals.\12\ Currently,
Registered Representatives who have been terminated for two or more
years may reregister as representatives or principals only if they
requalify by retaking and passing the applicable representative- or
principal-level examination or if they obtain a waiver of such
examination(s) (the ``two-year qualification period'').\13\ The two-
year qualification period was adopted prior to the creation of the CE
Program and was intended to ensure that individuals who reregister are
relatively current on their regulatory and securities knowledge.
---------------------------------------------------------------------------
\11\ The S101 (General Program for Registered Persons) and the
S201 (Registered Principals and Supervisors).
\12\ The current content is presented in a single format leading
individuals through a case that provides a story depicting
situations that they may encounter in the course of their work.
\13\ See supra note 10. Individuals must complete the entire
Regulatory Element session to be considered to have ``completed''
the Regulatory Element; partial completion is the same as non-
completion. As described below, the Exchange also proposes to adopt
additional language based on FINRA Rule 1210, Supplementary Material
.08 as new paragraph (j) to Rule 2.5.01.
---------------------------------------------------------------------------
Proposed Rule Change
The Exchange has participated in extensive work with the Securities
Industry/Regulatory Council on Continuing Education (``CE Council'')
and discussions with stakeholders, including other industry
participants and the North American Securities Administrators
Association (``NASAA''), that has resulted in amendments to FINRA Rules
1210 and 1240.\14\ Following these changes, the Exchange seeks to align
its Rules to the FINRA CE Program by making the following changes to
the Exchange Rule 2.5.01 and Rule 2.5.02.
---------------------------------------------------------------------------
\14\ See Approval Order, supra note 7.
---------------------------------------------------------------------------
Transition to Annual Regulatory Element for Registered Representatives
Currently, the Regulatory Element prescribed in Rule 2.5.02 sets
forth that training must be completed every three years, and the
content is broad in nature. Based on changes in technology and learning
theory, the Regulatory Element content can be updated and delivered in
a timelier fashion and tailored to each registration category, which
would further the goals of the Regulatory Element.\15\ Therefore, to
align the Exchange's Rules with changes made by FINRA and to provide
registered persons with more timely and relevant training on
significant regulatory developments, the Exchange proposes amending
Rule 2.5.02(a) to require registered persons to complete the Regulatory
Element annually by December 31, with the first compliance date
December 31, 2023.\16\ The proposed amendment would also require
registered persons to complete Regulatory Element content for each
representative or principal registration category that they hold, which
would also further the goals of the Regulatory Element.\17\ Under the
proposed rule change, Registered Representatives will have the
flexibility to complete the Regulatory Element sooner than December 31
of each year.\18\
---------------------------------------------------------------------------
\15\ When the FINRA CE Program was originally adopted in 1995,
registered persons were required to complete the Regulatory Element
on their second, fifth and 10th registration anniversary dates. See
Securities Exchange Act Release No. 35341 (February 8, 1995), 60 FR
8426 (February 14, 1995) (Order Approving File Nos. SR-AMEX-94-59;
SR-CBOE-94-49; SR-CHX-94-27; SR-MSRB-94-17; SR-NASD-94-72; SR-NYSE-
94-43; SR-PSE-94-35; and SR-PHLX-94-52). The change to the current
three-year cycle was made in 1998 to provide registered persons more
timely and effective training, consistent with the overall purpose
of the Regulatory Element. See Securities Exchange Act Release No.
39712 (March 3, 1998), 63 FR 11939 (March 11, 1998) (Order Approving
File Nos. SR-CBOE-97-68; SR-MSRB-98-02; SR-NASD-98-03; and SR-NYSE-
97-33).
\16\ See proposed Rule 2.5.02(a)(1).
\17\ Id.
\18\ Id.
---------------------------------------------------------------------------
Registered Representatives who would be registering as a
representative or principal for the first time on or after the
implementation date of the proposed rule change would be required to
complete their initial Regulatory Element for that registration
category in the next calendar year following their registration.\19\ In
addition, subject to specified conditions, Registered Representatives
who would be reregistering as a representative or principal on or after
the implementation date of the proposed rule change would also be
required to complete their initial Regulatory Element for that
registration category in the next calendar year following their
reregistration.\20\
---------------------------------------------------------------------------
\19\ Id.
\20\ See proposed Rule 2.5.02(a)(4).
---------------------------------------------------------------------------
Consistent with current requirements, Registered Representatives
who fail to complete their Regulatory Element within the prescribed
period would be automatically designated as inactive. However, the
proposed rule change preserves the Exchange's ability to extend the
time by which a Registered Representative must complete the Regulatory
Element for good cause shown.\21\
---------------------------------------------------------------------------
\21\ The proposed rule change clarifies that the request for an
extension of time must be in writing and include supporting
documentation, which is consistent with current practice.
---------------------------------------------------------------------------
The Exchange also proposes amending Rule 2.5.02 to clarify that:
(1) Individuals who are designated as inactive would be required to
complete all of their pending and upcoming annual Regulatory Element,
including any annual Regulatory Element that becomes due during their
CE inactive period, to return to active status; \22\ (2) the two-year
CE inactive period is calculated from the date individuals become CE
inactive, and it continues to run regardless of whether individuals
terminate their registrations; \23\ (3) individuals who become subject
to a significant disciplinary action may be required to complete
assigned continuing education content as
[[Page 16270]]
prescribed by the Exchange; \24\ (4) individuals who have not completed
any Regulatory Element content for a registration category in the
calendar year(s) prior to reregistering would not be approved for
registration for that category until they complete that Regulatory
Element content, pass an examination for that registration category or
obtain an unconditional examination waiver for that registration
category, whichever is applicable; \25\ and (5) the Regulatory Element
requirements apply to individuals who are registered, or in the process
of registering, as a representative or principal.\26\ The Exchange
notes that it also proposes to add additional language to Rule
2.5.02(a)(2) to further align such Rule with FINRA Rule 1240(a)(2).\27\
---------------------------------------------------------------------------
\22\ See proposed Rule 2.5.02(a)(2).
\23\ Id.
\24\ See proposed Rule 2.5.02(a)(3).
\25\ See proposed Rule 2.5.02(a)(4).
\26\ Id.
\27\ Specifically, proposed Rule 2.5.02(a)(2), like FINRA Rule
1240(a)(2), would state that a person whose registration had been
deemed inactive ``may not accept or solicit business or receive any
compensation for the purchase or sale of securities.'' The proposed
Rule would go on to state that ``[h]owever, such person may receive
trail or residual commissions resulting from transactions completed
before the inactive status, unless the Member with which such person
is associated has a policy prohibiting such trail or residual
commissions.'' See proposed Rule 2.5.02(a)(2).
---------------------------------------------------------------------------
Under the proposed rule change, the amount of content that
registered persons would be required to complete in a three-year,
annual cycle for a particular registration category is expected to be
comparable to what most registered persons are currently completing
every three years. In some years, there may be more required content
for some registration categories depending on the volume of rule
changes and regulatory issues. In addition, an individual who holds
multiple registrations may be required to complete additional content
compared to an individual who holds a single registration because, as
noted above, individuals would be required to complete content specific
to each registration category that they hold. However, individuals with
multiple registrations would not be subject to duplicative regulatory
content in any given year. The more common registration combinations
would likely share much of their relevant regulatory content each year.
For example, individuals registered as General Securities
Representatives and General Securities Principals would receive the
same content as individuals solely registered as General Securities
Representatives, supplemented with a likely smaller amount of
supervisory-specific content on the same topics. The less common
registration combinations may result in less topic overlap and more
content overall.
Firm Element
The Exchange proposes adopting paragraph (b) under Rule 2.5.02 to
implement and administer a required annual Firm Element training
program for Registered Representatives. Proposed paragraph (b) is based
on and substantially similar to FINRA Rule 1240(b), as amended. As
proposed, each Member shall conduct an annual needs analysis to
determine the appropriate training. At a minimum the Firm Element
training must cover ethics and professional responsibility, as well as
applicable regulatory requirements.
In alignment with recent changes to FINRA's Firm Element
requirements, the Exchange, consistent with its needs analysis, may
determine to apply toward the Firm Element other required training. The
Exchange may consider training relating to its AML compliance program
toward satisfying an individual's annual Firm Element requirement.
Consistent with FINRA amendments, the Exchange shall extend Firm
Element requirements to all Registered Representatives, with such
training to cover topics related to the role, activities, or
responsibilities of the individual Registered Representative and to
professional responsibility.
Maintenance of Qualification After Termination of Registration
The Exchange proposes adopting paragraph (d) under Rule 2.5.02 to
provide eligible individuals who terminate any of their representative
or principal registrations the option of maintaining their
qualification for any of the terminated registrations by completing
continuing education. The proposed rule change would not eliminate the
two-year qualification period set forth in Rule 2.5.02(a)(2). Rather,
it would provide such individuals an alternative means of staying
current on their regulatory and securities knowledge following the
termination of a registration(s). Eligible individuals who elect not to
participate in the proposed continuing education program would continue
to be subject to the current two-year qualification period. The
proposed rule change is generally aligned with other professional
continuing education programs that allow individuals to maintain their
qualification to work in their respective fields during a period of
absence from their careers (including an absence of more than two
years) by satisfying continuing education requirements for their
credential.
The proposed rule change would impose the following conditions and
limitations:
Individuals would be required to be registered in the
terminated registration category for at least one year immediately
prior to the termination of that category; \28\
---------------------------------------------------------------------------
\28\ See proposed Rule 2.5.02(d)(1).
---------------------------------------------------------------------------
Individuals could elect to participate when they terminate
a registration or within two years from the termination of a
registration; \29\
---------------------------------------------------------------------------
\29\ See proposed Rule 2.5.02(d)(2). Individuals who elect to
participate at the later date would be required to complete, within
two years from the termination of their registration, any continuing
education that becomes due between the time of their Form U5
(Uniform Termination Notice for Securities Industry Registration)
submission and the date that they commence their participation.
---------------------------------------------------------------------------
individuals would be required to complete annually all
prescribed continuing education; \30\
---------------------------------------------------------------------------
\30\ See proposed Rule 2.5.02(d)(3).
---------------------------------------------------------------------------
individuals would have a maximum of five years in which to
reregister; \31\
---------------------------------------------------------------------------
\31\ See proposed Rule 2.5.02(d).
---------------------------------------------------------------------------
individuals who have been inactive for two consecutive
years, or who become inactive for two consecutive years during their
participation, would not be eligible to participate or continue; \32\
and
---------------------------------------------------------------------------
\32\ See proposed Rule 2.5.02(d)(4) and (d)(5).
---------------------------------------------------------------------------
individuals who are subject to a statutory
disqualification, or who become subject to a statutory disqualification
following the termination of their registration or during their
participation, would not be eligible to participate or continue.\33\
---------------------------------------------------------------------------
\33\ See proposed Rule 2.5.02(d)(1) and (d)(6).
---------------------------------------------------------------------------
Additional Provision Based on FINRA Rules
Finally, the Exchange proposes to adopt new paragraph (j) to Rule
2.5.01, entitled Lapse of Registration and Expiration of SIE based on
FINRA Rule 1210.08. Currently, Interpretation and Policy .01(c) to Rule
2.5 states that any person who last passed the Securities Industry
Essentials Examination (``SIE'') or who was last registered as a
representative, whichever occurred last, four or more years immediately
preceding the date of receipt by the Exchange of a new application for
registration as a representative shall be required to pass the SIE in
addition to a representative qualification examination appropriate to
his or her category of registration. This same language is contained in
FINRA Rule 1210.08 but with additional detail. The Exchange proposes
adopting new paragraph (j) to more closely align with FINRA Rule
1210.08 and to move the
[[Page 16271]]
existing text described above from paragraph (c) to paragraph (j).\34\
---------------------------------------------------------------------------
\34\ The Exchange notes that it also proposes to modify
paragraph (h) of Rule 2.5.01 to define the term ``SIE'' because such
term is currently first used in the text that the Exchange proposes
to relocate to paragraph (j).
---------------------------------------------------------------------------
As proposed, any person who was last registered in a representative
registration category two or more years immediately preceding the date
of receipt by FINRA of a new application for registration in that
registration category shall be required to pass a representative
qualification examination appropriate to that registration category as
specified in Rule 2.5.01, unless the person has maintained his or her
qualification status for that registration category in accordance with
proposed Rule 2.5.02(d) or as otherwise permitted by the Exchange. Any
person who was last registered in a principal registration category two
or more years immediately preceding the date of a new application for
registration in that registration category shall be required to pass a
principal qualification examination appropriate to that registration
category as specified in this Interpretation and Policy .01, unless the
person has maintained his or her qualification status for that
registration category in accordance with Interpretation and Policy
.02(d) to Rule 2.5 or as otherwise permitted by the Exchange. Any
person whose registration has been revoked pursuant to Rule 8.1 and any
person who has a continuing education deficiency for a period of two
years as provided under Interpretation and Policy .02 to Rule 2.5 shall
be required to pass a representative or principal qualification
examination appropriate to his or her category of registration as
specified in this Interpretation and Policy .01, to be eligible for
registration. Lastly, for purposes of proposed paragraph (j), an
application shall not be considered as a new application for
registration if that application does not result in a registration.
Implementation Dates
The Exchange proposes to announce implementation dates of the
proposed rule change in Regulatory Notices to Members that align with
implementation dates previously announced by FINRA.\35\
---------------------------------------------------------------------------
\35\ See FINRA Regulatory Notice 21-41 (FINRA Amends Rules 1210
and 1240 to Enhance the Continuing Education Program for Securities
Industry Professionals), available at: https://www.finra.org/rules-guidance/notices/21-41.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\36\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\37\ in particular, in that it is designed to
prevent fraudulent and manipulative practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, 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.
---------------------------------------------------------------------------
\36\ 15 U.S.C. 78f(b).
\37\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
As noted above, the proposed rule change seeks to align the
Exchange Rules with recent changes to FINRA rules which have been
approved by the Commission.\38\ The Exchange believes the proposed rule
change is consistent with the provisions of Section 6(b)(5) of the
Act,\39\ which requires, among other things, that Exchange Rules must
be designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, and, in general, to
protect investors and the public interest, and Section 6(c)(3) of the
Act,\40\ which authorizes the Exchange to prescribe standards of
training, experience and competence for persons associated with
Exchange. The proposed changes are based on the changes approved by the
Commission in the Approval Order,\41\ and the Exchange is proposing to
adopt such changes substantially in the same form proposed by FINRA
with only minor changes necessary to conform to the Exchange's existing
rules, such as removal of cross-references to rules that are applicable
to FINRA members but not Members of the Exchange.\42\ The Exchange
believes the proposal is consistent with the Act for the reasons
described above and for those reasons cited in the Approval Order.\43\
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\38\ See Approval Order, supra note 7.
\39\ 15 U.S.C. 78f(b)(5).
\40\ 15 U.S.C. 78f(c)(3).
\41\ See Approval Order, supra note 7.
\42\ Proposed paragraph (j) to Interpretation and Policy .01 of
Rule 2.5 is based on and substantially similar to FINRA Rule
1210.08. The proposed changes to Interpretation and Policy .02,
including new paragraphs (b) and (d) through (f) are based on and
substantially similar to FINRA Rules 1240(a)(1)-(4), FINRA Rule
1240(b), FINRA Rule 1240(c) and Supplementary Materials .01 and .02
to FINRA Rule 1240. The Exchange does not currently have a
provisions analogous to FINRA Rules 1210.02, 1210.09, or Rule 3110
and thus has omitted language referring to such provisions in its
proposed Rules.
\43\ Id.
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The Exchange believes the proposed changes to the Regulatory
Element will ensure that all Registered Representatives receive timely
and relevant training, which will, in turn, enhance compliance and
investor protection. The Exchange believes that establishing a path for
individuals to maintain their qualification following the termination
of a registration will reduce unnecessary impediments to
requalification and promote greater diversity and inclusion in the
securities industry without diminishing investor protection.
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, which harmonizes its rules with recent rule
changes adopted by FINRA, will reduce the regulatory burden placed on
market participants engaged in trading activities across different
markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
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) of the Act \44\ and Rule 19b-
4(f)(6) thereunder.\45\
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\44\ 15 U.S.C. 78s(b)(3)(A)(iii).
\45\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
pursuant to Rule 19b-4(f)(6)(iii), the Commission may 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 this proposed
rule change may become operative immediately upon filing. In addition,
Rule 19b-4(f)(6)(iii) \46\ requires a self-regulatory organization to
give the Commission written notice of its intent
[[Page 16272]]
to file a proposed rule change under that subsection at least five
business days prior to the date of filing, or such shorter time as
designated by the Commission. The Exchange has provided such notice.
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\46\ 17 CFR 240.19b-4(f)(6)(iii).
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Waiver of the 30-day operative delay would allow the Exchange to
implement proposed changes to its Continuing Education Rules by March
15, 2022 to coincide with one of FINRA's announced implementation
dates, thereby eliminating the possibility of a significant regulatory
gap between the FINRA and MEMX rules, providing more uniform standards
across the securities industry, and helping to avoid confusion for
Members of the Exchange that are also FINRA members. For this reason,
the Commission believes that waiver of the 30-day operative delay for
this proposal is consistent with the protection of investors and the
public interest. Accordingly, the Commission hereby waives the 30-day
operative delay and designates the proposal operative upon filing.\47\
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\47\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change'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 change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MEMX-2022-05 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-MEMX-2022-05. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MEMX-2022-05 and should be submitted on
or before April 12, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\48\
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\48\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-05976 Filed 3-21-22; 8:45 am]
BILLING CODE 8011-01-P
