Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend FINRA Rule 1240.01 To Provide Eligible Individuals Another Opportunity To Elect To Participate in the Maintaining Qualifications Program, 18359-18361 [2023-06322]
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18359
Federal Register / Vol. 88, No. 59 / Tuesday, March 28, 2023 / Notices
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication by May 30, 2023.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend FINRA
Rule 1240.01 (Eligibility of Other
Persons to Participate in the Continuing
Education Program Specified in
Paragraph (c) of this Rule) to provide
eligible individuals another opportunity
to elect to participate in the Maintaining
Qualifications Program (‘‘MQP’’).
Below is the text of the proposed rule
change. Proposed new language is
italicized; proposed deletions are in
brackets.
*
*
*
*
*
Dated: March 23, 2023.
J. Matthew DeLesDernier,
Deputy Secretary.
*
[FR Doc. 2023–06411 Filed 3–27–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97184; File No. SR–FINRA–
2023–005]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend FINRA Rule
1240.01 To Provide Eligible Individuals
Another Opportunity To Elect To
Participate in the Maintaining
Qualifications Program
lotter on DSK11XQN23PROD with NOTICES1
March 22, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 14,
2023, the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
constituting a ‘‘non-controversial’’ rule
change under paragraph (f)(6) of Rule
19b–4 under the Act,3 which renders
the proposal effective upon receipt of
this filing by the Commission. 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).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
2 17
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1200. REGISTRATION AND
QUALIFICATION
*
*
*
*
1240. Continuing Education
This Rule prescribes requirements
regarding the continuing education of
registered persons. The requirements shall
consist of a Regulatory Element and a Firm
Element as set forth below. This Rule also
sets forth continuing education programs
through which specified persons may
maintain their qualification in a
representative or principal registration
category following the termination of that
registration category.
(a) through (c) No Change.
• • • Supplementary Material: -------------.01 Eligibility of Other Persons to
Participate in the Continuing Education
Program Specified in Paragraph (c) of this
Rule. A person registered in a representative
or principal registration category with FINRA
within two years immediately preceding
March 15, 2022 shall be eligible to participate
in the continuing education program under
paragraph (c) of this Rule, provided that he
or she satisfies the conditions set forth in
paragraphs (c)(1) and (c)(3) through (c)(6) of
this Rule. In addition, a person participating
in the Financial Services Affiliate Waiver
Program under Rule 1210.09 immediately
preceding March 15, 2022 shall be eligible to
participate in the continuing education
program under paragraph (c) of this Rule,
provided that he or she satisfies the
conditions set forth in paragraphs (c)(3),
(c)(5) and (c)(6) of this Rule. Persons eligible
under this Supplementary Material .01 shall
make their election to participate in the
continuing education program under
paragraph (c) of this Rule either (1) between
January 31, 2022, and March 15, 2022; or (2)
between March 15, 2023, and December 31,
2023 [by March 15, 2022]. If such persons
elect to participate in the continuing
education program, their participation period
shall also be for a period of five years
following the termination of their registration
categories, as with other participants under
paragraph (c) of this Rule [FINRA shall
adjust their participation period by deducting
from that period the amount of time that has
lapsed between the date that such persons
terminated their registration categories and
March 15, 2022]. In addition, eligible persons
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who elect to participate in the continuing
education program between March 15, 2023,
and December 31, 2023, must complete any
prescribed 2022 and 2023 continuing
education content by March 31, 2024.
.02 No Change.
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA 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. FINRA 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On September 21, 2021, the
Commission approved a proposed rule
change to amend FINRA Rules 1210
(Registration Requirements) and 1240
(Continuing Education Requirements)
to, among other things, provide eligible
individuals who terminate any of their
representative or principal registration
categories the option of maintaining
their qualification for any terminated
registration categories by completing
annual continuing education through a
new program, the MQP.4
Prior to the MQP, individuals whose
registrations as representatives or
principals had been terminated for two
or more years could reregister as
representatives or principals only if they
requalified by retaking and passing the
applicable representative- or principallevel examination or if they obtained a
waiver of such examination(s) (the
‘‘two-year qualification period’’). The
MQP provides these individuals an
alternative means of staying current on
their regulatory and securities
knowledge following the termination of
a registration.5 Specifically, the MQP
4 See Securities Exchange Act Release No. 93097
(September 21, 2021), 86 FR 53358 (September 27,
2021) (Order Approving File No. SR–FINRA–2021–
015).
5 The MQP does not eliminate the two-year
qualification period. Thus, eligible individuals who
elect not to participate in the MQP can continue to
avail themselves of the two-year qualification
period (i.e., they can reregister within two years of
terminating a registration category without having
to requalify by examination or having to obtain an
examination waiver).
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provides eligible individuals a
maximum of five years following the
termination of a representative or
principal registration category to
reregister without having to requalify by
examination or having to obtain an
examination waiver, subject to
satisfying the conditions and limitations
of the MQP, including the annual
completion of all prescribed continuing
education.
Under FINRA Rule 1240.01, the MQP
has a look-back provision that, subject
to specified conditions, extended the
option to participate in the MQP to
individuals who: (1) were registered as
a representative or principal within two
years immediately prior to March 15,
2022 (the implementation date of the
MQP); and (2) individuals who were
participating in the Financial Services
Affiliate Waiver Program (‘‘FSAWP’’)
under FINRA Rule 1210.09 (Waiver of
Examinations for Individuals Working
for a Financial Services Industry
Affiliate of a Member) immediately
prior to March 15, 2022 (collectively,
‘‘Look-Back Individuals’’).6
In Regulatory Notice 21–41
(November 17, 2021), FINRA announced
that Look-Back Individuals who wanted
to take part in the MQP were required
to make their election between January
31, 2022, and March 15, 2022 (the ‘‘First
Enrollment Period’’). In addition to the
announcement in Regulatory Notice 21–
41, FINRA notified the Look-Back
Individuals about the MQP and the First
Enrollment Period via two separate
mailings of postcards to their home
addresses and communications through
their FINRA Financial Professional
Gateway (‘‘FinPro’’) accounts.7
Shortly after the First Enrollment
Period had ended, a number of LookBack Individuals contacted FINRA and
indicated that they had only recently
become aware of the MQP. FINRA has
received anecdotal information that a
number of these individuals may not
have learned of the MQP, or the First
Enrollment Period, in a timely manner,
or at all, due to communication and
operational issues.8 In addition, the
6 The FSAWP is a waiver program for eligible
individuals who have left a member firm to work
for a foreign or domestic financial services affiliate
of a member firm. FINRA stopped accepting new
participants for the FSAWP beginning on March 15,
2022; however, individuals who were already
participating in the FSAWP prior to that date had
the option of continuing in the FSAWP.
7 Look-Back Individuals were able to notify
FINRA of their election to participate in the MQP
through their FinPro accounts.
8 This may have been a result of the timing of
FINRA’s announcements relating to the MQP,
which coincided with the holiday season and the
transition to the New Year. Further, given that
Look-Back Individuals were out of the industry at
the time of these announcements, it was unlikely
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original six-week enrollment period
may not have provided Look-Back
Individuals with sufficient time to
evaluate whether they should
participate in the MQP. For these
reasons, FINRA is proposing to amend
Rule 1240.01 to provide Look-Back
Individuals a second opportunity to
elect to participate in the MQP (the
‘‘Second Enrollment Period’’).9 The
Second Enrollment Period will be
between March 15, 2023, and December
31, 2023. In addition, the proposed rule
change requires that Look-Back
Individuals who elect to participate in
the MQP during the Second Enrollment
Period complete any prescribed 2022
and 2023 MQP content by March 31,
2024.10
FINRA believes that Look-Back
Individuals generally have greater
awareness of the MQP, including due to
news coverage, since the program’s
launch.11 As part of the rollout of the
Second Enrollment Period, FINRA will
also reach out to any Look-Back
Individuals who specifically expressed
an interest in participating in the MQP
on or after March 15, 2022.12 To further
help ensure that all Look-Back
Individuals are aware of the MQP as
well as the availability of the Second
Enrollment Period, FINRA plans to
engage in a robust second
communication campaign. Specifically,
FINRA plans to send postcards to their
home addresses and deliver the
information to their FinPro accounts,
similar to the first campaign. In
addition, FINRA plans to engage in
active outreach to journalists and social
and media outlets to further enhance
public awareness.
FINRA believes that greater public
awareness of the MQP and FINRA’s
additional outreach efforts, coupled
with a nine-month enrollment period,
should help ensure that all Look-Back
Individuals are aware of the MQP and
the availability of the Second
Enrollment Period and should provide
them with ample time to decide
whether to participate in the MQP.
Look-Back Individuals who elect to
enroll during the Second Enrollment
Period would need to notify FINRA of
their election to participate in the MQP
through a manner to be determined by
FINRA.13 FINRA also notes that LookBack Individuals who elect to
participate in the MQP during the
Second Enrollment Period would
continue to be subject to all of the other
MQP eligibility and participation
conditions. For example, as clarified in
the proposed rule change, Look-Back
Individuals electing to participate
during the Second Enrollment Period
would have only a maximum of five
years following the termination of a
registration category in which to
reregister without having to requalify by
examination or having to obtain an
examination waiver.14
FINRA has filed the proposed rule
change for immediate effectiveness and
has requested that the SEC waive the
requirement that the proposed rule
change not become operative for 30 days
after the date of the filing. The operative
date will be the date of filing of the
proposed rule change, if the SEC grants
the waiver.
that they would have learned of the MQP, or the
First Enrollment Period, through informal
communication channels.
9 The current rule text also provides that if LookBack Individuals elect to participate in the MQP,
their five-year participation period will be adjusted
by deducting from that period the amount of time
that has lapsed between the date that they
terminated their registrations and March 15, 2022.
To reflect the availability of the Second Enrollment
Period, the proposed rule change clarifies that for
all Look-Back Individuals who elect to participate
in the MQP, their participation period would also
be for a period of five years following the
termination of their registration categories, as with
other MQP participants.
10 Look-Back Individuals who elect to enroll in
the MQP during the Second Enrollment Period
would also need to pay the annual program fee of
$100 for both 2022 and 2023 at the time of their
enrollment.
11 See, e.g., Joanne Cleaver, FINRA Sets Big
Change in Motion with New Option for Licensing
Grace Period, InvestmentNews (June 23, 2022),
https://www.investmentnews.com/finra-sets-bigchange-in-motion-with-new-option-for-licensinggrace-period-222942.
12 As noted, a number of Look-Back Individuals
contacted FINRA directly on or after March 15,
2022. FINRA will reach out to these individuals to
make them aware of the availability of the Second
Enrollment Period.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,15 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
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13 FINRA anticipates that Look-Back Individuals
will make their selection to enroll in the MQP
during the Second Enrollment Period through their
FinPro accounts. See Enrolling in the MQP, https://
www.finra.org/registration-exams-ce/finpro/mqp
(describing the MQP enrollment process). FINRA
will inform Look-Back Individuals if it determines
to provide an alternative enrollment method.
14 For example, if a Look-Back Individual
terminated a registration category on May 1, 2020,
and elects to participate in the MQP on December
1, 2023, the individual’s maximum participation
period would be five years starting on May 1, 2020,
and ending no later than May 1, 2025. If the
individual does not reregister with a member firm
by May 1, 2025, the individual would need to
requalify by examination or obtain an examination
waiver in order to reregister after that date.
15 15 U.S.C. 78o–3(b)(6).
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Federal Register / Vol. 88, No. 59 / Tuesday, March 28, 2023 / Notices
general, to protect investors and the
public interest. FINRA believes that
providing Look-Back Individuals a
second opportunity to elect to
participate in the MQP is warranted
because participation in the MQP would
reduce unnecessary impediments to
requalification for these individuals
without diminishing investor
protection. In addition, the proposed
rule change is consistent with other
goals, such as the promotion of diversity
and inclusion in the securities industry
by attracting and retaining a broader and
diverse group of professionals. The
MQP also allows the industry to retain
expertise from skilled individuals,
providing investors with the advantage
of greater experience among the
individuals working in the industry.
FINRA believes that providing LookBack Individuals a second opportunity
to elect to participate in the MQP will
further these goals and objectives.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Further,
FINRA provided an extensive economic
impact assessment relating to the MQP
as part of the original rule filing.16
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
lotter on DSK11XQN23PROD with NOTICES1
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
FINRA has filed the proposed rule
change pursuant to Section 19(b)(3)(A)
of the Act 17 and Rule 19b–4(f)(6)
thereunder.18 Because the proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative prior to 30 days from the date
on which it was filed, or such shorter
time as the Commission may designate,
if consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)
thereunder.
16 See Securities Exchange Act Release No. 92183
(June 15, 2021), 86 FR 33427 (June 24, 2021) (Notice
of Filing of File No. SR–FINRA–2021–015).
17 15 U.S.C. 78s(b)(3)(A).
18 17 CFR 240.19b–4(f)(6).
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A proposed rule change filed under
Rule 19b–4(f)(6) 19 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),20 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest.
FINRA has asked the Commission to
waive the 30-day operative delay so that
the proposal may become operative
immediately upon filing. FINRA has
indicated that immediate operation of
the proposed rule change is appropriate
because it would help to ensure that
there is sufficient time for FINRA to
provide adequate notification of the
Second Enrollment Period to Look-Back
Individuals, as well as for these
individuals to consider whether they
wish to participate in the program
before the December 31, 2023
deadline.21 FINRA intends to engage in
outreach efforts and provide a ninemonth enrollment period in order to
ensure that all Look-Back Individuals
are aware of the MQP and the
availability of the Second Enrollment
Period. For these reasons, 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.22
At any time within 60 days of the
filing of such 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
under Section 19(b)(2)(B) 23 of the Act 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.
19 17
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
21 See supra Item II.
22 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).
23 15 U.S.C. 78s(b)(2)(B).
20 17
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18361
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
FINRA–2023–005 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–2023–005. 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
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–
2023–005 and should be submitted on
or before April 18, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–06322 Filed 3–27–23; 8:45 am]
BILLING CODE 8011–01–P
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]]>Agencies
[Federal Register Volume 88, Number 59 (Tuesday, March 28, 2023)]
[Notices]
[Pages 18359-18361]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06322]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97184; File No. SR-FINRA-2023-005]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend FINRA Rule 1240.01 To Provide Eligible
Individuals Another Opportunity To Elect To Participate in the
Maintaining Qualifications Program
March 22, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 14, 2023, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by FINRA. FINRA has designated
the proposed rule change as constituting a ``non-controversial'' rule
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which
renders the proposal effective upon receipt of this filing by the
Commission. 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\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend FINRA Rule 1240.01 (Eligibility of
Other Persons to Participate in the Continuing Education Program
Specified in Paragraph (c) of this Rule) to provide eligible
individuals another opportunity to elect to participate in the
Maintaining Qualifications Program (``MQP'').
Below is the text of the proposed rule change. Proposed new
language is italicized; proposed deletions are in brackets.
* * * * *
1200. REGISTRATION AND QUALIFICATION
* * * * *
1240. Continuing Education
This Rule prescribes requirements regarding the continuing
education of registered persons. The requirements shall consist of a
Regulatory Element and a Firm Element as set forth below. This Rule
also sets forth continuing education programs through which
specified persons may maintain their qualification in a
representative or principal registration category following the
termination of that registration category.
(a) through (c) No Change.
Supplementary Material: --------------
.01 Eligibility of Other Persons to Participate in the Continuing
Education Program Specified in Paragraph (c) of this Rule. A person
registered in a representative or principal registration category
with FINRA within two years immediately preceding March 15, 2022
shall be eligible to participate in the continuing education program
under paragraph (c) of this Rule, provided that he or she satisfies
the conditions set forth in paragraphs (c)(1) and (c)(3) through
(c)(6) of this Rule. In addition, a person participating in the
Financial Services Affiliate Waiver Program under Rule 1210.09
immediately preceding March 15, 2022 shall be eligible to
participate in the continuing education program under paragraph (c)
of this Rule, provided that he or she satisfies the conditions set
forth in paragraphs (c)(3), (c)(5) and (c)(6) of this Rule. Persons
eligible under this Supplementary Material .01 shall make their
election to participate in the continuing education program under
paragraph (c) of this Rule either (1) between January 31, 2022, and
March 15, 2022; or (2) between March 15, 2023, and December 31, 2023
[by March 15, 2022]. If such persons elect to participate in the
continuing education program, their participation period shall also
be for a period of five years following the termination of their
registration categories, as with other participants under paragraph
(c) of this Rule [FINRA shall adjust their participation period by
deducting from that period the amount of time that has lapsed
between the date that such persons terminated their registration
categories and March 15, 2022]. In addition, eligible persons who
elect to participate in the continuing education program between
March 15, 2023, and December 31, 2023, must complete any prescribed
2022 and 2023 continuing education content by March 31, 2024.
.02 No Change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA 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. FINRA 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
On September 21, 2021, the Commission approved a proposed rule
change to amend FINRA Rules 1210 (Registration Requirements) and 1240
(Continuing Education Requirements) to, among other things, provide
eligible individuals who terminate any of their representative or
principal registration categories the option of maintaining their
qualification for any terminated registration categories by completing
annual continuing education through a new program, the MQP.\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 93097 (September 21,
2021), 86 FR 53358 (September 27, 2021) (Order Approving File No.
SR-FINRA-2021-015).
---------------------------------------------------------------------------
Prior to the MQP, individuals whose registrations as
representatives or principals had been terminated for two or more years
could reregister as representatives or principals only if they
requalified by retaking and passing the applicable representative- or
principal-level examination or if they obtained a waiver of such
examination(s) (the ``two-year qualification period''). The MQP
provides these individuals an alternative means of staying current on
their regulatory and securities knowledge following the termination of
a registration.\5\ Specifically, the MQP
[[Page 18360]]
provides eligible individuals a maximum of five years following the
termination of a representative or principal registration category to
reregister without having to requalify by examination or having to
obtain an examination waiver, subject to satisfying the conditions and
limitations of the MQP, including the annual completion of all
prescribed continuing education.
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\5\ The MQP does not eliminate the two-year qualification
period. Thus, eligible individuals who elect not to participate in
the MQP can continue to avail themselves of the two-year
qualification period (i.e., they can reregister within two years of
terminating a registration category without having to requalify by
examination or having to obtain an examination waiver).
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Under FINRA Rule 1240.01, the MQP has a look-back provision that,
subject to specified conditions, extended the option to participate in
the MQP to individuals who: (1) were registered as a representative or
principal within two years immediately prior to March 15, 2022 (the
implementation date of the MQP); and (2) individuals who were
participating in the Financial Services Affiliate Waiver Program
(``FSAWP'') under FINRA Rule 1210.09 (Waiver of Examinations for
Individuals Working for a Financial Services Industry Affiliate of a
Member) immediately prior to March 15, 2022 (collectively, ``Look-Back
Individuals'').\6\
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\6\ The FSAWP is a waiver program for eligible individuals who
have left a member firm to work for a foreign or domestic financial
services affiliate of a member firm. FINRA stopped accepting new
participants for the FSAWP beginning on March 15, 2022; however,
individuals who were already participating in the FSAWP prior to
that date had the option of continuing in the FSAWP.
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In Regulatory Notice 21-41 (November 17, 2021), FINRA announced
that Look-Back Individuals who wanted to take part in the MQP were
required to make their election between January 31, 2022, and March 15,
2022 (the ``First Enrollment Period''). In addition to the announcement
in Regulatory Notice 21-41, FINRA notified the Look-Back Individuals
about the MQP and the First Enrollment Period via two separate mailings
of postcards to their home addresses and communications through their
FINRA Financial Professional Gateway (``FinPro'') accounts.\7\
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\7\ Look-Back Individuals were able to notify FINRA of their
election to participate in the MQP through their FinPro accounts.
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Shortly after the First Enrollment Period had ended, a number of
Look-Back Individuals contacted FINRA and indicated that they had only
recently become aware of the MQP. FINRA has received anecdotal
information that a number of these individuals may not have learned of
the MQP, or the First Enrollment Period, in a timely manner, or at all,
due to communication and operational issues.\8\ In addition, the
original six-week enrollment period may not have provided Look-Back
Individuals with sufficient time to evaluate whether they should
participate in the MQP. For these reasons, FINRA is proposing to amend
Rule 1240.01 to provide Look-Back Individuals a second opportunity to
elect to participate in the MQP (the ``Second Enrollment Period'').\9\
The Second Enrollment Period will be between March 15, 2023, and
December 31, 2023. In addition, the proposed rule change requires that
Look-Back Individuals who elect to participate in the MQP during the
Second Enrollment Period complete any prescribed 2022 and 2023 MQP
content by March 31, 2024.\10\
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\8\ This may have been a result of the timing of FINRA's
announcements relating to the MQP, which coincided with the holiday
season and the transition to the New Year. Further, given that Look-
Back Individuals were out of the industry at the time of these
announcements, it was unlikely that they would have learned of the
MQP, or the First Enrollment Period, through informal communication
channels.
\9\ The current rule text also provides that if Look-Back
Individuals elect to participate in the MQP, their five-year
participation period will be adjusted by deducting from that period
the amount of time that has lapsed between the date that they
terminated their registrations and March 15, 2022. To reflect the
availability of the Second Enrollment Period, the proposed rule
change clarifies that for all Look-Back Individuals who elect to
participate in the MQP, their participation period would also be for
a period of five years following the termination of their
registration categories, as with other MQP participants.
\10\ Look-Back Individuals who elect to enroll in the MQP during
the Second Enrollment Period would also need to pay the annual
program fee of $100 for both 2022 and 2023 at the time of their
enrollment.
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FINRA believes that Look-Back Individuals generally have greater
awareness of the MQP, including due to news coverage, since the
program's launch.\11\ As part of the rollout of the Second Enrollment
Period, FINRA will also reach out to any Look-Back Individuals who
specifically expressed an interest in participating in the MQP on or
after March 15, 2022.\12\ To further help ensure that all Look-Back
Individuals are aware of the MQP as well as the availability of the
Second Enrollment Period, FINRA plans to engage in a robust second
communication campaign. Specifically, FINRA plans to send postcards to
their home addresses and deliver the information to their FinPro
accounts, similar to the first campaign. In addition, FINRA plans to
engage in active outreach to journalists and social and media outlets
to further enhance public awareness.
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\11\ See, e.g., Joanne Cleaver, FINRA Sets Big Change in Motion
with New Option for Licensing Grace Period, InvestmentNews (June 23,
2022), https://www.investmentnews.com/finra-sets-big-change-in-motion-with-new-option-for-licensing-grace-period-222942.
\12\ As noted, a number of Look-Back Individuals contacted FINRA
directly on or after March 15, 2022. FINRA will reach out to these
individuals to make them aware of the availability of the Second
Enrollment Period.
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FINRA believes that greater public awareness of the MQP and FINRA's
additional outreach efforts, coupled with a nine-month enrollment
period, should help ensure that all Look-Back Individuals are aware of
the MQP and the availability of the Second Enrollment Period and should
provide them with ample time to decide whether to participate in the
MQP.
Look-Back Individuals who elect to enroll during the Second
Enrollment Period would need to notify FINRA of their election to
participate in the MQP through a manner to be determined by FINRA.\13\
FINRA also notes that Look-Back Individuals who elect to participate in
the MQP during the Second Enrollment Period would continue to be
subject to all of the other MQP eligibility and participation
conditions. For example, as clarified in the proposed rule change,
Look-Back Individuals electing to participate during the Second
Enrollment Period would have only a maximum of five years following the
termination of a registration category in which to reregister without
having to requalify by examination or having to obtain an examination
waiver.\14\
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\13\ FINRA anticipates that Look-Back Individuals will make
their selection to enroll in the MQP during the Second Enrollment
Period through their FinPro accounts. See Enrolling in the MQP,
https://www.finra.org/registration-exams-ce/finpro/mqp (describing
the MQP enrollment process). FINRA will inform Look-Back Individuals
if it determines to provide an alternative enrollment method.
\14\ For example, if a Look-Back Individual terminated a
registration category on May 1, 2020, and elects to participate in
the MQP on December 1, 2023, the individual's maximum participation
period would be five years starting on May 1, 2020, and ending no
later than May 1, 2025. If the individual does not reregister with a
member firm by May 1, 2025, the individual would need to requalify
by examination or obtain an examination waiver in order to
reregister after that date.
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FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days after the
date of the filing. The operative date will be the date of filing of
the proposed rule change, if the SEC grants the waiver.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\15\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in
[[Page 18361]]
general, to protect investors and the public interest. FINRA believes
that providing Look-Back Individuals a second opportunity to elect to
participate in the MQP is warranted because participation in the MQP
would reduce unnecessary impediments to requalification for these
individuals without diminishing investor protection. In addition, the
proposed rule change is consistent with other goals, such as the
promotion of diversity and inclusion in the securities industry by
attracting and retaining a broader and diverse group of professionals.
The MQP also allows the industry to retain expertise from skilled
individuals, providing investors with the advantage of greater
experience among the individuals working in the industry. FINRA
believes that providing Look-Back Individuals a second opportunity to
elect to participate in the MQP will further these goals and
objectives.
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\15\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. Further, FINRA provided an
extensive economic impact assessment relating to the MQP as part of the
original rule filing.\16\
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\16\ See Securities Exchange Act Release No. 92183 (June 15,
2021), 86 FR 33427 (June 24, 2021) (Notice of Filing of File No. SR-
FINRA-2021-015).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
FINRA has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \19\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\20\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA has asked the
Commission to waive the 30-day operative delay so that the proposal may
become operative immediately upon filing. FINRA has indicated that
immediate operation of the proposed rule change is appropriate because
it would help to ensure that there is sufficient time for FINRA to
provide adequate notification of the Second Enrollment Period to Look-
Back Individuals, as well as for these individuals to consider whether
they wish to participate in the program before the December 31, 2023
deadline.\21\ FINRA intends to engage in outreach efforts and provide a
nine-month enrollment period in order to ensure that all Look-Back
Individuals are aware of the MQP and the availability of the Second
Enrollment Period. For these reasons, 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.\22\
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\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
\21\ See supra Item II.
\22\ 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 such 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 under
Section 19(b)(2)(B) \23\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\23\ 15 U.S.C. 78s(b)(2)(B).
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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-FINRA-2023-005 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-2023-005. 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 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-2023-005 and should be submitted on or before April 18, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-06322 Filed 3-27-23; 8:45 am]
BILLING CODE 8011-01-P
