[Federal Register Volume 76, Number 222 (Thursday, November 17, 2011)]
[Notices]
[Pages 71398-71399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-29677]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65731; File No. SR-ISE-2011-74]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Remove the Requirement That its Members Pass the DTR
Examination Prior To Registering
November 10, 2011.
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 October 28, 2011, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I and II below, which items have been prepared by
the self-regulatory organization. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) of the Act,\3\ the
Exchange is filing a proposed rule change to remove the requirement
that Designated Trading Representatives (``DTRs'') pass an examination
administered by the ISE before they can be approved by the Exchange to
enter quotations and orders on behalf of market makers.
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\3\ 15 U.S.C. 78s(b)(1).
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The text of the proposed rule change is available on the Exchange's
Internet Web site at http://www.ise.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
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 self-regulatory organization
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, Proposed Rule Change
1. Purpose
The Exchange rules governing registration, examination, and
continuing education requirements for ISE members previously only
applied to associated persons who conducted a public customer business.
Such persons were required, in part, to pass the General Securities
Representative examination (``Series 7'') and the ISE's Designated
Trading Representative examination (``DTR Exam'') to function as
representatives if accepting orders from non-member customers.\4\ ISE
members whose business was limited to proprietary securities trading
(``Prop Traders'') were only required to pass the DTR exam prior to
receiving approval to enter quotations and orders on the Exchange.
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\4\ See ISE Rule 602.
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The ISE recently amended its rules governing registration,
examination, and continuing education to require members, regardless of
whether they conduct a public business or proprietary securities
business, to register, qualify and comply with continuing education
requirements.\5\ To address the gap in registration and examination
requirements related to Prop Traders, the ISE, in conjunction with
other SROs,\6\ implemented a new examination for Prop Traders (``Series
56'') that is administered by the Financial Industry Regulatory
Authority on behalf of the SROs.\7\
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\5\ See Securities Exchange Act Release No. 63843 (February 4,
2011), 76 FR 7885 (February 11, 2011) (SR-ISE-2010-115).
\6\ The Series 56 examination program is shared by the ISE,
Boston Options Exchange, Inc., Chicago Board Options Exchange, Inc.,
C2 Options Exchange, Inc., Chicago Stock Exchange, Inc., NASDAQ OMX,
BX, NASDAQ OMX, PHLX, NASDAQ Stock Market LLC, National Stock
Exchange, Inc., New York Stock Exchange, LLC, and NYSE Amex,
Incorporated.
\7\ The Series 56 examination tests a candidate's knowledge of
proprietary trading generally and the industry rules applicable to
trading of equity securities and listed options contracts. The
Series 56 examination covers, among other things, recordkeeping and
recording requirements, types and characteristics of securities and
investments, trading practices and display execution and trading
systems. While the examination is primarily dedicated to topics
related to proprietary trading, the Series 56 examination also
covers a few general concepts relating to customers. The Series 56
examination became available to ISE members on August 1, 2011.
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Because the ISE now requires all Prop Traders to pass the Series 56
examination prior to being approved for membership, the Exchange
believes that it is no longer necessary to administer its own exam.
Likewise, the associated persons who are required to pass the Series 7
examination prior to receiving approval to enter quotations and orders
on the Exchange, should no longer be required to also pass the DTR Exam
because the Series 7 is a much more comprehensive examination and tests
the candidate's knowledge of the subject matter applicable to
proprietary trading. Accordingly, the Exchange proposes to delete the
requirement that Designated Trading Representatives take the DTR Exam.
Such individuals will continue to be subject to the Exchange's
registration and other requirements specific [sic] Designated Trading
Representatives.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\8\ in general, and furthers the objectives of Section 6(b)(1) \9\
of the Act in particular, in that it is designed to enforce compliance
by Exchange members and persons associated with its members with the
rules of the Exchange. The Exchange also believes the proposed rule
change furthers the objectives of Section 6(c)(3) \10\ of the Act,
which authorizes ISE to prescribe standards of training, experience and
competence for persons associated with ISE members, in that this filing
establishes that ISE members must take and pass the Series 56
examination, which is being adopted by other SROs so as to create
market-wide consistency in the examination process, instead of
administering an ISE specific examination. ISE believes the Series 56
examination program establishes the appropriate
[[Page 71399]]
qualifications for an individual associated person that is required to
register as a Proprietary Trader under Exchange Rule 313, including,
but not limited to, Market-Makers, proprietary traders and individuals
effecting transactions on behalf of other broker-dealers. The Exchange
believes the Series 56 addresses industry topics that establish the
foundation for the regulatory and procedural knowledge necessary for
individuals required to register as Designated Trading Representatives
under ISE Rule 801.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(1).
\10\ 15 U.S.C. 78f(c)(3).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not 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) \11\ of the Act and Rule 19b-
4(f)(6) \12\ thereunder. The Exchange provided the Commission with
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at least
five business days prior to the date of filing the proposed rule
change.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
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The Exchange has requested that the Commission waive the 30-day
operative delay so that the proposed rule change may become effective
and operative upon filing with the Commission. The Commission believes
that such waiver will allow the Exchange to decommission the use of its
own examination for registration purposes in conjunction with the
Exchange's deadline for its membership to have taken and passed the
Series 56 examination. Waiver of the operative delay will help to
streamline the exam procedures, while simultaneously protecting
investors and the public interest. Therefore, the Commission designates
the proposal to be operative upon filing.\13\
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\13\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-ISE-2011-74 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2011-74. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the ISE. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2011-74 and should be
submitted on or before December 8, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-29677 Filed 11-16-11; 8:45 am]
BILLING CODE 8011-01-P