[Federal Register Volume 78, Number 224 (Wednesday, November 20, 2013)]
[Notices]
[Pages 69720-69723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-27757]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70877; File No. SR-MIAX-2013-48]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend MIAX Rules 1302, 1304 and the MIAX
Options Fee Schedule
November 14, 2013.
Pursuant to the provisions of 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 November 1, 2013, Miami International
Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') a 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend MIAX Rules 1302,
Registration of Representatives, and 1304, Continuing Education for
Registered Persons, and the MIAX Options Fee Schedule (the ``Fee
Schedule'').
The text of the proposed rule change is available on the Exchange's
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at
MIAX's principal office, 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.
[[Page 69721]]
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 Exchange Rule 1302, Registration of
Representatives, to state in the Exchange's rules that a person engaged
solely in proprietary trading on the Exchange is required to register
with the Exchange and to be qualified by passing the Proprietary
Traders Qualification Examination (Series 56),\3\ except that person
engaged in proprietary trading on the Exchange who has passed the
General Securities Registered Representative Examination (Series 7) and
maintains a Series 7 registration shall not be required to pass the
Proprietary Traders Qualification Examination (Series 56). The Exchange
believes that the Series 7 exam is more comprehensive and inclusive
than the Series 56 exam, and therefore obviates the need for a Series 7
qualified person to take and pass the Series 56 exam.
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\3\ Members that are individuals and associated persons of
Members engaged or to be engaged in the securities business of a
Member shall be registered with the Exchange in the category of
registration appropriate to the function to be performed in a form
and manner prescribed by the Exchange. Before the registration can
become effective, the individual Member or individual associated
person shall submit the appropriate application for registration,
pass a qualification examination appropriate to the category of
registration in a form and manner prescribed by the Exchange and
submit any required registration and examination fees. See Exchange
Rule 203(a). This part of the proposed rule change is intended to
clarify who may take the Series 56 exam as required by the Exchange.
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The Exchange also proposes to amend MIAX Rule 1304, Continuing
Education for Registered Persons, to specify the different Continuing
Education (``CE'') requirements for registered persons based upon their
registration with the Exchange. This change will authorize the Exchange
to administer different CE programs to differently registered
individuals while bringing clarity to Members about what CE requirement
they must fulfill. More specifically, the Exchange is proposing to
adopt, and to enumerate in Rule 1304, the following Regulatory Element
programs: (1) The S201 Supervisor Program for registered principals and
supervisors; (2) the S501 Proprietary Trader Continuing Education
Program for Series 56 registered persons; and (3) the S101 General
Program for Series 7 and all other registered persons.
Additionally, the Exchange is proposing to amend its Fee Schedule
to adopt fees for the above CE programs and to adopt a fee for the
Series 56 Examination. Specifically, the Exchange is now proposing to
adopt a $60 Session Fee for those Market Makers and ROTs that are
solely registered with the (``Series 56'') [sic] registration, a $100
Session Fee for all other registrations, and a $195 fee for the Series
56 examination.
Background
Currently, Exchange Rule 1304(a) states that each registered person
shall complete the Regulatory Element of the CE program on the
occurrence of their [sic] second registration anniversary date and
every three years thereafter or as otherwise prescribed by the
Exchange. The Regulatory Element is a computer-based education program
administered by the Financial Industry Regulatory Authority (``FINRA'')
on behalf of the Securities Industry Regulatory Council on Continuing
Education to help ensure that registered persons are kept up to date on
regulatory, compliance and sales practice matters in the industry. The
Exchange is proposing to enumerate in Rule 1304(a), which governs the
Regulatory Element, the S201 Supervisor Program for registered
principals and supervisors, the S501 Proprietary Trader Continuing
Education Program for Series 56 registered persons, and the S101
General Program for Series 7 and all other registered persons.
The Regulatory Element
The proposed rule change specifies the Continuing Education
Requirements for associated persons. The Proprietary Trader Continuing
Education Program (S501) is required for those registrants who
registered as Proprietary Traders \4\ by passing the Series 56 and do
not maintain any other registration through CRD. Individuals that are
registered under any other registration are required to maintain the CE
obligations associated with those registrations. For example, an
individual that is registered as a proprietary trader \5\ with the
Exchange yet continues to maintain a Series 7 registration will be
required to take the S101 General Program for Series 7 (S101), which
applies to persons with a Series 7 registration.\6\ The Proprietary
Trader Continuing Education Program allows the Exchange to tailor its
CE requirements more closely to those individuals registered only as
Proprietary Traders. More specifically, the Exchange believes that
permitting individuals engaging in proprietary trading and registered
under the Series 56 to complete a separate CE Program than those
maintaining a Series 7 registration is appropriate as all individuals
have the option of taking either test. In comparison to the Series 7,
the Series 56 Examination is more closely tailored to the practice of
proprietary trading while the Series 7 is more comprehensive. As such,
the Exchange believes a Series 56 CE Program should be tailored as
well. At the same time, if an individual would like to remain
registered as a Series 7, the Exchange believes it is appropriate they
[sic] continue to complete the broader CE program. As stated above,
though an individual maintaining a Series 7 registration may be
engaging in the same capacity as one registered as a Proprietary
Trader, because the Series 7 Examination is a more comprehensive exam,
the Exchange believes that such individual that continues to maintain a
Series 7 registration should complete a CE that covers all aspects of
his or her registration.
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\4\ Proprietary traders on the Exchange are Market Makers and
Registered Option Traders. The term ``Market Makers'' refers to
``Lead Market Makers'', ``Primary Lead Market Makers'' and
``Registered Market Makers'' collectively. See Exchange Rule 100.
Market Maker quotations and orders may be submitted to the System
only by Registered Option Traders (``ROTs''). An ROT is permitted to
enter quotes and orders only for the account of the Market Maker
with which he is associated. See Exchange Rule 601(a). ROTs may be:
(i) Individual Members registered with the Exchange as Market
Makers, or (ii) officers, partners, employees or associated persons
of Members that are registered with the Exchange as Market Makers.
See Exchange Rule 601(b)(1).
\5\ Id.
\6\ A person accepting orders from non-member customers (unless
such customer is a broker-dealer registered with the Securities and
Exchange Commission) is required to register with the Exchange and
to be qualified by passing the General Securities Registered
Representative Examination (Series 7). See Exchange Rule 1302(d).
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Amendments to the Fee Schedule
The Exchange proposes to adopt a $60 Session Fee to fund CE
sessions administered to Members that are registered only under the
Series 56, and a $100 Session Fee to fund both the development and
administration of a CE program that is applicable to all other CE
sessions for registrants that are required to take any other
examination(s). The Exchange anticipates that other exchanges will
assess corresponding fees for the S501 CE program.
The Exchange believes that the new fees are reasonable and
proportional based upon the programming of the CE. The Exchange
proposes a $60 session fee in order to cover the costs of
administration of the S501 CE Program. Specifically, the $60 session
fee will be used to fund the S501 CE Program administered to persons
registered only as Proprietary Traders who are required
[[Page 69722]]
to complete the S501 CE Program. The $60 session fee is less than the
existing $100 session fee currently charged by FINRA through CRD for
the existing CE Programs, including the S101 CE Program, because the
fees associated with the existing CE Programs are utilized for both
development and administration, whereas the $60 session fee for the
S501 CE Program only covers the administration of the program. The
costs associated with the development and maintenance of the S501 CE
Program are included in the Series 56 Examination fee. The Exchange
anticipates that the other Participating SROs will adopt, or have
adopted, the same $60 session fee applicable to completion of the S501
CE Program.
In addition, the Exchange proposes to amend its Fee Schedule to
adopt a $195 fee per registered person that chooses to complete the
Series 56 Examination. The Fee Schedule does not currently set forth
the examination fees for other qualification examinations required or
accepted by the Exchange because these programs are within FINRA's
jurisdiction. The Series 56 Examination, however, is a limited
registration category that is not recognized by FINRA under its
registration rules. However, as with existing non-FINRA examinations,
FINRA administers the Series 56 Examination and collects the $195 fee
through CRD on behalf of the SROs that developed and maintain the exam.
Additionally, only one $195 fee would be charged through CRD for a
registered person completing the Series 56 Examination, even if such
registered person's firm was a member of multiple exchanges. The
Exchange anticipates that the other Participating SROs will adopt, or
have adopted, the same $195 fee applicable to completion of the Series
56 Examination.
2. Statutory Basis
The Exchange believes its proposed rule change is consistent with
Section 6(c) of the Act \7\ in general, and in particular, furthers the
objectives of Section 6(c)(3) of the Act,\8\ which authorizes the
Exchange to prescribe standards of training, experience and competence
for Members and persons associated with the Members. The proposed rule
change would codify the existing requirements for Members and their
associated persons while also specifying the new S501 CE Program
requirement for persons registered only as Proprietary Traders. The
Exchange believes the proposed changes are reasonable and set forth the
appropriate CE requirements for persons required to register under
Exchange Rules and therefore will contribute to ensuring that
registered persons of Members are properly trained. In this regard, the
Exchange believes that the S501 CE Program is the appropriate CE
Program for persons registered only as Proprietary Traders because the
S501 CE Program is specifically tailored toward proprietary trading.
Individuals who maintain any other registration would be required to
complete the CE Program associated with their other registration, even
if simultaneously registered as Proprietary Traders, because the other
CE Program would be more comprehensive and tailored to that
registration category. The Exchange also believes that the proposed
rule change is reasonable because the other Participating SROs will
adopt, or have adopted, rules requiring completion of the S501 CE
Program for registered Proprietary Traders.
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\7\ 15 U.S.C. 78f(c).
\8\ 15 U.S.C. 78f(c)(3).
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The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act in general, and furthers the
objectives of Section 6(b)(4) and 6(b)(5) of the Act in particular, in
that it is an equitable allocation of reasonable fees and other
charges.
In particular, the proposed $60 Session Fee is equitable and not
unfairly discriminatory as it is allocated to all individuals that are
registered only under the Series 56. The Exchange believes that the
proposed $60 Session Fee is reasonable. While the $60 Session Fee is
less than the existing $100 Session Fee currently charged by FINRA
through CRD for the existing CE Programs, including the S101 CE
Program, the fees associated with the existing CE Programs are utilized
for both development and administration, whereas the $60 Session Fee
for the S501 CE Program covers only the administration of the program.
The costs associated with the development and maintenance of the S501
CE Program are included in the Series 56 Examination fee. The Exchange
also believes that the fee is reasonable because the other
Participating SROs will adopt, or have adopted, the same $60 session
fee applicable to completion of the S501 CE Program. The Exchange also
believes that the proposed rule change is reasonable because it will
specify the existing $100 Session Fee applicable to registered persons
of Members who are subject to CE requirements, which is collected by
FINRA through CRD. Finally, the Exchange believes that the proposed
rule change is equitable and not unfairly discriminatory because all
registered persons of Members that are subject to CE requirements would
be treated the same, as is currently the case. Therefore, any
registered person of a Member that is required to complete the S501 CE
Program would be subject to the corresponding $60 Session Fee.
The proposed fee is designed to allow FINRA to cover its cost of
administering the Series 56 Examination on behalf of the Exchange. The
Exchange believes that the proposed $195 Series 56 Examination fee is
also reasonable because it is designed to reflect the costs of
maintaining and developing the Series 56 Examination, as well as the
development and maintenance of the S501 CE Program, and to ensure that
the examination's content is, and continues to be, adequate for testing
the competence and knowledge generally applicable to proprietary
trading.
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 not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange does not believe
that the administrative changes being made, nor the introduction of the
S201, S501 and S101 requirements, will affect intermarket competition
because the Exchange believes that other exchanges offering the same CE
requirements will file similar rules addressing those CE programs. In
addition, the Exchange does not believe the proposed changes will
affect intramarket competition because all registered persons
maintaining the same registrations are required to complete the same CE
requirements. For example, all individuals maintaining a Series 7
registration will be required to complete the Series 7 CE while all
individuals maintaining a Series 56 registration (and no other
registrations) will be required to complete the Series 56 CE.
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
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 after the date of the filing, or such
shorter time as the Commission may designate, it has
[[Page 69723]]
become effective pursuant to 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) \10\ thereunder.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MIAX-2013-48 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-MIAX-2013-48. 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 on official business days
between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also
will be available for inspection and copying at the principal office of
the Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly.
All submissions should refer to File Number SR-MIAX-2013-48 and
should be submitted on or before December 11, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-27757 Filed 11-19-13; 8:45 am]
BILLING CODE 8011-01-P