[Federal Register Volume 79, Number 187 (Friday, September 26, 2014)]
[Notices]
[Pages 57997-57999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-22907]
[[Page 57997]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73159; File No. SR-NYSEMKT-2014-78]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Amend Commentary .01
to Rule 341 To Specify the Registration and Examination Requirements
for Certain Persons Engaged in Supervisory Activities
September 22, 2014.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on September 16, 2014, NYSE MKT LLC (the ``Exchange'' or
``NYSE MKT'') 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 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\ 15 U.S.C. 78a.
\3\ 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 proposes to proposes [sic] to amend Commentary .01 to
Rule 341 to specify the registration and examination requirements for
certain persons engaged in supervisory activities. The text of the
proposed rule change is available on the Exchange's Web site at
www.nyse.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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
(a) Purpose [sic]
The Exchange proposes to amend Commentary .01 to Rule 341 to
specify the registration and examination requirements for a person
engaged in the supervision of register [sic] representatives (``General
Securities Representatives'') and Proprietary Traders.
Rule 341(a) and Commentary .01 to Rule 341 prescribe the
registration and qualification requirements for individuals performing
certain duties on behalf of a member or member organization, including
regarding General Securities Representatives and their supervisors and
Proprietary Traders and their supervisors. A General Securities
Representative is any person engaged in the purchase or sale of
securities or other similar instruments on an agency basis or for the
proprietary account of a member or member organization with which he or
she is associated, as an employee or otherwise. A Proprietary Trader is
any person engaged in the purchase or sale of securities or other
similar instruments for the proprietary account of a member or member
organization with which he or she is associated, as an employee or
otherwise, and who does not transact any business with the public.\4\
The General Securities Registered Representative Examination (``Series
7'') is the qualifying examination for General Securities
Representatives and the Proprietary Traders Examination (``Series 56'')
is the qualifying examination for Proprietary Traders. \5\
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\4\ The term ``Proprietary Trader'' does not include a person
who is required to be registered as a Market Maker in accordance
with Rule 921NY or a Market Maker Authorized Trader in accordance
with Rule 921.1NY. See Commentary .01 to Rule 341.
\5\ See Securities Exchange Act Release No. 66453 (February 23,
2012), 77 FR 12345 (February 29, 2012) (SR-NYSEAmex-2012-11). An
individual may also register as a Proprietary Trader by passing the
General Securities Registered Representative Examination (``Series 7
Examination'') without passing the Series 56 Examination.
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The Exchange proposes to prescribe within Commentary .01 to Rule
341 that a supervisor of a General Securities Representative must
register and qualify as a General Securities Principal in Web CRD \6\
by passing the General Securities Principal Qualification Examination
(``Series 24''). The Exchange presently requires persons acting in a
supervisory capacity to be registered as a General Securities Principal
and pass the Series 24 and Series 7. This filing serves to codify the
existing registration and examination requirements and does not impart
any new obligations on individuals registered as a [sic] General
Securities Principal. The Exchange also proposes to prescribe within
Commentary .01 to Rule 341 that a supervisor of a Proprietary Trader
may choose to register and qualify as a Proprietary Trader Principal in
Web CRD if such supervisor's supervisory responsibilities are limited
solely to supervising Proprietary Traders, by passing the Series 24
Examination and registering pursuant to Exchange Rules as a Proprietary
Trader. The Proprietary Trader Principal registration would be a
limited principal registration and would not authorize an individual to
supervise non-Proprietary Traders. Therefore, the Exchange also
proposes to specify within Commentary .01 to Rule 341 that a
Proprietary Trader Principal would not be qualified to function in a
Principal or supervisory capacity with responsibility over any area of
business other than that involves [sic] proprietary trading.
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\6\ Web CRD is the central licensing and registration system for
the U.S. securities industry and its regulators operated by the
Financial Industry Regulatory Authority (``FINRA'').
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The proposed change is not otherwise intended to address any other
issues and the Exchange is not aware of any problems that Amex Trading
Permit Holders (``ATP Holders'') \7\ or their registered persons would
have in complying with the proposed change.
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\7\ See Rule 900.2NY(5).
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The Exchange is also proposing to amend Commentary .01 to Rule 341
by renumbering existing rule text. This non-substantive change is being
proposed simply to structure the rule in a more clear and concise
format.
2. Statutory Basis
(b) Statutory Basis [sic]
The proposed rule change is consistent with Section 6(c) of the
Act,\8\ in general, and furthers the objectives of Section 6(c)(3) of
the Act,\9\ in particular, which authorizes the Exchange to prescribe
standards of training, experience and competence for registered persons
of ATP Holders. The Exchange believes that the proposed examination
requirements for General Securities Principals and Proprietary Trader
Principals will help to ensure that they are competent to perform such
supervisory functions and the registration requirements will result in
their being subject to ongoing training
[[Page 57998]]
requirements under the Exchange's rules.\10\ The Exchange believes that
the proposed rule change is reasonable because the Proprietary Trader
Principal category is limited and tailored to persons supervising
proprietary trading functions and because other markets already
recognize Proprietary Trader Principal registration and related
examination requirements.\11\ The Exchange also believes that it is
reasonable to prescribe the Series 24 Examination as the appropriate
examination for persons acting in a supervisory capacity because the
Series 24 Examination tests knowledge and understanding of supervision-
related rules, including but not limited to rules governing sales
practices, books and records, account suitability, trade review and
trade reporting requirements.
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\8\ 15 U.S.C. 78f(c).
\9\ 15 U.S.C. 78f(c)(3).
\10\ Rule 341A specifies the continuing education requirements
for registered persons subsequent to their initial qualification and
registration, which consist of a Regulatory Element and a Firm
Element. The S201 Regulatory Element Program is required for
registered Supervisors/Principals.
\11\ See, e.g., Commentary .08 to Chicago Board Options Exchange
(``CBOE'') Rule 3.6A and Securities Exchange Act Release No. 67000
(May 16, 2012), 77 FR 30338 (May 22, 2012) (SR-CBOE-2012-039). See
also NASDAQ OMX BX (``BX'') Rule 1022(h) and Securities Exchange Act
Release No. 65056 (August 8, 2011), 76 FR 50279 (August 12, 2011)
(SR-BX-2011-053).
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The Exchange also believes that the proposed rule change is
consistent with Section 6(b) of the Act,\12\ in general, and furthers
the objectives of Section 6(b)(5) of the Act,\13\ in particular,
because it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanisms of, a free and open market and a national market
system and, in general, to protect investors and the public interest
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange believes that the
proposed rule change accomplishes these objectives by enabling
individuals to qualify for registration with the Exchange by passing a
qualification examination that specifically addresses industry topics
that establish the foundation for the regulatory and procedural
knowledge necessary for such persons electing to register as a General
Securities Principal or a Proprietary Trader Principal.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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For these reasons, the Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
Self-Regulatory Organization's Statement on Burden on Competition [sic]
In accordance with Section 6(b)(8) of the Act,\14\ 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. Specifically, the Exchange does not believe
that the introduction of examination requirements for General
Securities Principal and Proprietary Trader Principal registration will
affect intermarket competition because the Exchange anticipates that
other markets will similarly adopt, or other markets have adopted,
rules requiring such registration and examination.\15\ In addition, the
Exchange does not believe that the proposed rule change will affect
intramarket competition because all similarly situated registered
persons of ATP Holders, e.g., registered persons maintaining the same
categories of registration, are required to complete the same
qualification examinations and maintain the same registrations.
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\14\ 15 U.S.C. 78f(b)(8).
\15\ See supra note 9 [sic].
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 \16\ and Rule 19b-
4(f)(6)(iii) thereunder.
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\16\ 15 U.S.C. 78s(b)(3)(A).
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The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative upon filing. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest, as
this proposed rule change will make NYSE MKT's rules consistent with
those of the other markets which already provide for the Proprietary
Trader Principal category of registration and set forth the
qualification requirements for Proprietary Trader Principals.\17\
Therefore, the Commission designates the proposal operative upon
filing.\18\
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\17\ The Commission notes that, with respect to the General
Securities Principal registration category, NYSE MKT states that it
is codifying an existing requirement.
\18\ 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 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) \19\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\19\ 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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEMKT-2014-78 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2014-78. 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
[[Page 57999]]
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 10:00 a.m. and
3:00 p.m. Copies of such filing will also 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-NYSEMKT-2014-78 and should
be submitted on or before October 17, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-22907 Filed 9-25-14; 8:45 am]
BILLING CODE 8011-01-P