Federal Register / Vol. 76, No. 155 / Thursday, August 11, 2011 / Notices 49807 

15 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Pursuant to Rule 1011(b), the term ‘‘Associated 

Person’’ means any partner, officer, director, or 

branch manager of a BX member or Applicant (or 

person occupying a similar status or performing 

similar functions), any person directly or indirectly 

controlling, controlled by, or under common 

control with such BX member or Applicant, or any 

employee of such BX member or Applicant, except 

that any person associated with a BX member or 

Applicant whose functions are solely clerical or 

ministerial shall not be included in the meaning of 

such term for purposes of the BX Equity Rules. 

4See e.g., Securities Exchange Act Release Nos. 

63843 (February 4, 2011), 76 FR 7884 (February 11, 

2011) (SR–ISE–2010–115); and 63314 (November 

12, 2010), 75 FR 70957 (November 19, 2010)(SR– 

CBOE–2010–084). 

5One exchange has thus far filed a proposed rule 

change respecting the Series 56 content outline, 

which has become effective. See Securities 

Exchange Act Release No. 64699 (June 17, 2011), 76 

FR 36945 (June 23, 2011)(SR–CBOE–2011–056). 

6See BX Rule 1120(a)(5). 

7See BX Rule 1031. 

submissions should refer to File 

Number SR–BX–2011–052 and should 

be submitted on or before September 1, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20356 Filed 8–10–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65042; File No. SR–BX– 

2011–051] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change Relating to the 

Proprietary Trader Examination 

August 5, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 2 thereunder, 

notice is hereby given that on August 2, 

2011, NASDAQ OMX BX, Inc. 

(‘‘Exchange’’ or ‘‘BX’’) 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 the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

BX is filing with the Commission a 

proposed rule change to amend its Rule 

1032, Categories of Representative 

Registration, to adopt a new limited 

category of representative registration 

for proprietary traders, as described 

further below. BX will implement the 

proposal upon notice to its membership. 

The text of the proposed rule change 

is available at http:/ 

nasdaqomxbx.cchwallstreet.com, at 

BX’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. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to recognize a new category of 

limited representative registration for 

proprietary traders. Currently, under BX 

rules, persons performing proprietary 

trading functions fall within the 

definition of representative in Rule 

1011, because Rule 1011 includes 

persons who are engaged in the 

investment banking or securities 

business of a member. A 

‘‘Representative’’ means an Associated 

Person 3 of a registered broker or dealer 

who is engaged in the investment 

banking or securities business for the 

member including the functions of 

supervision, solicitation or conduct of 

business in securities or who is engaged 

in the training of persons associated 

with a broker or dealer for any of these 

functions are designated as 

representatives. As provided in Rule 

1031, all Representatives of BX 

members are required to be registered 

with the Exchange, and Representatives 

that are so registered are referred to as 

‘‘Registered Representatives.’’ 

BX has been working with FINRA and 

certain other exchanges, many of which 

have recently enhanced their 

registration requirements to require the 

registration of associated persons,4 to 

develop the content outline and 

qualification examination that would be 

applicable to proprietary traders. This 

new qualification examination, the 

Series 56, was recently filed with the 

Commission; 5 BX expects to file the 

content outline with the Commission as 

well and make it available upon 

availability in WebCRD. Accordingly, 

BX is amending its rules to recognize 

the new registration category 

‘‘Proprietary Trader’’ and, separately, 

the new examination, the Series 56. 

Specifically, BX proposes to adopt 

new subparagraph (b) to Rule 1032 to 

recognize the ‘‘Proprietary Trader’’ 

category of registration. The new 

Proprietary Trader category would be 

limited to persons performing the 

functions specified in new Rule 1032(b), 

which is proprietary trading. Persons 

who deal with the public do not fit in 

this registration category and must 

continue to register as General 

Securities Representatives. BX believes 

that the new limited registration 

category and qualification examination 

are appropriate, because they are 

tailored to proprietary trading functions. 

Today, these persons are required to 

register as a General Securities 

Representative and pass the Series 7 

examination, which the Exchange 

believes covers a great deal of material 

that is not relevant to proprietary 

trading functions. Instead, the Series 56 

covers both equities and options trading 

rules, but not all of the rules applicable 

to firms and persons conducting a 

public business. As stated above, BX 

will describe the Series 56 in greater 

detail in a separate proposed rule 

change. 

Of course, persons registered in the 

new category would be subject to the 

continuing education requirements of 

Rule 1120.6 In addition, the process for 

registering continues to be covered by 

Rule 1140, which provides that 

WebCRD must be used. 

Today, because BX rules require it, 

persons associated with BX members 

are already registered as General 

Securities Representatives and have 

passed the Series 7 examination.7 This 

proposal does not require proprietary 

traders who have already registered as 

General Securities Representatives and 

have passed the Series 7 examination to 

register under the new category as 

Proprietary Traders or to pass the Series 

56, because BX believes this would be 

redundant. Persons who are registered 

as General Securities Representatives 

and have passed the Series 7 may, of 

course, perform the functions of a 

Proprietary Trader, because the new 

Proprietary Trader registration category 

is a limited registration category. This 


srobinson on DSK4SPTVN1PROD with NOTICES
49808 Federal Register / Vol. 76, No. 155 / Thursday, August 11, 2011 / Notices 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78(c)(3)(B) [sic]. 

10 15 U.S.C. 78f(b)(5). 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). 

13 Id. 

14 Id. 

15 15 U.S.C. 78s(b)(3)(A). 

16For purposes only of waiving the operative 

delay of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). See also 17 CFR 200.30–3(a)(59). 

proposal does not preclude associated 

persons from registering as General 

Securities Representatives and passing 

the Series 7 examination and then 

functioning as a Proprietary Trader. 

BX expects that new members might 

consider the new category when 

applying for BX membership, once the 

new category and examination become 

available to BX members in WebCRD. 

Accordingly, BX believes that the new 

category should be helpful to attracting 

new members to BX, while at the same 

time preserving the important goals of 

appropriate registration and 

qualification for persons in the 

securities business. Additionally, 

members who hire new associated 

persons might choose to register those 

persons in the new category. 

Unlike the associated persons of 

proprietary trading firms covered by this 

proposal, associated persons of firms 

that are NOT proprietary trading firms 

continue to be subject to registration as 

General Securities Representatives and 

have to pass the Series 7 examination. 

They are not eligible for the new 

registration category and examination. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 8 in general, and furthers the 

objectives of: (1) Section 6(c)(3)(B) of the 

Act,9 pursuant to which a national 

securities exchange prescribes standards 

of training, experience and competence 

for members and their associated 

persons; and (2) Section 6(b)(5) of the 

Act,10 in that it is designed, among other 

things, to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest, by 

offering a new, limited registration 

category to certain associated persons of 

BX members. The Exchange believes 

that these new requirements should 

help ensure that all associated persons 

engaged in a securities business are, and 

will continue to be, properly trained 

and qualified to perform their functions, 

because the new category and 

examination are limited and tailored to 

persons performing proprietary trading 

functions. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

BX 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. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Pursuant to Section 19(b)(3)(A) of the 

Act 11 and Rule 19b–4(f)(6) 12

thereunder, the Exchange has 

designated this proposal as one that 

effects a change that: (i) Does not 

significantly affect the protection of 

investors or the public interest; (ii) does 

not impose any significant burden on 

competition; and (iii) by its terms, does 

not become operative for 30 days after 

the date of the filing, or such shorter 

time as the Commission may designate 

if consistent with the protection of 

investors and the public interest. Rule 

19b–4(f)(6) 13 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. 

Under Rule 19b–4(f)(6) of the Act,14 a 

proposal does not become operative for 

30 days after the date of its filing, or 

such shorter time as the Commission 

may designate if consistent with the 

protection of investors and the public 

interest. The Exchange requests that the 

Commission waive the 30 day operative 

period for this filing so that it may 

become effective and operative upon 

filing with the Commission pursuant to 

Section 19(b)(3)(A) 15 of the Act and 

subparagraph (f)(6) thereunder. The 

Exchange believes waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest as the waiver will allow the 

Exchange to make the new registration 

category available near the same time as 

other exchanges. 

For the reason stated above, the 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest and designates the 

proposal as operative upon filing.16

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–BX–2011–051 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–BX–2011–051. This file 

number should be included on the 

subject line if e-mail 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 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 76, No. 155 / Thursday, August 11, 2011 / Notices 49809 

17 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 64958 

(July 25, 2011) (SR–NASDAQ–2011–095). See also 

SR–NASDAQ–2011–107. 

4See, e.g., Securities Exchange Act Release Nos. 

63843 (February 4, 2011), 76 FR 7884 (February 11, 

2011) (SR–ISE–2010–115); and 63314 (November 

12, 2010), 75 FR 70957 (November 19, 2010) (SR– 

CBOE–2010–084). 

5One exchange has thus far filed a proposed rule 

change respecting the Series 56, which has become 

effective. See Securities Exchange Act Release No. 

64699 (June 17, 2011), 76 FR 36945 (June 23, 2011) 

(SR–CBOE–2011–056). 

6Proprietary trading firms do not have customers. 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78(c)(3)(B) [sic]. 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of BX. 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 publicly available. All 

submissions should refer to File 

Number SR–BX–2011–051 and should 

be submitted on or before September 1, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20357 Filed 8–10–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65040; File No. SR– 

NASDAQ–2011–108] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to the 

Proprietary Traders Qualification 

Examination (‘‘Series 56’’) 

August 5, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 2 thereunder, 

notice is hereby given that on August 1, 

2011, The NASDAQ Stock Market LLC 

(the ‘‘Exchange’’ or ‘‘NASDAQ’’) 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 the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NASDAQ is filing with the 

Commission the content outline and 

selection specifications for the 

Proprietary Traders Qualification 

Examination (‘‘Series 56’’) program. 

NASDAQ will notify its membership 

when the examination becomes 

available. 

The text of the proposed rule change 

is available at http:/nasdaq.

cchwallstreet.com/, at NASDAQ’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. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Recently, NASDAQ filed a proposed 

rule change to recognize a new category 

of limited representative registration for 

proprietary traders.3 Specifically, 

NASDAQ will recognize the new 

registration category ‘‘Proprietary 

Trader’’ and the new examination, the 

Series 56. The new Proprietary Trader 

category would be limited to persons 

engaged solely in proprietary trading. 

NASDAQ has been working with the 

Financial Industry Regulatory Authority 

(‘‘FINRA’’) and certain other exchanges, 

many of which have recently enhanced 

their registration requirements to 

require the registration of associated 

persons,4 to develop the content outline 

and qualification examination that 

would be applicable to proprietary 

traders. The Series 56 examination 

program is shared by NASDAQ and the 

following self-regulatory organizations 

(‘‘SROs’’): Boston Options Exchange; C2 

Options Exchange, Incorporated; 

Chicago Board Options Exchange, 

Incorporated; Chicago Stock Exchange, 

Incorporated; International Securities 

Exchange, LLC; NASDAQ OMX BX, 

Inc.; NASDAQ OMX PHLX LLC; 

National Stock Exchange, Incorporated; 

New York Stock Exchange, LLC; NYSE 

AMEX, Incorporated; and NYSE ARCA, 

Incorporated. Upon request by the SROs 

referenced above, FINRA staff convened 

a committee of industry representatives, 

NASDAQ staff and staff from the other 

SROs referenced above, to develop the 

criteria for the Series 56 examination 

program. This new qualification 

examination, the Series 56, was recently 

filed with the Commission.5

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.6

The qualification examination 

consists of 100 multiple choice 

questions. Candidates will have 150 

minutes to complete the exam. The 

content outline describes the following 

topical sections comprising the 

examination: Personnel, Business 

Conduct and Recordkeeping and 

Reporting Requirements, 9 questions; 

Markets, Market Participants, 

Exchanges, and Self Regulatory 

Organizations, 8 questions; Types and 

Characteristics of Securities and 

Investments, 20 questions; Trading 

Practices and Prohibited Acts, 50 

questions; and Display, Execution, and 

Trading Systems, 13 questions. 

Representatives from the applicable 

SROs intend to meet on a periodic basis 

to evaluate and, as necessary, update, 

the Series 56 examination program. 

NASDAQ understands that the other 

applicable SROs will also file with the 

Commission similar filings regarding 

the Series 56 examination program. 

NASDAQ proposes to implement the 

Series 56 examination program upon 

availability in WebCRD and notification 

to its membership. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 7 in general, and furthers the 

objectives of Section 6(c)(3)(B) of the 

Act,8 pursuant to which a national 

securities exchange prescribes standards 

of training, experience and competence 

for members and their associated 

persons, in particular, by offering a new, 

qualification examination for 


srobinson on DSK4SPTVN1PROD with NOTICES