Document ID: SEC-2013-1986-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange LLC
Posted Date: 2013-11-20T05:00Z

[Federal Register Volume 78, Number 224 (Wednesday, November 20, 2013)]
[Notices]
[Pages 69720-69723]
From the Federal Register Online via the Government Printing 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 rule-comments@sec.gov. 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