Document ID: SEC-2023-0793-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange LLC
Posted Date: 2023-07-31T04:00Z

[Federal Register Volume 88, Number 145 (Monday, July 31, 2023)]
[Notices]
[Pages 49542-49545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16107]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97980; File No. SR-IEX-2023-07]

Self-Regulatory Organizations: Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend IEX 
Rule 2.160 To Provide Eligible Individuals Another Opportunity To Elect 
To Participate in the Maintaining Qualifications Program

July 25, 2023.
    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 July 13, 2023, the Investors Exchange LLC (``IEX'' or 
the ``Exchange'') 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

    Pursuant to the provisions of Section 19(b)(1) under the Act,\4\ 
and Rule 19b-4 thereunder,\5\ IEX is filing with the Commission a 
proposed rule change to amend IEX Rule 2.160 to provide eligible 
individuals another opportunity to elect to participate in the 
Maintaining Qualifications Program. The Exchange has designated this 
proposal as non-controversial pursuant to Section 19(b)(3)(A)(iii) of 
the Act \6\ and provided the Commission with the notice required by 
Rule 19b-4(f)(6)(iii) thereunder.\7\
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6)(iii).
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    The text of the proposed rule change is available at the Exchange's 
website at www.iextrading.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

[[Page 49543]]

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    IEX is proposing to amend Supplementary Material .01 to IEX Rule 
2.160(p)(c) to provide eligible individuals another opportunity to 
elect to participate in in the Maintaining Qualifications Program 
(``MQP''). This proposed rule change is based on a substantively 
identical filing made by the Financial Industry Regulatory Authority, 
Inc. (``FINRA''), which established a second enrollment period for the 
MQP that ends on December 31, 2023 (``Second Enrollment Period'').\8\
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    \8\ See Securities Exchange Act Release No. 97184 (March 22, 
2023) 88 FR 18359 (March 28, 2023) (SR-FINRA-2023-005) (``FINRA MQP 
Second Enrollment Period Filing'').
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    On November 28, 2022, IEX amended IEX Rule 2.160 to, among other 
things, provide eligible individuals who terminate any of their 
representative or principal registration categories the option of 
maintaining their qualification for any terminated registration 
categories by completing annual continuing education through the new 
MQP.\9\ By that time, however, the First Enrollment Period, defined 
below, had expired leaving many eligible individuals unable to 
participate in the MQP. This proposed rule change will provide those 
eligible individuals a second opportunity to elect to participate in 
the MQP to maintain their qualifications.
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    \9\ See Securities Exchange Act Release No. 96473 (December 9, 
2022) 87 FR 77152 (December 16, 2022) (SR-IEX-2022-11).
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    Prior to the MQP, individuals whose registrations as 
representatives or principals had been terminated for two or more years 
could reregister as representatives or principals only if they 
requalified by retaking and passing the applicable representative or 
principal-level examination or if they obtained a waiver of such 
examination(s) (the ``two-year qualification period''). The MQP 
provides these individuals an alternative means of staying current on 
their regulatory and securities knowledge following the termination of 
a registration.\10\ Specifically, the MQP provides eligible individuals 
a maximum of five years following the termination of a representative 
or principal registration category to reregister without having to 
requalify by examination or having to obtain an examination waiver, 
subject to satisfying the conditions and limitations of the MQP, 
including the annual completion of all prescribed continuing education.
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    \10\ The MQP does not eliminate the two-year qualification 
period. Thus, eligible individuals who elect not to participate in 
the MQP can continue to avail themselves of the two-year 
qualification period (i.e., they can reregister within two years of 
terminating a registration category without having to requalify by 
examination or having to obtain an examination waiver).
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    Supplementary Material .01 to IEX Rule 2.160(p)(c) (Eligibility of 
Other Persons to Participate in the Continuing Education Program 
Specified in Subparagraph (c) of Rule 2.160(p)), describes a look-back 
provision that extended the option of participating in the MQP to 
individuals who: (1) were registered in a representative or principal 
registration category with FINRA within two years immediately preceding 
March 15, 2022; or (2) were participating in the Financial Services 
Affiliate Waiver Program (``FSAWP'') \11\ pursuant to Supplementary 
Material .01 to Rule 2.160(g) immediately preceding March 15, 2022 
(collectively, ``Look-Back Individuals'').
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    \11\ The FSAWP is a waiver program for eligible individuals who 
have left a member firm to work for a foreign or domestic financial 
services affiliate of a member firm. FINRA stopped accepting new 
participants for the FSAWP beginning on March 15, 2022; however, 
individuals who were already participating in the FSAWP prior to 
that date had the option of continuing in the FSAWP.
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    In the FINRA MQP Second Enrollment Period Filing, FINRA noted that 
in Regulatory Notice 21-41 (November 17, 2021), it announced that Look-
Back Individuals who wanted to take part in the MQP were required to 
make their election between January 31, 2022, and March 15, 2022 (the 
``First Enrollment Period''). In addition to the announcement in 
Regulatory Notice 21-41, FINRA notified the Look-Back Individuals about 
the MQP and the First Enrollment Period via two separate mailings of 
postcards to their home addresses and communications through their 
FINRA Financial Professional Gateway (``FinPro'') accounts.\12\ In that 
same filing, FINRA noted that shortly after the First Enrollment Period 
ended, a number of Look-Back Individuals contacted FINRA and indicated 
that they had only recently become aware of the MQP.\13\ In addition, 
FINRA noted that the original six-week enrollment period may not have 
provided Look-Back Individuals with adequate time to evaluate whether 
they should participate in the MQP.\14\ Thus, FINRA both established a 
Second Enrollment Period for the MQP, which lasts until December 31, 
2023, and set forth a robust communication campaign involving more 
active outreach to enhance public awareness of Second Enrollment Period 
for the MQP.\15\
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    \12\ Look-Back Individuals were able to notify FINRA of their 
election to participate in the MQP through their FinPro accounts.
    \13\ See supra note 8.
    \14\ See Id.
    \15\ See Id.
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    IEX, like FINRA, believes that greater public awareness of the MQP 
and FINRA's additional outreach efforts, coupled with the longer 
duration of the Second Enrollment Period (the first enrollment period 
last six weeks), should help notify as many Look-Back-Individuals as 
possible of their options with respect to the MQP, and should provide 
them ample time to decide whether to participate in the MQP.\16\
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    \16\ See Id.
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    Thus, IEX proposes to amend Supplementary Material .01 to IEX Rule 
2.160(p)(c) to conform with FINRA's recent amendments to FINRA Rule 
1240.01. Specifically, IEX proposes to add language stating that 
persons eligible for the MQP look-back period either: (i) had to elect 
to participate with FINRA in the MQP by March 15, 2022, or (ii) shall 
make their election to participate with IEX in the MQP during a new 
enrollment period that begins on [date of the filing] and ends on 
December 31, 2023. IEX also proposes to add language stating that Look-
Back Individuals who participate in the MQP shall have a participation 
period of five years following the termination of their registration 
categories, and that they must complete any prescribed 2022 and 2023 
continuing education content by March 31, 2024.\17\ Lastly, IEX 
proposes to delete the last sentence of Supplementary Material .01 to 
IEX Rule 2.160(p)(c) that describes how FINRA adjusted participation 
periods for individuals who enrolled in the MQP during the first 
enrollment period.
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    \17\ Look-Back Individuals who elect to enroll in the MQP during 
the Second Enrollment Period would also need to pay the annual 
program fee of $100 for both 2022 and 2023 at the time of their 
enrollment.
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    Look-Back Individuals who elect to enroll during the Second 
Enrollment Period would need to notify FINRA of their election to 
participate in the MQP through their FinPro accounts.\18\ IEX also 
notes that Look-Back Individuals who elect to participate in the MQP 
during the Second Enrollment Period

[[Page 49544]]

would continue to be subject to all of the other MQP eligibility and 
participation conditions. For example, as clarified in the proposed 
rule change, Look-Back Individuals electing to participate during the 
Second Enrollment Period would have only a maximum of five years 
following the termination of a registration category in which to 
reregister without having to requalify by examination or having to 
obtain an examination waiver.\19\
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    \18\ See Second Enrollment Period, https://www.finra.org/registration-exams-ce/continuing-education/CE-transformation/mqp#Second-Enrollment.
    \19\ For example, if a Look-Back Individual terminated a 
registration category on May 1, 2020, and elects to participate in 
the MQP on December 1, 2023, the individual's maximum participation 
period would be five years starting on May 1, 2020, and ending no 
later than May 1, 2025. If the individual does not reregister with a 
member firm by May 1, 2025, the individual would need to requalify 
by examination or obtain an examination waiver in order to 
reregister after that date.
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    IEX has filed the proposed rule change for immediate effectiveness 
and has requested that the Commission waive the 30-day operative delay. 
The operative date will be the date of the filing of the proposed rule 
change if the Commission grants the waiver.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of Sections 6(b) \20\ and 6(b)(5) of the Act,\21\ in 
particular, in that it is designed 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. IEX believes that 
providing Look-Back Individuals a second opportunity to elect to 
participate in the MQP is warranted because participation in the MQP 
would reduce unnecessary impediments to requalification for these 
individuals without diminishing investor protection. In addition, the 
proposed rule change is consistent with other goals, such as the 
promotion of diversity and inclusion in the securities industry by 
attracting and retaining a broader and diverse group of professionals. 
The MQP also allows the industry to retain expertise from skilled 
individuals, protecting investors with the advantage of greater 
experience among individuals working in the industry. IEX believes that 
providing Look-Back Individuals a second opportunity to elect to 
participate in the MQP will further these goals and objectives.
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    \20\ 15 U.S.C. 78f(b).
    \21\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed rule change is consistent with 
the provisions of Section 6(b)(5) of the Act,\22\ which requires, among 
other things, that Exchange Rules must be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, and, in general, to protect investors 
and the public interest, and Section 6(c)(3) of the Act,\23\ which 
authorizes the Exchange to prescribe standards of training, experience 
and competence for persons associated with Exchange.
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    \22\ 15 U.S.C. 78f(b)(5).
    \23\ 15 U.S.C. 78f(c)(3).
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    Finally, as described in the Purpose section, the proposed rule 
change seeks to align the Exchange Rules with changes to FINRA rules 
which have been allowed to take effect by the Commission.\24\ Thus, 
this rule change raises no novel issues that have not already been 
considered by and accepted by the Commission.
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    \24\ See supra note 8.
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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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes that 
the proposed rule change, which harmonizes its rules with rule changes 
adopted by FINRA, will reduce the regulatory burden placed on market 
participants engaged in trading activities across different markets.

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

    IEX has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \25\ and Rule 19b-4(f)(6) thereunder.\26\ 
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 and Rule 19b-
4(f)(6)(iii) thereunder.
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    \25\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \26\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \27\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\28\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. IEX has indicated that 
the immediate operation of the proposed rule change is appropriate 
because it would allow the Exchange to implement the proposed changes 
to its continuing education rules without delay, thereby eliminating 
the possibility of a significant regulatory gap between the FINRA rules 
and the Exchange rules, providing more uniform standards across the 
securities industry, and helping to avoid confusion for Exchange 
members that are also FINRA members. IEX also noted that FINRA plans to 
conduct additional public outreach efforts to promote awareness of the 
MQP and the availability of the Second Enrollment Period among Look-
Back Individuals. Therefore, IEX indicated that the immediate operation 
of the proposed rule change is also appropriate because it would help 
to further notify Look-Back Individuals of their options and provide 
additional time for them to consider whether they wish to participate 
in the MQP program before the December 31, 2023 deadline. For these 
reasons, the Commission believes that waiver of the 30-day operative 
delay for this proposal is consistent with the protection of investors 
and the public interest. Accordingly, the Commission hereby waives the 
30-day operative delay and designates the proposal operative upon 
filing.\29\
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    \27\ 17 CFR 240.19b-4(f)(6).
    \28\ 17 CFR 240.19b-4(f)(6)(iii).
    \29\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change'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) \30\ of the Act to

[[Page 49545]]

determine whether the proposed rule change should be approved or 
disapproved.
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    \30\ 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-IEX-2023-07 on the subject line.

Paper Comments

     Send paper comments in triplicate to: Secretary, 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 
20549-1090.

All submissions should refer to File Number SR-IEX-2023-07. 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 website (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 website 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 Exchange. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to File Number SR-IEX-2023-07 and should be submitted on 
or before August 21, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
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    \31\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-16107 Filed 7-28-23; 8:45 am]
BILLING CODE 8011-01-P