Document ID: SEC-2014-1615-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2014-09-26T04:00Z

[Federal Register Volume 79, Number 187 (Friday, September 26, 2014)]
[Notices]
[Pages 57997-57999]
From the Federal Register Online via the Government Printing 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 rule-comments@sec.gov. 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