Document ID: SEC-2023-0352-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2023-03-28T04:00Z

[Federal Register Volume 88, Number 59 (Tuesday, March 28, 2023)]
[Notices]
[Pages 18359-18361]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-06322]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97184; File No. SR-FINRA-2023-005]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend FINRA Rule 1240.01 To Provide Eligible 
Individuals Another Opportunity To Elect To Participate in the 
Maintaining Qualifications Program

March 22, 2023.
    Pursuant to 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 March 14, 2023, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') 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 FINRA. FINRA has designated 
the proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. 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.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA Rule 1240.01 (Eligibility of 
Other Persons to Participate in the Continuing Education Program 
Specified in Paragraph (c) of this Rule) to provide eligible 
individuals another opportunity to elect to participate in the 
Maintaining Qualifications Program (``MQP'').
    Below is the text of the proposed rule change. Proposed new 
language is italicized; proposed deletions are in brackets.
* * * * *

1200. REGISTRATION AND QUALIFICATION

* * * * *

1240. Continuing Education

    This Rule prescribes requirements regarding the continuing 
education of registered persons. The requirements shall consist of a 
Regulatory Element and a Firm Element as set forth below. This Rule 
also sets forth continuing education programs through which 
specified persons may maintain their qualification in a 
representative or principal registration category following the 
termination of that registration category.
    (a) through (c) No Change.

   Supplementary Material: --------------

.01 Eligibility of Other Persons to Participate in the Continuing 
Education Program Specified in Paragraph (c) of this Rule. A person 
registered in a representative or principal registration category 
with FINRA within two years immediately preceding March 15, 2022 
shall be eligible to participate in the continuing education program 
under paragraph (c) of this Rule, provided that he or she satisfies 
the conditions set forth in paragraphs (c)(1) and (c)(3) through 
(c)(6) of this Rule. In addition, a person participating in the 
Financial Services Affiliate Waiver Program under Rule 1210.09 
immediately preceding March 15, 2022 shall be eligible to 
participate in the continuing education program under paragraph (c) 
of this Rule, provided that he or she satisfies the conditions set 
forth in paragraphs (c)(3), (c)(5) and (c)(6) of this Rule. Persons 
eligible under this Supplementary Material .01 shall make their 
election to participate in the continuing education program under 
paragraph (c) of this Rule either (1) between January 31, 2022, and 
March 15, 2022; or (2) between March 15, 2023, and December 31, 2023 
[by March 15, 2022]. If such persons elect to participate in the 
continuing education program, their participation period shall also 
be for a period of five years following the termination of their 
registration categories, as with other participants under paragraph 
(c) of this Rule [FINRA shall adjust their participation period by 
deducting from that period the amount of time that has lapsed 
between the date that such persons terminated their registration 
categories and March 15, 2022]. In addition, eligible persons who 
elect to participate in the continuing education program between 
March 15, 2023, and December 31, 2023, must complete any prescribed 
2022 and 2023 continuing education content by March 31, 2024.
    .02 No Change.

* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA 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. FINRA 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
    On September 21, 2021, the Commission approved a proposed rule 
change to amend FINRA Rules 1210 (Registration Requirements) and 1240 
(Continuing Education Requirements) 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 a new program, the MQP.\4\
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    \4\ See Securities Exchange Act Release No. 93097 (September 21, 
2021), 86 FR 53358 (September 27, 2021) (Order Approving File No. 
SR-FINRA-2021-015).
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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.\5\ Specifically, the MQP

[[Page 18360]]

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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    \5\ 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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    Under FINRA Rule 1240.01, the MQP has a look-back provision that, 
subject to specified conditions, extended the option to participate in 
the MQP to individuals who: (1) were registered as a representative or 
principal within two years immediately prior to March 15, 2022 (the 
implementation date of the MQP); and (2) individuals who were 
participating in the Financial Services Affiliate Waiver Program 
(``FSAWP'') under FINRA Rule 1210.09 (Waiver of Examinations for 
Individuals Working for a Financial Services Industry Affiliate of a 
Member) immediately prior to March 15, 2022 (collectively, ``Look-Back 
Individuals'').\6\
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    \6\ 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 Regulatory Notice 21-41 (November 17, 2021), FINRA 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.\7\
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    \7\ Look-Back Individuals were able to notify FINRA of their 
election to participate in the MQP through their FinPro accounts.
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    Shortly after the First Enrollment Period had ended, a number of 
Look-Back Individuals contacted FINRA and indicated that they had only 
recently become aware of the MQP. FINRA has received anecdotal 
information that a number of these individuals may not have learned of 
the MQP, or the First Enrollment Period, in a timely manner, or at all, 
due to communication and operational issues.\8\ In addition, the 
original six-week enrollment period may not have provided Look-Back 
Individuals with sufficient time to evaluate whether they should 
participate in the MQP. For these reasons, FINRA is proposing to amend 
Rule 1240.01 to provide Look-Back Individuals a second opportunity to 
elect to participate in the MQP (the ``Second Enrollment Period'').\9\ 
The Second Enrollment Period will be between March 15, 2023, and 
December 31, 2023. In addition, the proposed rule change requires that 
Look-Back Individuals who elect to participate in the MQP during the 
Second Enrollment Period complete any prescribed 2022 and 2023 MQP 
content by March 31, 2024.\10\
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    \8\ This may have been a result of the timing of FINRA's 
announcements relating to the MQP, which coincided with the holiday 
season and the transition to the New Year. Further, given that Look-
Back Individuals were out of the industry at the time of these 
announcements, it was unlikely that they would have learned of the 
MQP, or the First Enrollment Period, through informal communication 
channels.
    \9\ The current rule text also provides that if Look-Back 
Individuals elect to participate in the MQP, their five-year 
participation period will be adjusted by deducting from that period 
the amount of time that has lapsed between the date that they 
terminated their registrations and March 15, 2022. To reflect the 
availability of the Second Enrollment Period, the proposed rule 
change clarifies that for all Look-Back Individuals who elect to 
participate in the MQP, their participation period would also be for 
a period of five years following the termination of their 
registration categories, as with other MQP participants.
    \10\ 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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    FINRA believes that Look-Back Individuals generally have greater 
awareness of the MQP, including due to news coverage, since the 
program's launch.\11\ As part of the rollout of the Second Enrollment 
Period, FINRA will also reach out to any Look-Back Individuals who 
specifically expressed an interest in participating in the MQP on or 
after March 15, 2022.\12\ To further help ensure that all Look-Back 
Individuals are aware of the MQP as well as the availability of the 
Second Enrollment Period, FINRA plans to engage in a robust second 
communication campaign. Specifically, FINRA plans to send postcards to 
their home addresses and deliver the information to their FinPro 
accounts, similar to the first campaign. In addition, FINRA plans to 
engage in active outreach to journalists and social and media outlets 
to further enhance public awareness.
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    \11\ See, e.g., Joanne Cleaver, FINRA Sets Big Change in Motion 
with New Option for Licensing Grace Period, InvestmentNews (June 23, 
2022), https://www.investmentnews.com/finra-sets-big-change-in-motion-with-new-option-for-licensing-grace-period-222942.
    \12\ As noted, a number of Look-Back Individuals contacted FINRA 
directly on or after March 15, 2022. FINRA will reach out to these 
individuals to make them aware of the availability of the Second 
Enrollment Period.
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    FINRA believes that greater public awareness of the MQP and FINRA's 
additional outreach efforts, coupled with a nine-month enrollment 
period, should help ensure that all Look-Back Individuals are aware of 
the MQP and the availability of the Second Enrollment Period and should 
provide them with ample time to decide whether to participate in the 
MQP.
    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 a manner to be determined by FINRA.\13\ 
FINRA also notes that Look-Back Individuals who elect to participate in 
the MQP during the Second Enrollment Period 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.\14\
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    \13\ FINRA anticipates that Look-Back Individuals will make 
their selection to enroll in the MQP during the Second Enrollment 
Period through their FinPro accounts. See Enrolling in the MQP, 
https://www.finra.org/registration-exams-ce/finpro/mqp (describing 
the MQP enrollment process). FINRA will inform Look-Back Individuals 
if it determines to provide an alternative enrollment method.
    \14\ 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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    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the SEC waive the requirement that 
the proposed rule change not become operative for 30 days after the 
date of the filing. The operative date will be the date of filing of 
the proposed rule change, if the SEC grants the waiver.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\15\ which requires, among 
other things, that FINRA rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in

[[Page 18361]]

general, to protect investors and the public interest. FINRA 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, providing investors with the advantage of greater 
experience among the individuals working in the industry. FINRA 
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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    \15\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. Further, FINRA provided an 
extensive economic impact assessment relating to the MQP as part of the 
original rule filing.\16\
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    \16\ See Securities Exchange Act Release No. 92183 (June 15, 
2021), 86 FR 33427 (June 24, 2021) (Notice of Filing of File No. SR-
FINRA-2021-015).
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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

    FINRA has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\ 
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) thereunder.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \19\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\20\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. FINRA has asked the 
Commission to waive the 30-day operative delay so that the proposal may 
become operative immediately upon filing. FINRA has indicated that 
immediate operation of the proposed rule change is appropriate because 
it would help to ensure that there is sufficient time for FINRA to 
provide adequate notification of the Second Enrollment Period to Look-
Back Individuals, as well as for these individuals to consider whether 
they wish to participate in the program before the December 31, 2023 
deadline.\21\ FINRA intends to engage in outreach efforts and provide a 
nine-month enrollment period in order to ensure that all Look-Back 
Individuals are aware of the MQP and the availability of the Second 
Enrollment Period. 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.\22\
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    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 17 CFR 240.19b-4(f)(6)(iii).
    \21\ See supra Item II.
    \22\ 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) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 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-FINRA-2023-005 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-FINRA-2023-005. 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 FINRA. All comments received will be 
posted without change. Persons submitting comments are cautioned that 
we do not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
FINRA-2023-005 and should be submitted on or before April 18, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-06322 Filed 3-27-23; 8:45 am]
BILLING CODE 8011-01-P