Document ID: SEC-2015-2047-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC,
Posted Date: 2015-12-11T05:00Z

[Federal Register Volume 80, Number 238 (Friday, December 11, 2015)]
[Notices]
[Pages 77058-77061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31278]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76579; File No. SR-NYSEMKT-2015-100]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending Exchange Rules 
To Establish the Securities Trader and Securities Trader Principal 
Registration Categories

December 8, 2015.
    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 November 24, 2015, 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, II, 
and III 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 amend Exchange Rules to (1) prescribe the 
Securities Traders examination (Series 57) (the ``Series 57 
Examination'') as the qualifying examination for registered Market 
Makers, Market Maker Authorized Traders (``MMATs''), and Floor Brokers, 
(2) eliminate reference to the S501 Program as a continuing education 
requirement, and (3) rename the category ``Proprietary Trader'' as 
``Securities Trader'' in Exchange rules without making any substantive 
change to the definition of such term. 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.

[[Page 77059]]

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
    The Exchange proposes to amend Exchange Rules 921NY, 921.1NY and 
931NY to prescribe the Series 57 Examination as the qualifying 
examination for registered Market Makers, MMATs, and Floor Brokers.
    Exchange Rule 921NY currently specifies that an applicant must pass 
an examination prescribed by the Exchange in order to register as a 
Market Maker. Exchange Rule 921.1NY currently specifies that an 
applicant must pass an examination prescribed by the Exchange in order 
to register as a MMAT. And Exchange Rule 931NY currently specifies that 
an applicant must pass an examination prescribed by the Exchange in 
order to register as a Floor Broker. For purposes of these rules, NYSE 
Amex Options has currently prescribed the successful completion of the 
Proprietary Trader Qualification Examination (``Series 56 
Examination'') as the qualifying exam for Market Makers, MMATs and 
Floor Brokers. In addition, individuals currently engaged solely in 
proprietary trading, who are not registered as Market Makers, MMATs or 
Floor Brokers, may qualify for registration by successful completion of 
the Series 56 Examination or the General Securities Representative 
Qualification Examination (``Series 7 Examination'').
    The Exchange proposes to change the prescribed examination for 
Market Makers, MMATs and Floor Brokers from the Series 56 Examination 
to the Series 57 Examination. With this proposed rule change, Market 
Makers, MMATs, Floor Brokers and individuals engaged solely in 
proprietary trading will qualify for registration by passing the Series 
57 Examination.\4\
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    \4\ Currently, individuals engaged solely in proprietary trading 
can alternatively take the Series 7 Examination as a qualifying 
exam. After implementation of the Series 57 Examination, an 
individual engaged solely in proprietary trading will be required to 
take the Series 57 Examination as the Series 7 Examination would no 
longer serve as a qualifying exam to engage solely in proprietary 
trading.
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    The Series 57 Examination is being developed by the Financial 
Industry Regulatory Authority, Inc. (``FINRA'') in consultation with 
industry and exchange representatives. The Series 57 examination will 
be based on the current job functions of securities traders and will 
include elements of the Series 55 Equity Trader Qualification 
Examination (which is required to engage in over-the-counter securities 
trading) and the current Series 56 Registered Proprietary Traders 
Examination (which is required for associated persons engaged in 
securities trading).\5\ The Series 57 Examination will be based on 
industry rules applicable to trading of equity securities and listed 
options contracts. The Series 57 examination will cover, among other 
things, recordkeeping and recording requirements; types and 
characteristics of securities and investments; trading practices; and 
display, execution, and trading systems.\6\ As such, the Exchange 
believes that an applicant who has passed the Series 57 Examination is 
shown to be qualified to act in the capacity of a Market Maker, Floor 
Broker, MMAT or engage solely in proprietary trading on NYSE Amex 
Options.
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    \5\ While the Series 56 Examination is required for associated 
persons engaged in proprietary trading, Exchange rules do not 
require such individuals to work at a proprietary trading firm only. 
These individuals can work at any type of firm. However, they may 
only engage in proprietary trading at the firm where they are 
employed. For example, an individual engaged in proprietary trading 
at a full service firm, who is registered solely to engage in 
proprietary trading, may not act as a registered representative for 
that firm.
    \6\ See Securities Exchange Act Release No. 75783 (August 28, 
2015), 80 FR 53369 (September 3, 2015) (SR-FINRA-2015-017) (Order 
Approving a Proposed Rule Change to Establish the Securities Trader 
and Securities Trader Principal Registration Categories).
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    While NYSE Amex Options will no longer be offering the Series 56 
Examination as a qualifying exam to new applicants, the Exchange will 
continue to recognize individuals who have passed that exam as having 
successfully completed a qualifying exam. Individuals who have taken 
the Series 56 Examination and have registered in Web CRD \7\ as 
proprietary traders will have their registration converted in Web CRD 
on January 4, 2016 to a securities trader. Additionally, individuals 
currently engaged solely in proprietary trading, who currently qualify 
for registration by passing the Series 7 Examination and have 
registered in Web CRD as Proprietary Traders will have their 
registration converted in Web CRD on January 4, 2016 to a Securities 
Trader without having to take any additional examinations and without 
having to take any other actions. Individuals presently registered as 
Market Makers, MMATs, Floor Brokers or those that engage solely in 
proprietary trading on NYSE Amex Options, who have previously passed a 
qualifying exam will not be required to take the Series 57 Examination 
as a condition of their continued registration. However, the 
registration of individuals who have taken the Series 56 Examination 
will not be converted to a Securities Trader if they have not 
registered as a Proprietary Trader in Web CRD by December 28, 2015. 
After that date, these individuals will be required to take the Series 
57 Examination in order to register as securities traders. In addition, 
individuals registered as proprietary traders in Web CRD prior to the 
effective date of the proposed rule change will be eligible to register 
as securities traders without having to take any additional 
examinations, provided that no more than two years have passed between 
the date the individual last registered as a proprietary trader and the 
date the individual registers as a securities trader.\8\
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    \7\ Web CRD is the central licensing and registration system for 
the U.S. securities industry and its regulators.
    \8\ See Rule 341A, Commentary .03.
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    The Exchange also proposes to amend Exchange Rules 341 and 341A. 
Under the proposed rule change, the Exchange would rename the category 
``Proprietary Trader'' as ``Securities Trader'' in Rule 341 without 
making any substantive change to the definition of such term. A 
Securities Trader, similar to what is currently required for a 
Proprietary Trader, would be required to register as such on Web CRD 
and pass the Series 57 Examination described above, but would not be 
permitted to function in an agency capacity or otherwise conduct a 
public business in securities. Additionally, Rule 341 requires that an 
individual associated with an Exchange member with supervisory 
responsibility over proprietary trading activities qualify and register 
as a Proprietary Trader Principal. Under the proposed rule change, the 
Exchange would replace references in Rule 341 to Proprietary Trader 
Principal with Securities Trader Principal.

[[Page 77060]]

    Further, registered persons are required under Rule 341A to comply 
with the Exchange's continuing education requirements. Specifically, 
under Rule 341A(a)(1), individuals engaged solely in proprietary 
trading are required to complete the S501 Program to fulfill the 
Regulatory Element of their continuing education requirement. With the 
transition to the Series 57 Examination, the S501 Program will no 
longer be required; such individuals will instead be required to 
complete the S101 Program to fulfill the Regulatory Element of their 
continuing education requirement.
    The Exchange notes that in order to qualify as a Proprietary Trader 
Principal, an associated person currently must pass the Series 56 
Examination or the Series 7 Examination, and the Series 24 Examination. 
Once the Exchange has adopted the Series 57 Examination as the 
qualifying exam for a Securities Trader, associated persons would need 
to pass the Series 57 Examination and the Series 24 Examination in 
order to register as a Securities Trader Principal. Only those 
individuals who are registered as such would be qualified to supervise 
a Securities Trader. Individuals registered as a General Securities 
Principal would not be qualified to supervise a Securities Trader, nor 
would a Securities Trader Principal be able to act as a General 
Securities Principal, unless the individual is registered as a 
Securities Trader Principal and a General Securities Principal.
    Within 30 days of filing the proposed rule change, the Exchange 
will issue a Regulatory Bulletin announcing the operative date of the 
rule change, which will not be sooner than January 4, 2016.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (``Act''),\9\ in general, 
and furthers the objectives of Section 6(c)(3)(B) \10\ of the Act, 
pursuant to which a national securities exchange prescribes standards 
of training, experience and competence for members and their associated 
persons, and Section 6(b)(5) \11\ of the Act, in particular, in that it 
is designed, among other things, 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. The Exchange 
believes that prescribing the Series 57 Examination for Market Makers, 
MMATs, Floor Brokers and for individuals engaged solely in proprietary 
trading is appropriate because the Series 57 Examination addresses 
industry topics that establish the foundation for the regulatory and 
procedural knowledge necessary for such individuals to appropriately 
register under Exchange rules. In addition, the Series 57 Examination 
is expected to be shared by other exchanges and become the industry 
standard.\12\ Accordingly, adopting the Series 57 Examination will help 
to promote consistency in examination requirements and uniformity 
across markets.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(c)(3)(B).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ See supra, note 6.
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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 not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change does 
not impose any additional examination burdens on persons who are 
already registered. There is no obligation to take the Series 57 
examination in order to continue in their present duties, so the 
proposed rule change is not expected to disadvantage current registered 
persons relative to new entrants in this regard.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\ 
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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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
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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) \17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 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-2015-100 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-2015-100. 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

[[Page 77061]]

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 Section, 100 F Street NE., Washington, DC 20549-1090. Copies 
of the filing will also be available for inspection and copying at the 
NYSE's principal office and on its Internet Web site at www.nyse.com. 
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-2015-
100 and should be submitted on or before January 4, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31278 Filed 12-10-15; 8:45 am]
 BILLING CODE 8011-01-P