Document ID: SEC-2012-0502-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2012-03-29T04:00Z

[Federal Register Volume 77, Number 61 (Thursday, March 29, 2012)]
[Notices]
[Pages 19042-19044]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7571]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66645; File No. SR-PHLX-2012-37]

Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ OMX PHLX LLC Relating 
to the Proprietary Traders Qualification Examination (``Series 56'')

March 22, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on March 21, 2012, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been

[[Page 19043]]

prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing with the Securities and Exchange Commission 
(``Commission'') the content outline and selection specifications for 
the Proprietary Traders Qualification Examination (``Series 56'') 
program. Phlx will implement the proposal upon notice to its 
membership.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nasdaqtrader.com/micro.aspx?id=PHLXRulefilings, 
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 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.

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

1. Purpose
    Recently, Phlx filed a proposed rule change to recognize a new 
category of limited representative registration for proprietary 
traders.\3\ Specifically, Phlx will recognize the new registration 
category ``Proprietary Trader'' and the new examination, the Series 56. 
The new Proprietary Trader category would be limited to persons engaged 
solely in proprietary trading, market making or effecting transactions 
on behalf of a broker-dealer account.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 66497 (March 1, 
2012), 77 FR 13668 (March 7, 2012) (SR-Phlx-2012-23).
---------------------------------------------------------------------------

    The Exchange has been working with the Financial Industry 
Regulatory Authority (``FINRA'') and certain other markets, many of 
which have recently enhanced their registration requirements to require 
the registration of associated persons,\4\ to develop the content 
outline and qualification examination that would be applicable to 
proprietary traders. The Series 56 examination program is shared by 
Phlx and the following: Boston Options Exchange; C2 Options Exchange, 
Incorporated; Chicago Board Options Exchange, Incorporated; Chicago 
Stock Exchange, Inc.; International Securities Exchange, LLC; The 
NASDAQ Stock Market LLC; National Stock Exchange, Inc.; New York Stock 
Exchange LLC; NYSE AMEX LLC; and NYSE ARCA, Inc. FINRA staff convened a 
committee of industry representatives and staff of the various markets 
to develop the criteria for the Series 56 examination program.
---------------------------------------------------------------------------

    \4\ See e.g., Securities Exchange Act Release Nos. 63843 
(February 4, 2011), 76 FR 7884 (February 11, 2011) (SR-ISE-2010-
115); and 63314 (November 12, 2010), 75 FR 70957 (November 19, 2010) 
(SR-CBOE-2010-084).
---------------------------------------------------------------------------

    The Series 56 examination tests a candidate's knowledge of 
proprietary trading generally and the industry rules applicable to 
trading of equity securities and listed options contracts. The Series 
56 examination covers, among other things, recordkeeping and recording 
requirements, types and characteristics of securities and investments, 
trading practices and display execution and trading systems. While the 
examination is primarily dedicated to topics related to proprietary 
trading, the Series 56 examination also covers a few general concepts 
relating to customers.\5\
---------------------------------------------------------------------------

    \5\ Proprietary trading firms don not have customers.
---------------------------------------------------------------------------

    The qualification examination consists of 100 multiple choice 
questions. Candidates will have 150 minutes to complete the exam. The 
content outline describes the following topical sections comprising the 
examination: Personnel, Business Conduct and Recordkeeping and 
Reporting Requirements, 9 questions; Markets, Market Participants, 
Exchanges, and Self-Regulatory Organizations, 8 questions; Types and 
Characteristics of Securities and Investments, 20 questions; Trading 
Practices and Prohibited Acts, 50 questions; and Display, Execution, 
and Trading Systems, 13 questions. Representatives from the applicable 
markets intend to meet on a periodic basis to evaluate and, as 
necessary, update the Series 56 examination program.
    The Exchange understands that the other applicable markets will 
also file with the Commission similar filings regarding the Series 56 
examination program. The Exchange proposes to implement the Series 56 
examination program upon availability in WebCRD, notification to its 
membership and approval of SR-Phlx-2012-23.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \6\ in general, and furthers the objectives of Section 
6(c)(3)(B) of the Act,\7\ pursuant to which a national securities 
exchange prescribes standards of training, experience and competence 
for members and their associated persons, in particular, by offering a 
new qualification examination for proprietary traders. This filing 
provides the content outline and relevant specifications for the Series 
56 examination program, which should help ensure that all associated 
persons engaged in a securities business are, and will continue to be, 
properly trained and qualified to perform their functions.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78(c)(3)(B).
---------------------------------------------------------------------------

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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or 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 become effective 
pursuant to 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) \9\ 
thereunder.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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.
---------------------------------------------------------------------------

    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

[[Page 19044]]

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-PHLX-2012-37 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-PHLX-2012-37. 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, 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 offices 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-PHLX-2012-37, and should be 
submitted on or before April 19, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-7571 Filed 3-28-12; 8:45 am]
BILLING CODE 8011-01-P