Document ID: SEC-2009-0140-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc
Posted Date: 2009-01-30T05:00Z

[Federal Register: January 30, 2009 (Volume 74, Number 19)]
[Notices]               
[Page 5690-5692]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30ja09-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59292; File No. SR-BATS-2009-003]

 
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
BATS Rule 2.5, Entitled ``Restrictions,'' and BATS Rule 11.4, Entitled 
``Authorized Traders.''

January 23, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on January 16, 2009, BATS Exchange, Inc. (``BATS'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with 
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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend BATS Rule 2.5, entitled 
``Restrictions,'' and BATS Rule 11.4, entitled ``Authorized Traders,'' 
to permit qualification and registration of Authorized Traders of 
Members pursuant to certain foreign examination modules equivalent to 
the Series 7 examination.
    The text of the proposed rule change is available at the Exchange's 
Web site at http://www.batstrading.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 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 parts of such 
statements.

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

1. Purpose
    Exchange Rules 2.5 and 11.4 both state that the Series 7 is 
required for registration with the Exchange as an Authorized Trader. 
The purpose of the proposed rule change is to expand the types of exams 
that may satisfy the Exchange's Series 7 requirement by recognizing 
foreign examination

[[Page 5691]]

modules equivalent to the Series 7 examination.
    The proposal would reduce duplicative qualification standards that 
foreign registered representatives encounter to qualify as a U.S. 
general securities registered representative. For example, the 
examination modules for the U.K. (Series 17) and Canada (Series \37/
38\) currently are accepted as equivalent to the U.S. Series 7 by the 
NYSE, the Financial Industry Regulatory Authority (``FINRA''), the 
NASDAQ Stock Market, NYSE AlterNext US, NYSE Arca, and the Chicago 
Board Options Exchange (``CBOE'').\5\
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    \5\ See, e.g., Securities Exchange Act Release No. 27967 (May 1, 
1990), 55 FR 19124 (May 8, 1990) (approving File No. SR-NYSE-89-22, 
Series 17); Securities Exchange Act Release No. 36629, International 
Series Release No. 909 (Dec. 21, 1995), 60 FR 67385, corrected, 
Securities Exchange Act Release No. 36629A, International Series 
Release No. 909A (Jan. 4, 1996), 61 FR 744 (Jan. 10, 1996) 
(approving File No. SR-NYSE-95-29, Series 37 and Series 38); 
Securities Exchange Act Release No. 36825 (Feb. 9, 1996), 61 FR 6052 
(approving File No. SR-NASD-96-04, Series 37 and 38); Securities 
Exchange Act Release No. 38274 (February 12, 1997), 62 FR 7485 
(approving File No. SR-CBOE-97-04, Series 17, 37 and 38); Securities 
Exchange Act Release No. 38921 (August 11, 1997), 62 FR 44023 
(approving File No. SR-AMEX-97-26, Series 17, 37 and 38); see also 
NASD Rule 1032(a)(2)(B) and (C); NASDAQ Rule 1032(a)(2)(B) and (C).
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    The Series 17 version, the United Kingdom--Limited General 
Securities Registered Representative Examination, is for U.K. 
registrants who have successfully completed the basic exam of the U.K. 
and who are in good standing with the Financial Services Authority 
(``FSA''). Essentially, this modified Series 7 examination deletes 
those substantive sections of the standard Series 7 that overlap with 
the FSA examination. The Series 17 is a 100 question examination, is 
120 minutes in duration, and deals with U.S. securities laws, 
regulations, sales practices and special products drawn from the 
standard Series 7 examination.
    The Series 37 version is for Canadian registrants who have 
successfully completed the basic core module of the CSI Global 
Education (``CSI'', formerly the Canadian Securities Institute) 
program. The Series 38 version is for Canadian registrants who, in 
addition to having successfully completed the basic core module of the 
CSI program, have also successfully completed the Canadian option and 
futures program. Both the Series 37 and 38 share topics and test 
questions with the parent Series 7 program but cover only subject 
matter that is not covered, or not covered in sufficient detail, on the 
Canadian qualification examination. The Series 37 has 90 questions and 
is 150 minutes in duration, while the Series 38, an abbreviated version 
of the series 37, has only 45 questions and is 75 minutes in duration. 
Forty-five questions pertaining to options from the series 37 were 
omitted from the Series 38.
    The Exchange wishes to give U.K. and Canadian registered 
representatives the same advantage they have at other exchanges by 
eliminating duplicative examinations. The Exchange believes that 
acceptance of these examinations will benefit both the Exchange and the 
foreign representatives affected by the proposal. Accordingly, pursuant 
to the amended rules, as proposed, the Exchange would approve the 
examination modules for the U.K. (Series 17) and Canada (Series \37/
38\) as equivalent foreign examination modules.\6\ In addition, the 
rule changes as proposed will permit the Exchange to accept other 
foreign examination modules if, in the future, such modules are 
developed and approved by the Exchange as an equivalent foreign 
examination module.
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    \6\ The Exchange notes that the U.K. (Series 17) and Canada 
(Series 37/38) represent foreign examination modules that allow 
persons in good standing with the securities regulators of their 
respective countries to qualify as general securities registered 
representatives (equivalent to Series 7 registrants) by successfully 
completing certain modified general securities representative 
examinations which were developed, along with others for other 
foreign jurisdictions, by the New York Stock Exchange (``NYSE'') 
more than 10 years ago.
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2. Statutory Basis
    The statutory basis for the Exchange's acceptance of these foreign 
examination modules lies in Section 6(c)(3)(B) of the Act.\7\ Under 
that section, it is the Exchange's responsibility to prescribe 
standards of training, experience, and competence for persons 
associated with Exchange Members. Pursuant to this statutory 
obligation, the Exchange has adopted examinations that are administered 
by other self-regulatory organizations to establish that Authorized 
Traders of Exchange Members have attained specified levels of 
competence and knowledge.
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    \7\ 15 U.S.C. 78f(c)(3)(B).
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    The Exchange believes the proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder that 
are applicable to a national securities exchange, and, in particular, 
with the requirements of Section 6(b).\8\ In particular, for the 
reasons described above, the proposed change is consistent with Section 
6(b)(5) of the Act,\9\ because it would promote just and equitable 
principles of trade, remove impediments to, and perfect the mechanism 
of, a free and open market and a national market system, and, in 
general, protect investors and the public interest, by helping foreign 
representatives to qualify for registration with the Exchange by 
reducing duplicative qualification requirements. Accordingly, the 
modifications to BATS Rules 2.5 and 11.4 promote just and equitable 
principles of trade, remove impediments to, and perfect the mechanism 
of, a free and open market and a national market system.
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    \8\ 15 U.S.C. 78(f)(b).
    \9\ 15 U.S.C. 78f(b)(5).
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(B) Self-Regulatory Organization's Statement of Burden on Competition

    The Exchange does not believe that the proposed rule change imposes 
any burden on competition.

(C) Self-Regulatory Organization's Statement on Comments Regarding the 
Proposed Rule Changes Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
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 \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
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 \12\ and Rule 19b-
4(f)(6)(iii) thereunder.\13\
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    \10\ U.S.C. 78s(b)(3)(A)(iii).
    \11\ CFR 240.19b-4(f)(6).
    \12\ U.S.C. 78s(b)(3)(A).
    \13\ CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change along with a 
brief description and text of 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the

[[Page 5692]]

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. The 
Commission has determined that waiving the 30-day operative delay of 
the Exchange's proposal is consistent with the protection of investors 
and the public interest because such waiver will reduce duplicative 
qualification standards that foreign registered representatives 
encounter to qualify as a U.S. general securities registered 
representative. Additionally, the Commission notes that other self-
regulatory organizations currently accept certain foreign examination 
modules as equivalent to the Series 7 examination as satisfactory 
proficiency examinations. Therefore, the Commission designates the 
proposal as operative upon filing.\16\ At any time within 60 days of 
the filing of the proposed rule change, the Commission may summarily 
abrogate 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.
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    \14\ CFR 240.19b-4(f)(6).
    \15\ CFR 240.19b-4(f)(6)(iii).
    \16\ 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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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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-BATS-2009-003 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-BATS-2009-003. This file 
number should be included on the subject line if e-mail 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 inspection and 
copying in the Commission's Public Reference Room 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 
BATS. 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-
BATS-2009-003 and should be submitted on or before February 20, 2009.

    For the Commission, by the Division of Trading & Markets, 
pursuant to delegated authority.\17\
Florence E. Harmon,
Deputy Secretary.
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    \17\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E9-2020 Filed 1-29-09; 8:45 am]

BILLING CODE 8011-01-P