
[Federal Register Volume 76, Number 155 (Thursday, August 11, 2011)]
[Notices]
[Pages 49822-49824]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20371]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65041; File No. SR-NASDAQ-2011-107]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Correct the Proprietary Trader Registration Category

August 5, 2011.
    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 August 1, 2011, The NASDAQ Stock Market LLC (the ``Exchange'' 
or ``NASDAQ'') 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 the Exchange. 
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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASDAQ is filing with the Commission a proposed rule change to 
correct a prior filing to make it applicable to NASDAQ and not just the 
NASDAQ Options Market (``NOM'').\3\ The prior filing amended NASDAQ 
Rule 1032, Categories of Representative Registration, to adopt a new 
limited category of representative registration for proprietary 
traders, as described further below.
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    \3\ See Securities Exchange Act Release No. 64958 (July 25, 
2011) (SR-NASDAQ-2011- 095) (``NASDAQ Proprietary Trader Filing'').
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    The text of the proposed rule change is available at http:/
nasdaq.cchwallstreet.com/, at NASDAQ's principal office, 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

[[Page 49823]]

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
    The purpose of the proposed rule change is to correct a prior 
filing, the NASDAQ Proprietary Trader Filing, to make it applicable to 
NASDAQ and not just the NASDAQ Options Market (``NOM''). Although that 
filing was correctly submitted as a NASDAQ filing, the exhibit to the 
filing was incorrectly limited to NOM.
    The NASDAQ Proprietary Trader Filing amended NASDAQ Rule 1032, 
Categories of Representative Registration, to adopt a new limited 
category of representative registration for proprietary traders. This 
new category should apply to all NASDAQ members, not just NOM 
participants. Specifically, paragraph (c) to Rule 1032 recognized the 
``Proprietary Trader'' category of registration for persons engaged 
solely in proprietary trading; it expressly provides that such person's 
activities in the investment banking or securities business are limited 
solely to proprietary trading, that he passes the Series 56 and that he 
is an associated person of a proprietary trading firm as defined in 
Rule 1011(o).\4\ NASDAQ proposes herein that Rule 1032(c) applies to 
all NASDAQ members.
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    \4\ Rule 1011(o) defines a proprietary trading firm as an 
Applicant with the following characteristics: (1) The Applicant is 
not required by Section 15(b)(8) of the Act to become a FINRA member 
but is a member of another registered securities exchange not 
registered solely under Section 6(g) of the Act; (2) all funds used 
or proposed to be used by the Applicant for trading are the 
Applicant's own capital, traded through the Applicant's own 
accounts; (3) the Applicant does not, and will not have 
``customers,'' as that term is defined in Nasdaq Rule 0120(g); and 
(4) all Principals and Representatives of the Applicant acting or to 
be acting in the capacity of a trader must be owners of, employees 
of, or contractors to the Applicant. ``Applicant'' is defined in 
Rule 1011(a).
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    Accordingly, as stated in the NASDAQ Proprietary Trader Filing, 
associated persons of NASDAQ members who deal with the public do not 
fit in this registration category and must continue to register as 
General Securities Representatives, and NASDAQ believes that the new 
limited registration category and qualification examination are 
appropriate, because they are tailored to proprietary trading 
functions. In addition, because NASDAQ rules require it, persons 
associated with NASDAQ members are, today, already registered as 
General Securities Representatives and have passed the Series 7 
examination. As applied to all NASDAQ members, this proposal does not 
require proprietary traders who have already registered as General 
Securities Representatives and have passed the Series 7 examination to 
register under the new category as Proprietary Traders or to pass the 
Series 56, because NASDAQ believes this would be redundant. Persons who 
are registered as General Securities Representatives and have passed 
the Series 7 may, of course, perform the functions of a Proprietary 
Trader, because the new Proprietary Trader registration category is a 
limited registration category. As applied to all NASDAQ members, this 
proposal does not preclude associated persons from registering as 
General Securities Representatives and passing the Series 7 examination 
and then functioning as a Proprietary Trader.
    NASDAQ expects that new members might consider the new category 
when applying for NASDAQ membership, once the new category and 
examination become available to NASDAQ members in WebCRD. Accordingly, 
NASDAQ believes that the new category should be helpful to attracting 
new members to NASDAQ, while at the same time preserving the important 
goals of appropriate registration and qualification for persons in the 
securities business. Additionally, members who hire new associated 
persons might choose to register those persons in the new category.
    Unlike the associated persons of proprietary trading firms covered 
by this proposal, associated persons of NASDAQ members that are NOT 
proprietary trading firms continue to be subject to registration as 
General Securities Representatives and have to pass the Series 7 
examination.\5\ They are not eligible for the new registration category 
and examination.
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    \5\ Such persons may also be subject to registration as an 
Equity Trader pursuant to Rule 1032(f), which requires successful 
completion of the Series 55 exam (for which the prerequisite is the 
Series 7 examination).
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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: (1) 
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; and (2) Section 
6(b)(5) of the Act,\8\ in that it is designed, among other things, to 
prevent fraudulent and manipulative acts and practices, 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, by 
offering a new, limited registration category to NASDAQ members. The 
Exchange believes that these new requirements 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, because the new category and examination are limited and 
tailored to persons performing proprietary trading functions. This 
proposal corrects the NASDAQ Proprietary Trader Filing by applying Rule 
1032(c) to all NASDAQ members, not just NOM participants.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78(c)(3)(B) [sic].
    \8\ 15 U.S.C. 78f(b)(5).
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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.

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

    Pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) 
\10\ thereunder, the Exchange has designated this proposal as one that 
effects a change that: (i) Does not significantly affect the protection 
of investors or the public interest; (ii) does not impose any 
significant burden on competition; and (iii) by its terms, does not 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest. Rule 19b-4(f)(6) \11\ 
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.

[[Page 49824]]

 Under Rule 19b-4(f)(6) of the Act,\12\ a proposal does not become 
operative for 30 days after the date of its filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. The Exchange requests that the 
Commission waive the 30 day operative period for this filing so that it 
may become effective and operative upon filing with the Commission 
pursuant to Section 19(b)(3)(A) \13\ of the Act and subparagraph (f)(6) 
thereunder. The Exchange believes waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest as 
the waiver will allow the Exchange to apply NASDAQ Rule 1032(c) to all 
NASDAQ members, not just NOM participants, near the same time as other 
exchanges have established proprietary trading registration and 
qualification requirements. For the reasons stated above, the 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest and 
designates the proposal as operative upon filing.\14\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ Id.
    \12\ Id.
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ For purposes only of waiving the operative delay of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f). See also 17 CFR 200.30-3(a)(59).
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    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 public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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-NASDAQ-2011-107 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-NASDAQ-2011-107. 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 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 office of NASDAQ. 
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 publicly 
available. All submissions should refer to File Number SR-NASDAQ-2011-
107 and should be submitted on or before September 1, 2011.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20371 Filed 8-10-11; 8:45 am]
BILLING CODE 8011-01-P


