
[Federal Register Volume 80, Number 238 (Friday, December 11, 2015)]
[Notices]
[Pages 77063-77065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31276]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76577; File No. SR-NYSEARCA-2015-116]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Rule 2.23 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 Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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 NYSE Arca Rule 2.23 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''), Floor Brokers and 
Securities Traders, (2) eliminate reference to the S501Program 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.

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 NYSE Arca Rule 2.23 to prescribe the 
Series 57 Examination as the qualifying examination for registered 
Market Makers, MMATs, Floor Brokers and Securities Traders and 
eliminate reference to the S501 Program as a continuing education 
requirement.
    NYSE Arca Rule 2.23 currently specifies that the successful 
completion of the Proprietary Trader Qualification Examination 
(``Series 56 Examination'') is required in order to register as a 
Market Maker, a MMAT, or a Floor Broker.\4\ In addition, individuals 
currently engaged solely in proprietary trading, who are not required 
to register 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'').\5\
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    \4\ Under the current rule, Market Makers, MMATs and Floor 
Brokers are also required to successfully complete an orientation 
program for the prescribed examination.
    \5\ 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 Exchange proposes to change the prescribed examination for 
Market Makers, MMATs, and Floor Brokers from the Series 56 Examination 
to the Series 57 Examination and also proposes to replace the Series 56 
Examination with the Series 57 Examination for individuals engaged 
solely in proprietary trading. 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.
    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 
proprietary trading).\6\ 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

[[Page 77064]]

recording requirements; types and characteristics of securities and 
investments; trading practices; and display, execution, and trading 
systems.\7\ 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 Arca.
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    \6\ 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.
    \7\ 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 Arca 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 \8\ 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 engaged solely in 
proprietary trading on NYSE Arca, 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.\9\
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    \8\ Web CRD is the central licensing and registration system for 
the U.S. securities industry and its regulators.
    \9\ See Rule 2.23, Commentary .03.
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    Under the proposed rule change, the Exchange would rename the 
category ``Proprietary Trader'' as ``Securities Trader'' in Rule 2.23 
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 2.23 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 2.23 to Proprietary Trader 
Principal with Securities Trader Principal.
    Further, registered persons are required under Rule 2.23(d) to 
comply with the Exchange's continuing education requirements. 
Specifically, under Rule 2.23(d)(1)(A), 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. 
Thus, a General Securities Principal may not 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''),\10\ in general, 
and furthers the objectives of Section 6(c)(3)(B) \11\ 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) \12\ 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 individuals required to register as 
Market Makers, MMATs, Floor Brokers and 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.\13\ Accordingly, adopting the Series 57 Examination 
will help to promote consistency in examination requirements and 
uniformity across markets.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(c)(3)(B).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ See supra, note 7.
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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

[[Page 77065]]

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 \14\ and Rule 19b-4(f)(6) thereunder.\15\ 
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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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\17\ 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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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 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) \18\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \18\ 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-NYSEARCA-2015-116 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-NYSEARCA-2015-116. 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 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-NYSEARCA-2015-116 and should be 
submitted on or before January 4, 2016.
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    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31276 Filed 12-10-15; 8:45 am]
BILLING CODE 8011-01-P


