[Federal Register Volume 87, Number 113 (Monday, June 13, 2022)]
[Notices]
[Pages 35812-35818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-12643]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95064; File No. SR-NYSEAMER-2022-20]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change of 
Amendments to the Exchange's Rules Regarding Continuing Education 
Requirements

June 7, 2022.
    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 May 25, 2022, NYSE American LLC (``NYSE American'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
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 amendments to the Exchange's rules regarding 
continuing education requirements (Rules 341A and 2.21E) applicable to 
member organizations,\4\ Equity Trading Permit (``ETP'') Holders and 
ATP Holders (collectively, ``members''). The proposed rule change also 
makes conforming amendments to the Exchange's rules regarding 
registration requirements (Rule 2.1210).\5\ Among other changes, the 
proposed rule change requires that the Regulatory Element of continuing 
education be completed annually rather than every three years and 
provides a path through continuing education for individuals to 
maintain their qualification following the termination of a 
registration. The proposed rule change is available on the Exchange's 
website at www.nyse.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.
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    \4\ References to ``member organization'' as used in Exchange 
rules include American Trading Permit (``ATP'') Holders, which are 
registered brokers or dealers approved to effect transactions on the 
Exchange's options marketplace. Under the Exchange's rules, an ATP 
Holder has the status as a ``member'' of the Exchange as that term 
is defined in Section 3 of the Act. See Rule 900.2NY(4) & (5).
    \5\ The Exchange also proposes to amend Rule 2.1220(a)(2)(A)(i) 
to make a conforming change to the current rule. The proposed text 
will conform Rule 2.1220(a)(2)(A)(i) with that of the rules of the 
Exchange's affiliate, NYSE Arca, Inc. See NYSE Arca Rule 
2.1220(a)(2)(A)(i).
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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 its continuing education 
requirements in Rules 341A \6\ and 2.21E \7\ and amend related 
registration requirements provided under various Commentaries to Rule 
2.1210. This proposed rule change is based on a filing recently 
submitted by the Financial Industry Regulatory Authority, Inc. 
(``FINRA''), and is intended to harmonize the Exchange's continuing 
education rules with those of FINRA so as to promote uniform standards 
across the securities industry.\8\ The proposed rule change is 
discussed in detail below.
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    \6\ Rule 341A applies to members and member organizations.
    \7\ Rule 2.21E applies to ETP Holders.
    \8\ See Securities Exchange Act Release No. 93097 (September 21, 
2021), 86 FR 53358 (September 27, 2021) (SR-FINRA-2021-015) (``FINRA 
Rule Change'').
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    The proposed changes are based on the changes approved by the 
Commission in the approval order for SR-FINRA-2021-015.\9\ The Exchange 
is proposing to adopt such changes substantially in the same form as 
proposed by FINRA, with only minor changes necessary to conform to the 
Exchange's existing rules such as to remove cross-references and rules 
that are applicable to FINRA members but not to Exchange members.
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    \9\ Id.
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Continuing Education Rules
(i) Background
    The continuing education program for registered persons of broker-
dealers (``CE Program'') currently requires registered persons to 
complete continuing education consisting of a

[[Page 35813]]

Regulatory Element and a Firm Element. The Regulatory Element, which is 
administered by FINRA on behalf of the Exchange, focuses on regulatory 
requirements and industry standards, while the Firm Element is provided 
by each firm and focuses on securities products, services and 
strategies the firm offers, firm policies and industry trends. The CE 
Program is codified under the rules of the self-regulatory 
organizations (``SROs''). The CE Program for registered persons of 
Exchange members is codified under Rules 341A and 2.21E.\10\
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    \10\ See also Commentary .06 to Rule 2.1210 (All Registered 
Persons Must Satisfy the Regulatory Element of Continuing 
Education).
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a. Regulatory Element
    Rule 341A(a) (Regulatory Element) and Rule 2.21E(d)(1) (Regulatory 
Element) each currently requires a registered person to complete the 
applicable Regulatory Element initially within 120 days after the 
person's second registration anniversary date and, thereafter, within 
120 days after every third registration anniversary date.\11\ The 
Exchange may extend these time frames for good cause shown.\12\ 
Registered persons who have not completed the Regulatory Element within 
the prescribed time frames will have their Exchange registrations 
deemed inactive and will be designated as ``CE inactive'' in the CRD 
system until the requirements of the Regulatory Element have been 
satisfied.\13\ A CE inactive person is prohibited from performing, or 
being compensated for, any activities requiring FINRA registration, 
including supervision. Moreover, if registered persons remain CE 
inactive for two consecutive years, they must requalify by retaking 
required examinations (or obtain a waiver of the applicable 
qualification examinations).\14\
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    \11\ See Rule 341A(a) and Rule 341A, Commentary .03 and Rule 
2.21E(d)(1) and Rule 2.21E, Commentary .04. An individual's 
registration anniversary date is generally the date they initially 
registered with the Exchange in the Central Registration Depository 
(``CRD[supreg]'') system. However, an individual's registration 
anniversary date would be reset if the individual has been out of 
the industry for two or more years and is required to requalify by 
examination, or obtain an examination waiver, in order to 
reregister. An individual's registration anniversary date would also 
be reset if the individual obtains a conditional examination waiver 
that requires them to complete the Regulatory Element by a specified 
date. Non-registered individuals who are participating in the waiver 
program under Commentary .08 to Rule 2.1210 (Waiver of Examinations 
for Individuals Working for a Financial Services Industry Affiliate 
of a Member Organization or ETP Holder) (``FSAWP participants'') are 
also subject to the Regulatory Element. The Regulatory Element for 
FSAWP participants correlates to their most recent registration(s), 
and it must be completed based on the same cycle had they remained 
registered. FSAWP participants are eligible for a single, fixed 
seven-year waiver period from the date of their initial designation, 
subject to specified conditions. Registered persons who become 
subject to a significant disciplinary action, as specified in Rules 
341A(a)(3) (Disciplinary Actions) and Rule 2.21E(d)(1)(C) 
(Disciplinary Actions), may be required to retake the Regulatory 
Element within 120 days of the effective date of the disciplinary 
action, if they remain registered. Further, their cycle for 
participation in the Regulatory Element may be adjusted to reflect 
the effective date of the disciplinary action rather than their 
registration anniversary date.
    \12\ See Rule 341A(a)(2) (Failure to Complete) and Rule 
2.21E(d)(1)(B) (Failure to Complete).
    \13\ Id. Individuals must complete the entire Regulatory Element 
session to be considered to have ``completed'' the Regulatory 
Element; partial completion is the same as non-completion. With this 
proposed rule change, the Exchange proposes to adopt additional rule 
text found in the FINRA rules with respect to termination of 
registrations that become inactive. To maintain consistency with 
FINRA rules, the Exchange proposes to amend current Rule 341A(a)(2) 
by adopting the following rule text within the current rule: ``A 
registration that remains inactive for a period of two consecutive 
years will be administratively terminated by the Exchange. A person 
whose registration(s) is so terminated or who otherwise fails to 
complete required Regulatory Element for two consecutive years may 
reactivate the registration(s) only by reapplying for registration 
and meeting the qualification requirements of the applicable 
provisions of Rules 2.1210 and 2.1220. The two-year period under 
this Section (a)(2) is calculated from the date a person's 
registration(s) is deemed inactive.'' Additionally, the Exchange 
proposes to amend current Rule 2.21E(d)(1)(B) by adopting the 
following text within the current rule: ``A registration that 
remains inactive for a period of two consecutive years will be 
administratively terminated by the Exchange. A person whose 
registration(s) is so terminated or who otherwise fails to complete 
required Regulatory Element for two consecutive years may reactivate 
the registration(s) only by reapplying for registration and meeting 
the qualification requirements of the applicable provisions of Rules 
2.1210 and 2.1220. The two-year period under this paragraph 
(d)(1)(B) is calculated from the date a person's registration(s) is 
deemed inactive.''
    \14\ This CE inactive two-year period is calculated from the 
date such persons become CE inactive, and it continues to run 
regardless of whether they terminate their registrations before the 
end of the two-year period. Therefore, if registered persons 
terminate their registrations while in a CE inactive status, they 
must satisfy all outstanding Regulatory Element prior to the end of 
the CE inactive two-year period in order to reregister with a member 
without having to requalify by examination or having to obtain an 
examination waiver.
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    The Regulatory Element consists of a subprogram for registered 
persons generally, and a subprogram for principals and supervisors.\15\ 
While some of the current Regulatory Element content is unique to 
particular registration categories, most of the content has broad 
application to both representatives and principals.\16\
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    \15\ The S101 (General Program for Registered Persons) and the 
S201 (Registered Principals and Supervisors).
    \16\ The current content is presented in a single format leading 
individuals through a case that provides a story depicting 
situations that they may encounter in the course of their work.
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    The Regulatory Element was originally designed at a time when most 
individuals had to complete the Regulatory Element at a test center, 
and its design was shaped by the limitations of the test center-based 
delivery model. In 2015, FINRA transitioned the delivery of the 
Regulatory Element to an online platform (``CE Online''), which allows 
individuals to complete the content online at a location of their 
choosing, including their private residence. This online delivery 
provides FINRA with much greater flexibility in updating content in a 
timelier fashion, developing content tailored to each registration 
category and presenting the material in an optimal learning format.
b. Firm Element
    Rule 341A(b) (Firm Element) and Rule 2.21E(d)(2) (Firm Element) 
each currently requires each firm to develop and administer an annual 
Firm Element training program for covered registered persons.\17\ The 
rule requires firms to conduct an annual needs analysis to determine 
the appropriate training.\18\ Currently, at a minimum, the Firm Element 
must cover training in ethics and professional responsibility as well 
as the following items concerning securities products, services and 
strategies offered by the member: (1) general investment features and 
associated risk factors; (2) suitability and sales practice 
considerations; and (3) applicable regulatory requirements.\19\
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    \17\ The rules define ``covered registered persons'' as any 
registered person who has direct contact with customers in the 
conduct of a member's securities sales and trading activities, and 
the immediate supervisors of any such persons. See Rule 341A(b)(1) 
(Persons Subject to the Firm Element) and Rule 2.21E(d)(2)(A) 
(Persons Subject to the Firm Element).
    \18\ See Rule 341A(b)(2) (Standards) and Rule 2.21E(d)(2)(B) 
(Standards).
    \19\ Id.
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    A firm, consistent with its needs analysis, may determine to apply 
toward the Firm Element other required training. The current rule does 
not expressly recognize other required training, such as training 
relating to the anti-money laundering (``AML'') compliance program and 
training relating to the annual compliance meeting, for purposes of 
satisfying Firm Element training.
c. Termination of a Registration
    Currently, individuals whose registrations as representatives or 
principals have been terminated for two or more years may reregister as 
representatives or principals only if they requalify by retaking and 
passing the applicable representative- or principal-

[[Page 35814]]

level examination or if they obtain a waiver of such examination(s) 
(the ``two-year qualification period'').\20\ The two-year qualification 
period was adopted prior to the creation of the CE Program and was 
intended to ensure that individuals who reregister are relatively 
current on their regulatory and securities knowledge.
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    \20\ See Commentary .07 to Rule 2.1210 (Lapse of Registration 
and Expiration of SIE). The two-year qualification period is 
calculated from the date individuals terminate their registration 
and the date the Exchange receives a new application for 
registration. The two-year qualification period does not apply to 
individuals who terminate a limited registration category that is a 
subset of a broader registration category for which they remain 
qualified. For instance, it would not apply to an individual who 
maintains his registration as a General Securities Representative 
but who terminates his registration as an Investment Company and 
Variable Contracts Products Representative. Such individuals have 
the option of reregistering in the more limited registration 
category without having to requalify by examination or obtain an 
examination waiver so long as they continue to remain qualified for 
the broader registration category. Further, the two-year 
qualification period only applies to the representative- and 
principal-level examinations; it does not extend to the Securities 
Industry Essentials (``SIE'') examination. The SIE examination is 
valid for four years, but having a valid SIE examination alone does 
not qualify an individual for registration as a representative or 
principal. Individuals whose registrations as representatives or 
principals have been revoked pursuant to Rule 8310 (Sanctions for 
Violation of the Rules) may only requalify by retaking the 
applicable representative- or principal-level examination in order 
to reregister as representatives or principals, in addition to 
satisfying the eligibility conditions for association with a firm. 
Waivers are granted either on a case-by-case basis under Commentary 
.02 to Rule 2.1210 (Qualification Examinations and Waivers of 
Examinations) or as part of the waiver program under Commentary .08 
to Rule 2.1210.
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(ii) Proposed Rule Change
    After extensive work with the Securities Industry/Regulatory 
Council on Continuing Education (``CE Council'') and discussions with 
stakeholders, including industry participants and the North American 
Securities Administrators Association (``NASAA''), FINRA adopted the 
following changes to the CE Program under its rules.\21\ In order to 
promote uniform standards across the securities industry, the Exchange 
now proposes to adopt substantially similar changes to its continuing 
education rules.
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    \21\ See supra note 8. FINRA's changes are based on the CE 
Council's September 2019 recommendations to enhance the CE Program. 
See Recommended Enhancements for the Securities Industry Continuing 
Education Program, available at http://cecouncil.org/media/266634/council-recommendations-final-.pdf. The CE Council is composed of 
securities industry representatives and representatives of SROs. The 
CE Council was formed in 1995 upon a recommendation from the 
Securities Industry Task Force on Continuing Education and was 
tasked with facilitating the development of uniform continuing 
education requirements for registered persons of broker-dealers.
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a. Transition to Annual Regulatory Element for Each Registration 
Category
    As noted above, currently, the Regulatory Element generally must be 
completed every three years, and the content is broad in nature. Based 
on changes in technology and learning theory, the Regulatory Element 
content can be updated and delivered in a timelier fashion and tailored 
to each registration category, which would further the goals of the 
Regulatory Element.\22\ Therefore, to provide registered persons with 
more timely and relevant training on significant regulatory 
developments, the Exchange proposes amending Rule 341A(a) and Rule 
2.21E(d)(1) to require registered persons to complete the Regulatory 
Element annually by December 31.\23\ The proposed amendment would also 
require registered persons to complete Regulatory Element content for 
each representative or principal registration category that they hold, 
which would also further the goals of the Regulatory Element.\24\ Under 
the proposed rule change, firms would have the flexibility to require 
their registered persons to complete the Regulatory Element sooner than 
December 31, which would allow firms to coordinate the timing of the 
Regulatory Element with other training requirements, including the Firm 
Element.\25\ For example, a firm could require its registered persons 
to complete both their Regulatory Element and Firm Element by October 1 
of each year.
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    \22\ When the CE Program was originally adopted in 1995, 
registered persons were required to complete the Regulatory Element 
on their second, fifth and 10th registration anniversary dates. See 
Securities Exchange Act Release No. 35341 (February 8, 1995), 60 FR 
8426 (February 14, 1995) (Order Approving File Nos. SR-AMEX-94-59; 
SR-CBOE-94-49; SR-CHX-94-27; SR-MSRB-94-17; SR-NASD-94-72; SR-NYSE-
94-43; SR-PSE-94-35; and SR-PHLX-94-52). The change to the current 
three-year cycle was made in 1998 to provide registered persons more 
timely and effective training, consistent with the overall purpose 
of the Regulatory Element. See Securities Exchange Act Release No. 
39712 (March 3, 1998), 63 FR 11939 (March 11, 1998) (Order Approving 
File Nos. SR-CBOE-97-68; SR-MSRB-98-02; SR-NASD-98-03; and SR-NYSE-
97-33).
    \23\ See proposed Rules 341A(a) and 341A, Commentary .03 and 
Rules 2.21E(d)(1) and 2.21E, Commentary .04.
    \24\ See proposed Rules 2.1210, Commentary .06, 341A(a) and 
2.21E(d)(1).
    \25\ See proposed Rules 341A(a) and 341A, Commentary .03 and 
Rules 2.21E(d)(1) and 2.21E, Commentary .04.
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    Individuals who would be registering as a representative or 
principal for the first time on or after the implementation date of the 
proposed rule change would be required to complete their initial 
Regulatory Element for that registration category in the next calendar 
year following their registration.\26\ In addition, subject to 
specified conditions, individuals who would be reregistering as a 
representative or principal on or after the implementation date of the 
proposed rule change would also be required to complete their initial 
Regulatory Element for that registration category in the next calendar 
year following their reregistration.\27\
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    \26\ See proposed Rule 341A(a) and Rule 2.21E(d)(1).
    \27\ See proposed Rule 341A, Commentary .03 and Rule 2.21E, 
Commentary .04.
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    Consistent with current requirements, individuals who fail to 
complete their Regulatory Element within the prescribed period would be 
automatically designated as CE inactive.\28\ However, the proposed rule 
change preserves the Exchange's ability to extend the time by which a 
registered person must complete the Regulatory Element for good cause 
shown.\29\
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    \28\ See proposed Rule 341A(a)(2) and Rule 2.21E(d)(1)(B).
    \29\ Id. The proposed rule change clarifies that the request for 
an extension of time must be in writing and include supporting 
documentation, which is consistent with current practice.
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    The Exchange also proposes amending Rule 341A(a) and Rule 
2.21E(d)(1) to clarify that: (1) individuals who are designated as CE 
inactive would be required to complete all of their pending and 
upcoming annual Regulatory Element, including any annual Regulatory 
Element that becomes due during their CE inactive period, to return to 
active status; \30\ (2) the two-year CE inactive period is calculated 
from the date individuals become CE inactive, and it continues to run 
regardless of whether individuals terminate their registrations; \31\ 
(3) individuals who become subject to a significant disciplinary action 
may be required to complete assigned continuing education content as 
prescribed by the Exchange; \32\ (4) individuals who have not completed 
any Regulatory Element content for a registration category in the 
calendar year(s) prior to reregistering would not be approved for 
registration for that category until they complete that Regulatory 
Element content, pass an examination for that registration category or 
obtain an unconditional examination waiver for that registration

[[Page 35815]]

category, whichever is applicable; \33\ and (5) the Regulatory Element 
requirements apply to individuals who are registered, or in the process 
of registering, as a representative or principal. In addition, the 
Exchange proposes making conforming amendments to Commentary .07 to 
Rule 2.1210.
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    \30\ See proposed Rule 341A(a)(2) and Rule 2.21E(d)(1)(B).
    \31\ See proposed Rule 341A(a)(2) and Rule 2.21E(d)(1)(B).
    \32\ See proposed Rule 341A(a)(3) and Rule 2.21E(d)(1)(C). As 
previously noted, Rule 345A(a)(3) and Rule 2.21E(d)(1)(C) each 
currently provides that such individuals may be required to retake 
the Regulatory Element. See supra note 11.
    \33\ See proposed Rule 341A, Commentary .03 and Rule 2.21E, 
Commentary .04.
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    Under the proposed rule change, the amount of content that 
registered persons would be required to complete in a three-year, 
annual cycle for a particular registration category is expected to be 
comparable to what most registered persons are currently completing 
every three years. In some years, there may be more required content 
for some registration categories depending on the volume of rule 
changes and regulatory issues. In addition, an individual who holds 
multiple registrations may be required to complete additional content 
compared to an individual who holds a single registration because, as 
noted above, individuals would be required to complete content specific 
to each registration category that they hold.\34\ However, individuals 
with multiple registrations would not be subject to duplicative 
regulatory content in any given year. The more common registration 
combinations would likely share much of their relevant regulatory 
content each year. For example, individuals registered as General 
Securities Representatives and General Securities Principals would 
receive the same content as individuals solely registered as General 
Securities Representatives, supplemented with a likely smaller amount 
of supervisory-specific content on the same topics. The less common 
registration combinations may result in less topic overlap and more 
content overall.
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    \34\ As discussed in the economic impact assessment in the FINRA 
Rule Change, individuals with multiple registrations represent a 
smaller percentage of the population of registered persons.
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b. Recognition of Other Training Requirements for Firm Element and 
Extension of Firm Element to All Registered Persons
    To better align the Exchange's rulebook with FINRA's rulebook, and, 
in addition, to better align the Firm Element requirement with other 
required training, the Exchange proposes amending Rule 341A(b) and Rule 
2.21E(d)(2) to expressly allow firms to consider training relating to 
the AML compliance program and the annual compliance meeting toward 
satisfying an individual's annual Firm Element requirement.\35\ The 
Exchange also proposes amending the rule to extend the Firm Element 
requirement to all registered persons, including individuals who 
maintain solely a permissive registration consistent with Commentary 
.01 to Rule 2.1210 (Permissive Registrations), thereby further aligning 
the Firm Element requirement with other broadly-based training 
requirements.\36\ In conjunction with this proposed change, the 
Exchange proposes modifying the current minimum training criteria under 
Rule 341A(b) and Rule 2.21E(d)(2) to instead provide that the training 
must cover topics related to the role, activities or responsibilities 
of the registered person and to professional responsibility.\37\
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    \35\ See proposed Rule 341A(b)(2)(iv) and Rule 
2.21E(d)(2)(B)(iv).
    \36\ See proposed Rule 341A(b)(1) and Rule 2.21E(d)(2)(A). As 
noted earlier, the current requirement only applies to ``covered 
registered persons'' and not all registered persons.
    \37\ See proposed Rule 341A(b)(2)(ii) and Rule 
2.21E(d)(2)(B)(ii).
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c. Maintenance of Qualification After Termination of Registration
    The Exchange proposes adopting paragraph (c) under Rule 341A and 
Commentary .06 and .07 under Rule 341A and paragraph (3) under 2.21E(d) 
and Commentary .06 and .07 under Rule 2.21E to provide eligible 
individuals who terminate any of their representative or principal 
registrations the option of maintaining their qualification for any of 
the terminated registrations by completing continuing education.\38\ 
The proposed rule change would not eliminate the two-year qualification 
period. Rather, it would provide such individuals an alternative means 
of staying current on their regulatory and securities knowledge 
following the termination of a registration(s). Eligible individuals 
who elect not to participate in the proposed continuing education 
program would continue to be subject to the current two-year 
qualification period. The proposed rule change is generally aligned 
with other professional continuing education programs that allow 
individuals to maintain their qualification to work in their respective 
fields during a period of absence from their careers (including an 
absence of more than two years) by satisfying continuing education 
requirements for their credential.
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    \38\ The proposed option would also be available to individuals 
who terminate any permissive registrations as provided under 
Commentary .01 to Rule 2.1210. However, the proposed option would 
not be available to individuals who terminate a limited registration 
category that is a subset of a broader registration category for 
which they remain qualified. As previously noted, such individuals 
currently have the option of reregistering in the more limited 
registration category without having to requalify by examination or 
obtain an examination waiver so long as they continue to remain 
qualified for the broader registration category. In addition, the 
proposed option would not be available to individuals who are 
maintaining an eliminated registration category, such as the 
category for Corporate Securities Representative, or individuals who 
have solely passed the Securities Industry Essentials examination, 
which does not, in and of itself, confer registration.
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    The proposed rule change would impose the following conditions and 
limitations:
     individuals would be required to be registered in the 
terminated registration category for at least one year immediately 
prior to the termination of that category; \39\
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    \39\ See proposed Rule 341A(c)(1) and Rule 2.21E(d)(3)(A).
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     individuals could elect to participate when they terminate 
a registration or within two years from the termination of a 
registration; \40\
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    \40\ See proposed Rule 341A(c)(2) and Rule 2.21E(d)(3)(B). 
Individuals who elect to participate at the later date would be 
required to complete, within two years from the termination of their 
registration, any continuing education that becomes due between the 
time of their Form U5 (Uniform Termination Notice for Securities 
Industry Registration) submission and the date that they commence 
their participation. In addition, FINRA would enhance its systems to 
notify individuals of their eligibility to participate, enable them 
to affirmatively opt in, and notify them of their annual continuing 
education requirement if they opt in.
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     individuals would be required to complete annually all 
prescribed continuing education; \41\
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    \41\ See proposed Rule 341A(c)(3) and Rule 2.21E(d)(3)(C). 
However, upon a participant's request and for good cause shown, the 
Exchange would have the ability to grant an extension of time for 
the participant to complete the prescribed continuing education. A 
participant who is also a registered person must directly request an 
extension of the prescribed continuing education from the Exchange. 
The continuing education content for participants would consist of a 
combination of Regulatory Element content and content selected by 
FINRA and the CE Council from the Firm Element content catalog. The 
content would correspond to the registration category for which 
individuals wish to maintain their qualifications. Participants who 
are maintaining their qualification status for a principal 
registration category that includes one or more corequisite 
representative registrations must also complete required annual 
continuing education for the corequisite registrations in order to 
maintain their qualification status for the principal registration 
category. The proposed rule change clarifies that the prescribed 
continuing education must be completed by December 31 of the 
calendar year, which is consistent with the timing for the proposed 
annual Regulatory Element.
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     individuals would have a maximum of five years in which to 
reregister; \42\
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    \42\ See proposed Rule 341A(c) and Rule 2.21E(d)(3). In 
addition, individuals applying for reregistration must satisfy all 
other requirements relating to the registration process (e.g., 
submit a Form U4 (Uniform Application for Securities Industry 
Registration or Transfer) and undergo a background check).

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[[Page 35816]]

     individuals who have been CE inactive for two consecutive 
years, or who become CE inactive for two consecutive years during their 
participation, would not be eligible to participate or continue; \43\ 
and
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    \43\ See proposed Rules 341A(c)(4) and (c)(5) and Rules 
2.21E(d)(3)(C) and (d)(3)(D).
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     individuals who are subject to a statutory 
disqualification, or who become subject to a statutory disqualification 
following the termination of their registration or during their 
participation, would not be eligible to participate or continue.\44\
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    \44\ See proposed Rules 341A(c)(1) and (c)(6) and Rules 
2.21E(d)(3)(A) and (d)(3)F). Further, any content completed by 
participants would be retroactively nullified upon disclosure of the 
statutory disqualification. The following example illustrates the 
application of the proposed rule change to individuals who become 
subject to a statutory disqualification while participating in the 
proposed continuing education program. Individual A participates in 
the proposed continuing education program for four years and 
completes the prescribed content for each of those years. During 
year five of his participation, he becomes subject to a statutory 
disqualification resulting from a foreign regulatory action. In that 
same year, the Exchange receives a Form U4 submitted by a member on 
behalf of Individual A requesting registration with the Exchange. 
The Form U4 discloses the statutory disqualification event. The 
Exchange would then retroactively nullify any content that 
Individual A completed while participating in the proposed 
continuing education program. Therefore, in this example, in order 
to become registered with the Exchange, he would be required to 
requalify by examination. This would be in addition to satisfying 
the eligibility conditions for association with an Exchange member 
firm. See Exchange Act Sections 3(a)(39) and 15(b)(4).
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    The proposed rule change also includes a look-back provision that 
would, subject to specified conditions, extend the proposed option to 
individuals who have been registered as a representative or principal 
within two years immediately prior to the implementation date of the 
proposed rule change and individuals who have been FSAWP participants 
immediately prior to the implementation date of the proposed rule 
change.\45\
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    \45\ See proposed Commentary .06 to Rule 341A and Commentary .06 
to Rule 2.21E. Such individuals would be required to elect whether 
to participate by the effective date of the proposed rule change. If 
such individuals elect to participate, they would be required to 
complete their initial annual content by the end of the calendar 
year in which the proposed rule change becomes effective. In 
addition, if such individuals elect to participate, their initial 
participation period would be adjusted based on the date that their 
registration was terminated. The current waiver program for FSAWP 
participants would not be available to new participants upon the 
date the proposed rule change becomes effective. See proposed 
Commentary .08 to Rule 2.1210. However, individuals who are FSAWP 
participants immediately prior to the effective date of the proposed 
rule change could elect to continue in that waiver program until the 
program has been retired. As noted above, FSAWP participants may 
participate for up to seven years in that waiver program, subject to 
specified conditions. See supra note 11. As discussed above, the 
proposed rule change provides a five-year participation period for 
participants in the proposed continuing education program. So as not 
to disadvantage FSAWP participants, the Exchange has determined to 
preserve that waiver program for individuals who are participating 
in the FSAWP immediately prior to the effective date of the proposed 
rule change. Because the proposed rule change transitions the 
Regulatory Element to an annual cycle, FSAWP participants who remain 
in that waiver program following the effective date of the proposed 
rule change would be subject to an annual Regulatory Element 
requirement. See proposed Rule 341A(a) and Rule 2.21E(d)(1). 
Finally, the proposed rule change preserves the Exchange's ability 
to extend the time by which FSAWP participants must complete the 
Regulatory Element for good cause shown. See proposed Rule 
341A(a)(2) and Rule 2.21E(d)(1)(B).
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    In addition, the proposed rule change includes a re-eligibility 
provision that would allow individuals to regain eligibility to 
participate each time they reregister with a firm for a period of at 
least one year and subsequently terminate their registration, provided 
that they satisfy the other participation conditions and 
limitations.\46\ Additionally, the Exchange proposes making conforming 
amendments to Rule 2.1210, including adding references to proposed Rule 
341A(c) and Rule 2.21E(d)(3) under Commentary .07 to Rule 2.1210. 
Further, the Exchange proposes certain additional amendments to its 
rules to further align the Exchange's rules with those of FINRA, 
including making changes to certain rules to correct typographical and 
grammatical errors. More specifically, the Exchange proposes to amend 
current Rules 314A(a)(2) and 2.21E(d)(1)(B) to clarify that the 
provisions under such rules apply to a ``registered person'' by 
inserting the word ``registered'' in front of ``person.'' The Exchange 
also proposes to adopt Section (a)(5) under Rule 341A which describes 
the manner in which members designate a contact person to the Exchange 
for receiving notifications regarding the Regulatory Element. Finally, 
the Exchange proposes to amend current Rule 2.1220(a)(2)(A)(i) to 
conform the rule to that of its affiliate, NYSE Arca.
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    \46\ See proposed Commentary .07 to Rule 341A and Commentary .07 
to Rule 2.21E.
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    The proposed rule change will have several important benefits. It 
will provide individuals with flexibility to address life and career 
events and necessary absences from registered functions without having 
to requalify each time. It will also incentivize them to stay current 
on their respective securities industry knowledge following the 
termination of any of their registrations. The continuing education 
under the proposed option will be as rigorous as the continuing 
education of registered persons, which promotes investor protection. 
Further, the proposed rule change will enhance diversity and inclusion 
in the securities industry by attracting and retaining a broader and 
diverse group of professionals.
    Significantly, the proposed rule change will be of particular value 
to women, who continue to be the primary caregivers for children and 
aging family members and, as a result, are likely to be absent from the 
industry for longer periods.\47\ In addition, the proposed rule change 
will provide longer-term relief for women, individuals with low incomes 
and other populations, including older workers, who are at a higher 
risk of a job loss during certain economic downturns and who are likely 
to remain unemployed for longer periods.\48\
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    \47\ See The Female Face of Family Caregiving (November 2018), 
available at https://www.nationalpartnership.org/our-work/resources/economic-justice/femaleface-family-caregiving.pdf.
    \48\ See The COVID-19 Recession is the Most Unequal in Modern 
U.S. History (September 30, 2020), available at https://www.washingtonpost.com/graphics/2020/business/coronavirus-recessionequality/ and Unemployment's Toll on Older Workers Is Worst 
in Half a Century (October 21, 2020), available at https://www.aarp.org/work/working-at-50-plus/info-2020/pandemic-unemployment-older-workers.
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d. CE Program Implementation
    As stated in the FINRA Rule Change, FINRA and the CE Council also 
plan to enhance the CE Program in other ways, and these additional 
enhancements do not require any changes to the FINRA rules.\49\ As it 
relates to the rule changes themselves, the FINRA changes relating to 
the Maintaining Qualifications Program and the Financial Services 
Affiliate Waiver Program (FSAWP) became effective on March 15, 
2022.\50\ The Exchange's proposed changes to the Maintaining 
Qualifications Program (paragraph (c) of Rule 341A along with 
Commentary .06 and .07 to Rule 341A and paragraph (3) of Rule 2.21E(d) 
along with Commentary .06 and .07 to Rule 2.21E) and to the FSAWP 
(Commentary .08 to Rule 2.1210) will become effective on the date this 
proposed rule change is filed. All other changes related to the FINRA 
Rule Change and to the Exchange's rules relating to the Regulatory 
Element, Firm Element and the two-year qualification period, will

[[Page 35817]]

have an implementation date of January 1, 2023.\51\
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    \49\ See supra note 8. As described in more detail in the FINRA 
Rule Change, FINRA will work with the CE Council to develop and 
incorporate additional resources in connection with the Regulatory 
and Firm Elements. Similar to FINRA, these additional enhancements 
do not require any changes to the Exchange rules.
    \50\ See FINRA Regulatory Notice 21-41 at https://www.finra.org/rulesguidance/notices/21-41.
    \51\ Id.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\52\ in general, and 
furthers the objectives of Section 6(b)(5),\53\ in particular, because 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, 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.
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    \52\ 15 U.S.C. 78f(b).
    \53\ 15 U.S.C. 78f(b)(5).
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    As noted above, the proposed rule change seeks to align the 
Exchange Rules with the recent change to FINRA rules which has been 
approved by the Commission.\54\ Additionally, the proposed rule change 
seeks to conform current Rule 2.1220(a)(2)(A)(i) with that of its 
affiliate, NYSE Arca. The Exchange believes the proposed rule change is 
consistent with the provisions of Section 6(b)(5) of the Act,\55\ which 
requires, among other things, that Exchange Rules must be designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, and, in general, to protect 
investors and the public interest, and Section 6(c)(3) of the Act,\56\ 
which authorizes the Exchange to prescribe standards of training, 
experience and competence for persons associated with the Exchange.
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    \54\ See supra note 8.
    \55\ 15 U.S.C. 78f(b)(5).
    \56\ 15 U.S.C. 78f(c)(3).
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    The Exchange believes that the proposed change to the Regulatory 
Element and Firm Element will ensure that all registered persons 
receive timely and relevant training, which will, in turn, enhance 
compliance and investor protection. Further, the Exchange believes that 
establishing a path for individuals to maintain their qualification 
following the termination of a registration will reduce unnecessary 
impediments to requalification and promote greater diversity and 
inclusion in the securities industry without diminishing investor 
protection.
    The Exchange believes the proposal is consistent with the Act for 
the reasons described above and for the reasons outlined in the 
approval order for SR-FINRA-2021-015.\57\
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    \57\ See supra note 8.
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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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes that 
the proposed rule change, which harmonizes its rules with the recent 
rule change adopted by FINRA, will reduce the regulatory burden placed 
on market participants engaged in trading activities across different 
markets. The Exchange believes that the harmonization of the CE program 
requirements across the various markets will reduce burdens on 
competition by removing impediments to participation in the national 
market system and promoting competition among participants across the 
multiple national securities exchanges.

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

    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 from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \58\ and Rule 19b-
4(f)(6) thereunder.\59\
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    \58\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \59\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
pursuant to Rule 19b-4(f)(6)(iii), the 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 this proposed 
rule change may become operative immediately upon filing. In addition, 
Rule 19b-4(f)(6)(iii) \60\ requires a self-regulatory organization to 
give the Commission written notice of its intent to file a proposed 
rule change under that subsection at least five business days prior to 
the date of filing, or such shorter time as designated by the 
Commission. The Exchange has provided such notice.
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    \60\ 17 CFR 240.19b-4(f)(6)(iii).
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    Waiver of the 30-day operative delay would allow the Exchange to 
more quickly align certain of its proposed changes with changes that 
FINRA implemented on March 15, 2022, thereby reducing the possibility 
of a significant regulatory gap between the FINRA and Exchange rules, 
providing more uniform standards across the securities industry, and 
helping to avoid confusion for registered persons of the Exchange that 
are also FINRA members. In addition, the waiver would allow the 
Exchange to immediately conform one of its rules to that of NYSE Arca, 
further providing more uniform standards across the securities 
industry. For these reasons, the Commission believes that waiver of the 
30-day operative delay for this proposal is consistent with the 
protection of investors and the public interest. Accordingly, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\61\
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    \61\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change 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 [email protected]. Please include 
File Number SR-NYSEAMER-2022-20 on the subject line.

[[Page 35818]]

Paper Comments

     Send paper comments in triplicate to: Secretary, 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NYSEAMER-2022-20. 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 website (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 website 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 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEAMER-2022-20 and should be submitted 
on or before July 5, 2022.
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    \62\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\62\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-12643 Filed 6-10-22; 8:45 am]
BILLING CODE 8011-01-P


