[Federal Register Volume 88, Number 120 (Friday, June 23, 2023)]
[Notices]
[Pages 41173-41176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13346]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97744; File No. SR-NYSECHX-2023-13]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change for 
Amendments to the Exchange's Rules Regarding Continuing Education 
Requirements

June 16, 2023.
    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 June 5, 2023, NYSE Chicago, Inc. (``NYSE Chicago'' 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 (Article 6, Rule 11) applicable to 
Participants \4\ to provide eligible individuals another opportunity to 
elect to participate in the Maintaining Qualifications Program 
(``MQP''). 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\ A Participant is a ``member'' of the Exchange for purposes 
of the Act. See Article 1, Rule 1(s).
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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 continuing education program for registered persons of broker-
dealers (``CE Program'') currently requires registered persons to 
complete continuing education consisting of a 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. The CE Program for registered persons of NYSE Chicago 
members is codified under Article 6, Rule 11.\5\ 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.\6\ 
The proposed rule change is discussed in detail below.
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    \5\ See also Interpretations and Policies .06 to Article 6, Rule 
13 (All Registered Persons Must Satisfy the Regulatory Element of 
Continuing Education).
    \6\ See Securities Exchange Act Release No. 97184 (March 22, 
2023), 88 FR 18359 (March 28, 2023) (SR-FINRA-2023-005) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend FINRA Rule 1240.01 To Provide Eligible Individuals Another 
Opportunity To Elect To Participate in the Maintaining 
Qualifications Program) (``FINRA Rule Change'').
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    On May 25, 2022, the Exchange amended NYSE Chicago Article 6, Rule 
11 (Continuing Education for Registered Persons) and Rule 13 
(Registration Requirements) to, among other things, provide eligible 
individuals who terminate any of their representative or principal 
registration categories the option of maintaining their qualification 
for any terminated registration categories by completing annual 
continuing education through a new program, the MQP.\7\ By that time, 
however, the First Enrollment Period, defined below, had expired 
leaving many eligible individuals from being able to participate in the 
MQP. This proposed rule change will provide those eligible individuals 
a second opportunity to elect to participate in the MQP to maintain 
their qualification.
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    \7\ See Securities Exchange Act Release No. 95063 (June 7, 
2022), 87 FR 35826 (June 13, 2022) (SR-NYSECHX-2022-11) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change for 
Amendments to the Exchange's Rules Regarding Continuing Education 
Requirements).
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    Prior to the MQP, individuals whose registrations as 
representatives or principals had been terminated for two or more years 
could reregister as representatives or principals only if they 
requalified by retaking and passing the applicable representative- or 
principal-level examination or if they obtained a waiver of such 
examination(s) (the ``two-year qualification period''). The MQP 
provides these individuals an alternative means of staying current on 
their regulatory and securities knowledge following the termination of 
a registration.\8\ Specifically, the MQP provides eligible individuals 
a maximum of five years following the termination of a representative 
or

[[Page 41174]]

principal registration category to reregister without having to 
requalify by examination or having to obtain an examination waiver, 
subject to satisfying the conditions and limitations of the MQP, 
including the annual completion of all prescribed continuing education.
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    \8\ The MQP does not eliminate the two-year qualification 
period. Thus, eligible individuals who elect not to participate in 
the MQP can continue to avail themselves of the two-year 
qualification period (i.e., they can reregister within two years of 
terminating a registration category without having to requalify by 
examination or having to obtain an examination waiver).
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    Under NYSE Chicago Article 6, Rule 11, Interpretations and Policies 
.07, the MQP has a look-back provision that, subject to specified 
conditions, extended the option to participate in the MQP to 
individuals who: (1) were registered as a representative or principal 
within two years immediately prior to May 25, 2022 (the implementation 
date of the MQP); and (2) individuals who were participating in the 
Financial Services Affiliate Waiver Program (``FSAWP'') under NYSE 
Chicago Article 6, Rule 13, Interpretations and Policies .08 (Waiver of 
Examinations for Individuals Working for a Financial Services Industry 
Affiliate of a Participant) immediately prior to May 25, 2022 
(collectively, ``Look-Back Individuals'').\9\
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    \9\ The FSAWP is a waiver program for eligible individuals who 
have left a member firm to work for a foreign or domestic financial 
services affiliate of a member firm. NYSE Chicago stopped accepting 
new participants for the FSAWP beginning on May 25, 2022; however, 
individuals who were already participating in the FSAWP prior to 
that date had the option of continuing in the FSAWP.
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    In the FINRA Rule Change, FINRA noted that in Regulatory Notice 21-
41 (November 17, 2021), it announced that Look-Back Individuals who 
wanted to take part in the MQP were required to make their election 
between January 31, 2022, and March 15, 2022 (the ``First Enrollment 
Period''). In addition to the announcement in Regulatory Notice 21-41, 
FINRA notified the Look-Back Individuals about the MQP and the First 
Enrollment Period via two separate mailings of postcards to their home 
addresses and communications through their FINRA Financial Professional 
Gateway (``FinPro'') accounts.\10\
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    \10\ Look-Back Individuals were able to notify FINRA of their 
election to participate in the MQP through their FinPro accounts.
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    In the FINRA Rule Change, FINRA further noted that shortly after 
the First Enrollment Period had ended, a number of Look-Back 
Individuals contacted FINRA and indicated that they had only recently 
become aware of the MQP. FINRA noted that it also received anecdotal 
information that a number of these individuals may not have learned of 
the MQP, or the First Enrollment Period, in a timely manner, or at all, 
due to communication and operational issues.\11\ In addition, the 
original six-week enrollment period may not have provided Look-Back 
Individuals with sufficient time to evaluate whether they should 
participate in the MQP. For these reasons, FINRA recently amended its 
rules to provide Look-Back Individuals a second opportunity to elect to 
participate in the MQP (the ``Second Enrollment Period''). For similar 
reasons, NYSE Chicago is also proposing to amend its rules to provide 
Look-Back Individuals with a Second Enrollment Period.\12\ The Second 
Enrollment Period will be between the date of filing of this proposed 
rule change, and December 31, 2023. In addition, the proposed rule 
change requires that Look-Back Individuals who elect to participate in 
the MQP during the Second Enrollment Period complete any prescribed 
2022 and 2023 MQP content by March 31, 2024.\13\
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    \11\ According to FINRA, this may have been a result of the 
timing of FINRA's announcements relating to the MQP, which coincided 
with the holiday season and the transition to the New Year. Further, 
given that Look-Back Individuals were out of the industry at the 
time of these announcements, it was unlikely that they would have 
learned of the MQP, or the First Enrollment Period, through informal 
communication channels.
    \12\ The current rule text also provides that if Look-Back 
Individuals elect to participate in the MQP, their five-year 
participation period will be adjusted by deducting from that period 
the amount of time that has lapsed between the date that they 
terminated their registrations and May 25, 2022. To reflect the 
availability of the Second Enrollment Period, the proposed rule 
change clarifies that for all Look-Back Individuals who elect to 
participate in the MQP, their participation period would also be for 
a period of five years following the termination of their 
registration categories, as with other MQP participants.
    \13\ Look-Back Individuals who elect to enroll in the MQP during 
the Second Enrollment Period would also need to pay the annual 
program fee of $100 for both 2022 and 2023 at the time of their 
enrollment.
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    NYSE Chicago believes that Look-Back Individuals generally have 
greater awareness of the MQP, including due to news coverage, since the 
program's launch.\14\ NYSE Chicago believes that greater public 
awareness of the MQP, coupled with a seven-month enrollment period, 
should help ensure that all Look-Back Individuals are aware of the MQP 
and the availability of the Second Enrollment Period and should provide 
them with ample time .to decide whether to participate in the MQP.
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    \14\ See, e.g., Joanne Cleaver, FINRA Sets Big Change in Motion 
with New Option for Licensing Grace Period, InvestmentNews (June 23, 
2022), https://www.investmentnews.com/finra-sets-big-change-in-motion-with-new-option-for-licensing-grace-period-222942.
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    Look-Back Individuals who elect to enroll during the Second 
Enrollment Period would need to notify FINRA of their election to 
participate in the MQP through a manner to be determined by FINRA.\15\ 
NYSE Chicago also notes that Look-Back Individuals who elect to 
participate in the MQP during the Second Enrollment Period would 
continue to be subject to all of the other MQP eligibility and 
participation conditions. For example, as clarified in the proposed 
rule change, Look-Back Individuals electing to participate during the 
Second Enrollment Period would have only a maximum of five years 
following the termination of a registration category in which to 
reregister without having to requalify by examination or having to 
obtain an examination waiver.\16\
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    \15\ In the FINRA Rule Change, FINRA noted that it anticipates 
that Look-Back Individuals will make their selection to enroll in 
the MQP during the Second Enrollment Period through their FinPro 
accounts. See Enrolling in the MQP, https://www.finra.org/registration-exams-ce/finpro/mqp (describing the MQP enrollment 
process). FINRA further noted that it will inform Look-Back 
Individuals if it determines to provide an alternative enrollment 
method.
    \16\ For example, if a Look-Back Individual terminated a 
registration category on May 1, 2020, and elects to participate in 
the MQP on December 1, 2023, the individual's maximum participation 
period would be five years starting on May 1, 2020, and ending no 
later than May 1, 2025. If the individual does not reregister with a 
member firm by May 1, 2025, the individual would need to requalify 
by examination or obtain an examination waiver in order to 
reregister after that date.
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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''),\17\ in general, and 
furthers the objectives of Section 6(b)(5),\18\ 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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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
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    NYSE Chicago believes that providing Look-Back Individuals a second 
opportunity to elect to participate in the MQP is warranted because 
participation in the MQP would reduce unnecessary impediments to 
requalification for these individuals without diminishing investor 
protection. In addition, the proposed rule change is consistent with 
other goals, such as the promotion of diversity and inclusion in the 
securities industry by attracting and retaining a broader and diverse 
group of professionals. The MQP also allows the industry to retain 
expertise from skilled

[[Page 41175]]

individuals, providing investors with the advantage of greater 
experience among the individuals working in the industry. NYSE Chicago 
believes that providing Look-Back Individuals a second opportunity to 
elect to participate in the MQP will further these goals and 
objectives.

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

    NYSE Chicago has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \19\ and Rule 19b-4(f)(6) thereunder.\20\ 
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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    \19\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \20\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\22\ 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 the proposal 
may become operative immediately upon filing. NYSE Chicago has 
indicated that the immediate operation of the proposed rule change is 
appropriate because it would allow the Exchange to implement the 
proposed changes to its continuing education rules without delay, 
thereby eliminating the possibility of a significant regulatory gap 
between the FINRA rules and the Exchange rules, providing more uniform 
standards across the securities industry, and helping to avoid 
confusion for Exchange members that are also FINRA members. NYSE 
Chicago also noted that FINRA plans to conduct additional public 
outreach efforts to promote awareness of the MQP and the availability 
of the Second Enrollment Period among Look-Back Individuals. Therefore, 
NYSE Chicago additionally indicated that the immediate operation of the 
proposed rule change is appropriate because it would ensure that there 
is sufficient time for Look-Back Individuals to consider whether they 
wish to participate in the program before the December 31, 2023 
deadline. 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.\23\
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    \21\ 17 CFR 240.19b-4(f)(6).
    \22\ 17 CFR 240.19b-4(f)(6)(iii).
    \23\ 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 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) \24\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \24\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSECHX-2023-13 on the subject line.

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-NYSECHX-2023-13. 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 (https://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 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to File Number SR-NYSECHX-2023-13 and should 
be submitted on or before July 14, 2023.


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-13346 Filed 6-22-23; 8:45 am]
BILLING CODE 8011-01-P


