[Federal Register Volume 75, Number 220 (Tuesday, November 16, 2010)]
[Notices]
[Pages 70052-70054]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28748]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63284; File No. SR-EDGX-2010-15]


 Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
EDGX Rules 2.5 and 11.4 To Permit Qualification and Registration of 
Authorized Traders of Members Pursuant to Certain Foreign Examination 
Modules Equivalent to the Series 7 Examination

November 9, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on October 27, 2010, the EDGX Exchange, Inc. (the ``Exchange'' or 
the ``EDGX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which items have been prepared by the 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\ 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 Rules 2.5 and 11.4 to permit 
qualification and registration of Authorized Traders of Members 
pursuant to certain foreign examination modules equivalent to the 
Series 7 examination. The Exchange also proposes to make a technical 
amendment to Rule 2.3. The text of the proposed rule change is 
available on the Exchange's Web site at http://www.directedge.com, at 
the Commission's Web site at http://www.sec.gov, at the Exchange's 
principal office, and at the Public Reference Room of the Commission.

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 these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in sections A, B and C below, of the 
most significant aspects of such statements.

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

1. Purpose
    Exchange Rules 2.5 and 11.4 both state that the Series 7 is 
required for registration with the Exchange as an Authorized Trader. 
The purpose of the proposed rule change is to expand the types of exams 
that may satisfy the Exchange's Series 7 requirement by recognizing 
foreign examination modules equivalent to the Series 7 examination.
    The proposal would reduce duplicative qualification standards that 
foreign registered representatives encounter to qualify as a U.S. 
general securities registered representative. For example, the 
examination modules for the U.K. (Series 17) and Canada (Series 37/38) 
currently are accepted as equivalent to the U.S. Series 7 by the NYSE, 
the Financial Industry Regulatory Authority (``FINRA''), the NASDAQ 
Stock Market, NYSE AlterNext US [sic], NYSE Arca, the Chicago Board 
Options Exchange (``CBOE''), and the BATS Exchange, Inc. (``BATS'').\3\
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    \3\ See, e.g., Securities Exchange Act Release No. 27967 (May 1, 
1990), 55 FR 19124 (May 8, 1990) (approving File No. SR-NYSE-89-22, 
Series 17); Securities Exchange Act Release No. 36629, International 
Series Release No. 909 (Dec. 21, 1995), 60 FR 67385, corrected, 
Securities Exchange Act Release No. 36629A, International Series 
Release No. 909A (Jan. 4, 1996), 61 FR 744 (Jan. 10, 1996) 
(approving File No. SR-NYSE-95-29, Series 37 and Series 38); 
Securities Exchange Act Release No. 36825 (Feb. 9, 1996), 61 FR 6052 
(approving File No. SR-NASD-96-04, Series 37 and 38); Securities 
Exchange Act Release No. 38274 (February 12, 1997), 62 FR 7485 
(approving File No. SR-CBOE-97-04, Series 17, 37 and 38); Securities 
Exchange Act Release No. 38921 (August 11, 1997), 62 FR 44023 
(approving File No. SR-AMEX-97-26, Series 17, 37 and 38); see also 
NASD Rule 1032(a)(2)(B) and (C); NASDAQ Rule 1032(a)(2)(B) and (C); 
Securities Exchange Act Release No. 59292 (January 23, 2009), 74 FR 
5690 (January 30, 2009) (approving File No. SR-BATS-2009-003).
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    The Series 17 version, the United Kingdom--Limited General 
Securities Registered Representative Examination, is for U.K. 
registrants who have successfully completed the basic exam of the U.K. 
and who are in good standing with the Financial Services Authority 
(``FSA''). Essentially, this modified Series 7 examination deletes 
those substantive sections of the standard Series 7 that overlap with 
the FSA examination. The Series 17 is a 100 question examination, is 
120 minutes in duration, and deals with U.S. securities laws, 
regulations, sales practices and special products drawn from the 
standard Series 7 examination.
    The Series 37 version is for Canadian registrants who have 
successfully completed the basic core module of the CSI Global 
Education (``CSI'', formerly the Canadian Securities Institute) 
program. The Series 38 version is for Canadian registrants who, in 
addition to having successfully completed the basic core module of the 
CSI program, have also successfully completed the Canadian option and 
futures program. Both the Series 37 and 38 share topics and test 
questions with the parent Series 7 program but cover only subject 
matter that is not covered, or not covered in sufficient detail, on the 
Canadian qualification examination. The Series 37 has 90 questions and 
is 150 minutes in duration, while the Series 38, an abbreviated version 
of the series 37, has only 45 questions and is 75 minutes in duration. 
Forty-five questions pertaining to options from the series 37 were 
omitted from the Series 38.
    The Exchange wishes to give U.K. and Canadian registered 
representatives the same advantage they have at other exchanges by 
eliminating duplicative examinations. The Exchange believes that 
acceptance of these examinations will benefit both the Exchange and the 
foreign representatives affected by the proposal. Accordingly, pursuant 
to the amended rules, as proposed, the Exchange would approve the 
examination modules for the U.K. (Series 17) and Canada (Series 37/38) 
as equivalent foreign examination modules.\4\ The Exchange has added 
Interpretation .05 to Rule 2.5 to define

[[Page 70053]]

what it means to have passed an equivalent foreign examination module.
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    \4\ The Exchange notes that the U.K. (Series 17) and Canada 
(Series 37/38) represent foreign examination modules that allow 
persons in good standing with the securities regulators of their 
respective countries to qualify as general securities registered 
representatives (equivalent to Series 7 registrants) by successfully 
completing certain modified general securities representative 
examinations which were developed, along with others for other 
foreign jurisdictions, by the New York Stock Exchange (``NYSE'') 
more than 10 years ago.
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Technical Amendment to Rule 2.3(c)
    The Exchange proposes to amend Rule 2.3 to clarify that all 
Authorized Traders who are to function as Principals on the Exchange 
shall be registered as Principals with the Exchange consistent with 
paragraph (e) of Rule 2.3, which requires that there be at least one 
such Principal registered.
2. Statutory Basis
    The statutory basis for the Exchange's acceptance of these foreign 
examination modules lies in Section 6(c)(3)(B) of the Act.\5\ Under 
that section, it is the Exchange's responsibility to prescribe 
standards of training, experience, and competence for persons 
associated with Exchange Members. Pursuant to this statutory 
obligation, the Exchange has adopted examinations that are administered 
by other self-regulatory organizations to establish that Authorized 
Traders of Exchange Members have attained specified levels of 
competence and knowledge.
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    \5\ 15 U.S.C. 78f(c)(3)(B).
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    The rule change proposed in this submission is consistent with the 
requirements of the Act and the rules and regulations thereunder that 
are applicable to a national securities exchange, and, in particular, 
with the requirements of Section 6(b) of the Act.\6\ Specifically, the 
proposed change is consistent with Section 6(b)(5) of the Act,\7\ 
because it would promote just and equitable principles of trade, remove 
impediments to, and perfect the mechanism of, a free and open market 
and a national market system, and, in general, protect investors and 
the public interest, by helping foreign representatives to qualify for 
registration with the Exchange by reducing duplicative qualification 
requirements. Accordingly, the modifications to EDGX Rules 2.5 and 11.4 
promote just and equitable principles of trade, remove impediments to, 
and perfect the mechanism of, a free and open market and a national 
market system.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) of the Act and paragraph (f)(6) of Rule 19b-4 
thereunder, in that the proposed rule change: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) does not become operative for 30 days after the date of the 
filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest; 
provided the self-regulatory organization has given the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest, as it will allow the Exchange to recognize proficiency 
examinations already currently recognized by other self-regulatory 
organizations. The Exchange has noted that foreign representatives who 
have passed foreign examination modules equivalent to the Series 7 
examination, are registered with other self-regulatory organizations, 
and wish to register with EDGX would be disadvantaged by having to wait 
for the proposed rule changes to become operative. Accordingly, the 
Commission designates the proposed rule change operative upon filing 
with the Commission.\8\
    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 should be approved or disapproved.
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    \8\ For the purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78(c)(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File No. SR-EDGX-2010-15 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-EDGX-2010-15. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Web site (http://www.sec.gov/rules/sro.shtml). Copies 
of the submission, all subsequent amendments, all written statements 
with respect to the proposed rule change that are filed with the 
Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference Room, 100 F Street, NE., Washington, 
DC 20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of such filing also will be available for inspection and 
copying at the principal office of EDGX. 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 No. SR-EDGX-2010-15 and should be

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submitted on or before December 7, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28748 Filed 11-15-10; 8:45 am]
BILLING CODE 8011-01-P