[Federal Register Volume 76, Number 155 (Thursday, August 11, 2011)]
[Notices]
[Pages 49809-49810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-20370]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65040; File No. SR-NASDAQ-2011-108]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Proprietary Traders Qualification Examination (``Series 
56'')

August 5, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on August 1, 2011, The NASDAQ Stock Market LLC (the ``Exchange'' 
or ``NASDAQ'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II, below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASDAQ is filing with the Commission the content outline and 
selection specifications for the Proprietary Traders Qualification 
Examination (``Series 56'') program.
    NASDAQ will notify its membership when the examination becomes 
available.
    The text of the proposed rule change is available at http:/
nasdaq.cchwallstreet.com/, at NASDAQ's principal office, and at the 
Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of 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
    Recently, NASDAQ filed a proposed rule change to recognize a new 
category of limited representative registration for proprietary 
traders.\3\ Specifically, NASDAQ will recognize the new registration 
category ``Proprietary Trader'' and the new examination, the Series 56. 
The new Proprietary Trader category would be limited to persons engaged 
solely in proprietary trading.
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    \3\ See Securities Exchange Act Release No. 64958 (July 25, 
2011) (SR-NASDAQ-2011-095). See also SR-NASDAQ-2011-107.
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    NASDAQ has been working with the Financial Industry Regulatory 
Authority (``FINRA'') and certain other exchanges, many of which have 
recently enhanced their registration requirements to require the 
registration of associated persons,\4\ to develop the content outline 
and qualification examination that would be applicable to proprietary 
traders. The Series 56 examination program is shared by NASDAQ and the 
following self-regulatory organizations (``SROs''): Boston Options 
Exchange; C2 Options Exchange, Incorporated; Chicago Board Options 
Exchange, Incorporated; Chicago Stock Exchange, Incorporated; 
International Securities Exchange, LLC; NASDAQ OMX BX, Inc.; NASDAQ OMX 
PHLX LLC; National Stock Exchange, Incorporated; New York Stock 
Exchange, LLC; NYSE AMEX, Incorporated; and NYSE ARCA, Incorporated. 
Upon request by the SROs referenced above, FINRA staff convened a 
committee of industry representatives, NASDAQ staff and staff from the 
other SROs referenced above, to develop the criteria for the Series 56 
examination program. This new qualification examination, the Series 56, 
was recently filed with the Commission.\5\
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    \4\ See, e.g., Securities Exchange Act Release Nos. 63843 
(February 4, 2011), 76 FR 7884 (February 11, 2011) (SR-ISE-2010-
115); and 63314 (November 12, 2010), 75 FR 70957 (November 19, 2010) 
(SR-CBOE-2010-084).
    \5\ One exchange has thus far filed a proposed rule change 
respecting the Series 56, which has become effective. See Securities 
Exchange Act Release No. 64699 (June 17, 2011), 76 FR 36945 (June 
23, 2011) (SR-CBOE-2011-056).
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    The Series 56 examination tests a candidate's knowledge of 
proprietary trading generally and the industry rules applicable to 
trading of equity securities and listed options contracts. The Series 
56 examination covers, among other things, recordkeeping and recording 
requirements, types and characteristics of securities and investments, 
trading practices and display execution and trading systems. While the 
examination is primarily dedicated to topics related to proprietary 
trading, the Series 56 examination also covers a few general concepts 
relating to customers.\6\
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    \6\ Proprietary trading firms do not have customers.
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    The qualification examination consists of 100 multiple choice 
questions. Candidates will have 150 minutes to complete the exam. The 
content outline describes the following topical sections comprising the 
examination: Personnel, Business Conduct and Recordkeeping and 
Reporting Requirements, 9 questions; Markets, Market Participants, 
Exchanges, and Self Regulatory Organizations, 8 questions; Types and 
Characteristics of Securities and Investments, 20 questions; Trading 
Practices and Prohibited Acts, 50 questions; and Display, Execution, 
and Trading Systems, 13 questions. Representatives from the applicable 
SROs intend to meet on a periodic basis to evaluate and, as necessary, 
update, the Series 56 examination program.
    NASDAQ understands that the other applicable SROs will also file 
with the Commission similar filings regarding the Series 56 examination 
program. NASDAQ proposes to implement the Series 56 examination program 
upon availability in WebCRD and notification to its membership.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \7\ in general, and furthers the objectives of Section 
6(c)(3)(B) of the Act,\8\ pursuant to which a national securities 
exchange prescribes standards of training, experience and competence 
for members and their associated persons, in particular, by offering a 
new, qualification examination for

[[Page 49810]]

proprietary traders. This filing provides the content outline and 
relevant specifications for the Series 56 examination program, which 
NASDAQ believes establishes the appropriate qualifications for this new 
registration category, because it tests the knowledge generally 
applicable to proprietary trading.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78(c)(3)(B) [sic].
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B. Self-Regulatory Organization's Statement on Burden on Competition

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

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

    No written comments were either solicited or received.

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

    Pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) 
\10\ thereunder, the Exchange has designated this proposal as one that 
effects a change that: (i) Does not significantly affect the protection 
of investors or the public interest; (ii) does not impose any 
significant burden on competition; and (iii) by its terms, does not 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest. Rule 19b-4(f)(6) \11\ 
requires a self-regulatory organization to give the Commission written 
notice of its intent to file the proposed rule change at least five 
business days prior to the date of filing of the proposed rule change, 
or such shorter time as designated by the Commission. The Exchange has 
satisfied this requirement.
    Under Rule 19b-4(f)(6) of the Act,\12\ a proposal does not become 
operative for 30 days after the date of its filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. The Exchange requests that the 
Commission waive the 30 day operative period for this filing so that it 
may become effective and operative upon filing with the Commission 
pursuant to Section 19(b)(3)(A) \13\ of the Act and subparagraph (f)(6) 
thereunder. The Exchange believes waiving the 30-day operative delay is 
consistent with the protection of investors and the public as a waiver 
will make the examination available as soon as possible to coincide 
with availability on another exchange. For the reasons stated above, 
the Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest and 
designates the proposal as operative upon filing.\14\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ Id.
    \12\ Id.
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ For purposes only of waiving the operative delay of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f). See also 17 CFR 200.30-3(a)(59).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASDAQ-2011-108 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2011-108. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of NASDAQ. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make publicly 
available. All submissions should refer to File Number SR-NASDAQ-2011-
108 and should be submitted on or before September 1, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20370 Filed 8-10-11; 8:45 am]
BILLING CODE 8011-01-P