[Federal Register Volume 80, Number 247 (Thursday, December 24, 2015)]
[Notices]
[Pages 80425-80428]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32387]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76691; File No. SR-MIAX-2015-71]


Self-Regulatory Organizations; Miami International Securities 
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Establish the Securities Trader and Securities 
Trader Principal Registration Categories and To Establish the Series 57 
Examination as the Appropriate Qualification Examination for Securities 
Traders

December 18, 2015.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on December 8, 2015, Miami International 
Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') a proposed rule 
change as described in Items I, II, and III below, of which Items I and 
II were 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

    The Exchange proposes to amend MIAX Rule 203, Qualification and 
Registration of Members and Associated Persons, MIAX Rule 1302, 
Registration of Representatives, and MIAX Rule 1304, Continuing 
Education for Registered Persons, to establish the Securities Trader 
and Securities Trader Principal registration categories, to establish 
the Series 57 examination as the appropriate qualification examination 
for Securities Traders replacing the Series 56 examination, and to 
establish S101 as the appropriate continuing education program for 
Securities Traders replacing the S501, from and after January 4, 2016.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at 
MIAX'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
    The Exchange proposes to amend its rules to establish the 
Securities Trader and Securities Trader Principal registration 
categories, to establish the Series 57 examination as the appropriate 
qualification examination for Securities Traders and retire the Series 
56 examination for Proprietary Traders, and to establish S101 as the 
appropriate continuing education program for Securities Traders and 
retire the S501 continuing education program for Proprietary Traders, 
from and after January 4, 2016. The Exchange also proposes to amend its 
rules to provide for Web-based delivery of the continuing education 
regulatory element for registered persons. This filing is, in all 
material respects, based upon SR-FINRA-2015-017 and SR-FINRA-2015-015, 
which were recently approved by the Commission.\3\
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    \3\ See Securities Exchange Release No. 75783 (August 28, 2015), 
80 FR 53369 (September 3, 2015) (approving SR-FINRA-2015-017) and 
Securities Exchange Act Release No. 75581 (July 31, 2015), 80 FR 
47018 (August 6, 2015) (approving SR-FINRA-2015-015) collectively 
referred herein as the ``FINRA Amendments''. According to the 
approval orders, the Financial Industry Regulatory Authority's 
(``FINRA'') expected effective date for the FINRA Amendments is 
January 4, 2016.
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    The Exchange proposes to amend MIAX Rule 203, Qualification and 
Registration of Members and Associated Persons, to add the registration 
categories of Securities Trader and Securities Trader Principal. The 
Exchange also proposes to amend MIAX Rule 1302, Registration of 
Representatives, to replace the Proprietary Traders qualification 
examination (Series 56) with the Securities Trader qualification 
examination (Series 57) and to amend MIAX Rule 1304, Continuing 
Education for Registered Persons, to specify the S101 Regulatory 
Element Continuing Education Program as the Continuing Education 
(``CE'') requirement for Securities Traders replacing the S501. The 
Exchange further proposes to amend Rule 1304 to provide for Web-based 
delivery of the CE Regulatory Element set forth in that rule and to 
amend MIAX Rule 203 to make other minor non-substantive revisions.
Securities Trader Registration Category
    Under the Exchange's registration rules relating to securities 
trading activity, Members that are individuals and associated persons 
of Members must register with the Exchange in an appropriate category 
of registration.\4\ Such persons must register with the Exchange 
through the Central Registration Depository system operated

[[Page 80426]]

by FINRA (the ``Web CRD'') under MIAX in the category of registration 
appropriate to the function to be performed.\5\ Currently, under MIAX 
Rule 1302(e), a person engaged solely in proprietary trading on the 
Exchange is required to register with the Exchange and be qualified by 
passing the Proprietary Traders qualification examination (Series 56), 
however, MIAX Rule 1302(e) also allows a person engaged in proprietary 
trading on the Exchange to pass the General Securities Registered 
Representative Examination (Series 7) and maintain a Series 7 
registration without being required to pass the Proprietary Traders 
qualification examination (Series 56).
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    \4\ Members that are individuals and associated persons of 
Members engaged or to be engaged in the securities business of a 
Member shall be registered with the Exchange in the category of 
registration appropriate to the function to be performed in a form 
and manner prescribed by the Exchange. Before the registration can 
become effective, the individual Member or individual associated 
person shall submit the appropriate application for registration, 
pass a qualification examination appropriate to the category of 
registration in a form and manner prescribed by the Exchange and 
submit any required registration and examination fees. See Exchange 
Rule 203(a).
    \5\ See Exchange Rule 203, Interpretation and Policy .01.
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    In consultation with FINRA and other exchanges, the Exchange 
proposes to establish a new Securities Trader registration category by 
adopting a new Rule 203(d) applicable to persons engaged solely in 
proprietary trading on the Exchange. Such persons would be required to 
register with the Exchange as Securities Traders and be qualified by 
passing the new Securities Trader qualification examination (Series 57) 
being implemented by FINRA. Specifically, Rule 203(d)(1) would require 
Members that are individuals and associated persons of Members to 
register with the Exchange as a Securities Trader if, with respect to 
transactions in equity, preferred or convertible debt securities, or 
foreign currency options on the Exchange, such person is engaged in 
proprietary trading, the execution of transactions on an agency basis, 
or the direct supervision of such activities (other than any person 
associated with a Member whose trading activities are conducted 
principally on behalf of an investment company that is registered with 
the Commission pursuant to the Investment Company Act of 1940 and that 
controls, is controlled by or is under common control, with the 
Member). Subparagraph (d)(2) would require an applicant to become 
qualified as a Securities Trader under Rule 1302(e) as proposed to be 
amended before registering in the new Securities Trader category. 
Subparagraph (d)(3) would also provide that a person registered as a 
Securities Trader would not be qualified to function in any other 
registration category, unless he or she is also separately qualified 
and registered in such other registration category.
    Rule 1302(e) as proposed to be amended would require that a person 
engaged solely in proprietary trading on the Exchange pass the new 
Series 57 qualification examination for Securities Traders being 
implemented by FINRA. Rule 1302(e) would also allow a person engaged in 
proprietary trading on the Exchange to be grandfathered as a Securities 
Trader without having to take the Securities Trader qualification 
examination (Series 57), if such person has passed the General 
Securities Registered Representative Examination (Series 7) and 
maintains a Series 7 registration or has passed the Proprietary Traders 
qualification examination (Series 56) and maintains a Proprietary 
Trader registration as of January 4, 2016, provided that no more than 
two years have passed between the date that the person last registered 
as a Proprietary Trader and the date such person registers as a 
Securities Trader in the Web CRD. Following January 4, 2016, all new 
candidates for Securities Trader registration must pass the Series 57 
examination. They will not be permitted to pass the Series 7 in order 
to register as Securities Traders. The Series 7 requirement will 
continue to apply to candidates for General Securities Representative 
registration, but will not qualify candidates to register as Securities 
Traders.
    A person registered as a Proprietary Trader in Web CRD system on 
January 4, 2016 will be grandfathered as a Securities Trader without 
having to take any additional examinations and without having to take 
any other actions. In addition, individuals who were registered as a 
Proprietary Trader in the Web CRD system prior to January 4, 2016 will 
be eligible to register as Securities Traders without having to take 
any additional examinations, provided that no more than two years have 
passed between the date they were last registered as a Proprietary 
Trader and the date they register as a Securities Trader.
    Persons registered in the new Securities Trader category would be 
subject to the continuing education requirements of Rule 1304. The S501 
Proprietary Trader CE Program is currently specified as the CE 
Regulatory Element applicable for registrants registered as Proprietary 
Traders by passing the Series 56 qualification examination. The S101 
Regulatory Element CE Program is the CE Regulatory Element that applies 
to persons with a Series 7 registration, including those registered as 
Proprietary Traders by passing the Series 7 qualification examination. 
MIAX Rule 1304(a) as proposed to be amended would specify the S101 
Regulatory Element CE Program as the appropriate CE Regulatory Element 
applicable to Securities Traders. The rule would leave in place the 
Proprietary Trader CE Program through January 4, 2016, the phase out 
date for the registration category of Proprietary Trader. From and 
after January 4, 2016, the S101 would become the appropriate CE 
Regulatory Element applicable to individuals maintaining a Series 7 or 
a Series 57. The S101 CE Regulatory Element content is being updated by 
FINRA to provide for a more comprehensive, complete and customized CE 
approach covering key aspects of a particular registered person's 
registration.
Securities Trader Principal Registration Category
    In consultation with FINRA and other exchanges, the Exchange 
further proposes to establish a new Securities Trader Principal 
registration category by adopting a new Rule 203(c) applicable to 
persons responsible for the supervision of persons engaged in 
proprietary trading on the Exchange. Persons responsible for the 
supervision of persons engaged in proprietary trading on the Exchange 
would be required to register with the Exchange as Securities Trader 
Principals. The proposed rule change should allow MIAX to more easily 
track principals with supervisory responsibility over specific 
securities trading activities. Securities Trader Principals would be 
required to qualify by first registering as a Securities Trader under 
Rule 1302(e), and passing the new Securities Trader qualification 
examination (Series 57) being implemented by FINRA as well as passing 
the General Securities Principal qualification examination (Series 24). 
Specifically, Rule 203(c)(1) would require Members that are individuals 
and associated persons of Members within the definition of Options 
Principal in Rule 100 and who will have supervisory responsibility over 
the securities trading activities described in Rule 203(d) (i.e., the 
activities engaged in by Securities Traders) to become qualified and 
registered as a Securities Trader Principal. To qualify for 
registration as a Securities Trader Principal, such person shall become 
qualified and registered as a Securities Trader under Rule 1302(e) and 
pass the General Securities Principal qualification examination (Series 
24).
    A person who is qualified and registered as a Securities Trader 
Principal under the proposed rule would only have supervisory 
responsibility over the securities trading activities specified in Rule 
203(d), unless such person were separately qualified and registered in 
another appropriate principal registration

[[Page 80427]]

category, such as the General Securities Principal registration 
category. Subparagraph (c)(2) would make clear that a registered 
General Securities Principal would not be qualified to supervise the 
securities trading activities described in Rule 203(d), unless such 
person also qualified and registered as a Securities Trader under Rule 
1302(e) by passing the Securities Trader qualification examination and 
registering as a Securities Trader Principal.
    A person registered as a Proprietary Trader Principal in the Web 
CRD system on January 4, 2016 will be eligible to register as a 
Securities Trader Principal without having to take any additional 
examinations. An individual who was registered as a Proprietary Trader 
Principal in the Web CRD system prior to the effective date of the 
proposed rule change will also be eligible to register as a Securities 
Trader Principal without having to take any additional examinations, 
provided that no more than two years have passed between the date they 
were last registered as an Options Principal and the date they register 
as a Securities Trader Principal. Members, however, will be required to 
affirmatively register persons transitioning to the proposed 
registration category as Securities Trader Principals on or after 
January 4, 2016.
Delivery of the Regulatory Element
    In consultation with FINRA and other exchanges, the Exchange 
further proposes to provide for Web-based delivery of the CE Regulatory 
for registered persons. As proposed to be amended, MIAX Rule 1304 would 
specify in a new subparagraph (a)(4) that the CE Regulatory Element set 
forth in the rule will be administered through Web-based delivery or 
such other technological manner and format as specified by the Exchange 
from and after January 4, 2016. Most registered persons currently 
complete the Regulatory Element in a test center and the remainder do 
so in-firm. Given the advances in Web-based technology, the Exchange 
believes that there is diminishing utility in the test center and in-
firm CE delivery methods. The Exchange notes that the Web-based format 
will include safeguards to authenticate the identity of the CE 
candidate. Moreover, according to FINRA, registered persons have raised 
concerns with the current test center delivery method because of the 
travel involved, the limited time currently available to complete a 
Regulatory Element session and the use of rigorous security measures at 
test centers, which are appropriate for taking qualification 
examinations, but onerous for a CE program.\6\ Also, according to 
FINRA, the test center is expensive to operate.\7\
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    \6\ See supra note 3.
    \7\ Id.
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Other Clarifying Changes
    In addition to the changes set forth above, the Exchange proposes 
to make the following non-substantive clarifying changes to Rule 203: 
(i) Re-letter the paragraphs following new Rules 203(c) and (d), (ii) 
remove the word ``Exam'' in the parenthetical in subparagraph (e) for 
consistency with other references to examinations in MIAX's rulebook, 
(iii) add a colon at the end of the subparagraph (f), and (iv) correct 
the reference to the Securities Exchange Act of 1934, as the ``Act'' to 
the defined term of ``Exchange Act'' in subparagraph (f)(1). These 
clarifying changes would make the rule more concise, clear and 
understandable, and eliminate the potential for confusion.
    Within 30 days of filing the proposed rule change, the Exchange 
will issue a Regulatory Circular announcing the operative date of the 
rule change, which will not be sooner than January 4, 2016.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \8\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act \9\ in particular, in that 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 mechanisms 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange further believes its proposed rule change is 
consistent with Section 6(c) of the Act \10\ in general, and in 
particular, furthers the objectives of Section 6(c)(3) of the Act,\11\ 
which authorizes the Exchange to prescribe standards of training, 
experience and competence for Members and persons associated with the 
Members. The Exchange believes that the requirements of the Securities 
Trader and Securities Trader Principal registration categories, the new 
Securities Trader qualification examination and continuing education 
requirement, as well as Web-based delivery of the continuing education 
requirement, should help ensure that proprietary traders and the 
principals who supervise proprietary traders and proprietary trading 
are, and will continue to be, properly trained and qualified to perform 
their functions which should protect investors and the public interest.
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    \10\ 15 U.S.C. 78f(c).
    \11\ 15 U.S.C. 78f(c)(3).
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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. Implementation of the 
proposed changes to MIAX registration rules in coordination with the 
FINRA Amendments does not present any competitive issues, but rather is 
designed to provide less burdensome and more efficient regulatory 
compliance for Members and enhance the ability of the Exchange to 
fairly and efficiently regulate Members, which will further enhance 
competition. Additionally, the proposed rule change should not affect 
intra-market competition because all similarly situated representatives 
and principals will be required to complete the same qualification 
examinations and maintain the same registrations. Finally, the proposed 
rule change does not impose any additional examination burdens on 
persons who are already registered. There is no obligation to take the 
proposed new Series 57 examination in order to continue in their 
present duties, so the proposed rule change is not expected to 
disadvantage current registered persons relative to new entrants in 
this regard.

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

    Written comments were neither solicited nor received.

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 after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A)

[[Page 80428]]

of the Act \12\ and Rule 19b-4(f)(6) \13\ thereunder. The Exchange has 
requested that the Commission waive the thirty-day operative delay so 
that the proposal may become operative as of January 4, 2016. The 
Exchange states that waiving the thirty-day delay would enable it to 
implement the Securities Trader and Securities Trader Principal 
registration categories, and their respective examination and 
continuing education requirements, at the same time as FINRA and the 
other national securities exchanges. The Commission believes that 
waiving the thirty day delay is consistent with the protection of 
investors and the public interest. Therefore, the Commission hereby 
waives the thirty-day operative delay and designates the proposal 
operative as of January 4, 2016.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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.
    \14\ For purposes 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. 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 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- MIAX-2015-71 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MIAX-2015-71. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).
    Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference 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; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MIAX-2015-71 and should be 
submitted on or before January 14, 2016.

    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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-32387 Filed 12-23-15; 8:45 am]
 BILLING CODE 8011-01-P