[Federal Register Volume 81, Number 6 (Monday, January 11, 2016)]
[Notices]
[Pages 1263-1266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00247]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76836; File No. SR-ISE Gemini-2015-28]


Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change to Establish the 
Securities Trader and Securities Trader Principal Registration 
Categories

January 5, 2016.
    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 December 23, 2015, ISE Gemini, LLC (the ``Exchange'' or the 
``ISE Gemini'') filed with the Securities and Exchange Commission the 
proposed rule change as described in Items I, II, and III below, of 
which Items I and II 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

    ISE Gemini proposes to codify, in the Supplementary Material to 
Rule 306 Registration Requirements, the categories of registration and 
respective qualification examinations required for individual 
associated persons (``associated persons'') that engage in the 
securities activities of members on the Exchange. Specifically, the 
Exchange proposes to 1) replace the Proprietary Trader registration 
category

[[Page 1264]]

and the Series 56 Proprietary Trader registration qualification 
examination with the newly codified Securities Trader category of 
registration and the Series 57 Securities Trader registration 
qualification examination for Securities Traders respectively and 2) 
replace the Proprietary Trader Principal registration category with the 
newly codified registration category of Securities Trader Principal and 
require Securities Trader Principals to take the Series 57 
qualification examination in addition to the Series 24 qualification 
examination. The text of the proposed rule change is available on the 
Exchange's Web site at www.ise.com, at the principal office of the 
Exchange, 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 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 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 Rule 306 Registration Requirements. 
This amendment will replace the Proprietary Trader (PT) registration 
category and qualification examination (Series 56) with the newly 
codified Securities Trader (TD) registration category and qualification 
examination (Series 57). In addition, the Exchange proposes to replace 
the Proprietary Trader Principal (TP) registration category with the 
newly codified Securities Trader Principal (TP) registration category 
for associated persons who either: (i) Supervise or monitor proprietary 
trading, market-making and/or brokerage activities for broker-dealers; 
(ii) supervise or train those engaged in proprietary trading, market-
making and/or effecting transactions on behalf of a broker-dealer, with 
respect to those activities; and/or (iii) are officers, partners or 
directors of a member, as described in proposed paragraph (a) to .08 of 
Supplementary Material to Rule 306. The Exchange also proposes to 
replace the Proprietary Trader Compliance Officer (CT) registration 
category with the newly codified Securities Trader Compliance Officer 
(CT) registration category for Chief Compliance Officers (or 
individuals performing similar functions) of a member or member 
organization. This filing is, in all material respects, based upon SR-
FINRA-2015-017 and SR-C2-2015-027.\3\
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    \3\ See Securities Exchange Act Release No. 75783 (August 28, 
2015), 80 FR 53369 (September 3, 2015) (SR-FINRA-2015-017) and 
Securities Exchange Act Release No. 76408 (November 10, 2015) (SR-
C2-2015-027).
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    Currently, Rule 306 requires, among other things, an associated 
person engaged or to be engaged in the securities business of a member 
to register with the Exchange in the category of registration 
appropriate to the function to be performed and to pass the 
qualification examination appropriate to the category of registration 
as prescribed by the Exchange. Among the qualification and registration 
requirements set forth by the Exchange, an associated person who 
engages in proprietary trading, market-making, or effecting 
transactions on behalf of a broker-dealer must register and qualify as 
a Proprietary Trader (PT) in WebCRD.\4\ To qualify as a Proprietary 
Trader, an associated person must either pass the Series 56 Proprietary 
Trader qualification examination \5\ or Series 7 General Securities 
Representative qualification examination. Several exchanges, including 
ISE Gemini currently use the Series 56 examination as a qualification 
standard.\6\
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    \4\ WebCRD is a secure registration and licensing system 
operated by FINRA and is the central licensing and registration 
system for the U.S. securities industry and its regulators. The 
system contains the registration records of more than 6,500 
registered broker-dealers, and the qualification, employment and 
disclosure histories of more than 650,000 active registered 
associated persons. In addition, Web CRD facilitates the processing 
and payment of FINRA registration-related fees such as form filings, 
fingerprint submissions, qualification exams and continuing 
education sessions.
    \5\ The Series 56 Proprietary Trader Examination is a two hour 
and thirty minute exam, consisting of 100 scored multiple-choice 
questions. The Series 56 examination is administered by FINRA, but 
is not recognized by FINRA as an acceptable qualification 
examination for associated persons engaged in securities trading. 
Under FINRA rules, associated persons of FINRA members that engage 
in over-the-counter securities trading are required to pass the 
Series 55 Equity Trader Exam. Nevertheless, as FINRA has recognized, 
because the Series 55 and Series 56 are intended to test the core 
knowledge required of associated persons engaged in trading 
activities as well as self-regulatory organization (``SRO'') rules, 
including trading rules that are common across all SROs, there is 
significant overlap in the content of the Series 55 and Series 56 
qualification examinations. See Securities Exchange Act Release No. 
75394 (July 8, 2015), 80 FR 41119 (Notice of Filing of a Proposed 
Rule Change to Establish the Securities Trader and Securities Trader 
Principal Registration Categories) (SR-FINRA-2015-017).
    \6\ See, e.g., BATS Exchange, Inc. (``BATS'') Interpretation and 
Policy .01 to Rule 2.5 (Proficiency Examinations); Miami 
International Securities Exchange, LLC (``MIAX'') Rule 1302 
(Registration of Representatives).
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    .07 of Supplementary Material to Rule 306 further requires that an 
associated person with supervisory responsibility over proprietary 
trading activities or who is an (i) officer; (ii) partner; (iii) 
director; (iv) supervisor of proprietary trading, market-making or 
brokerage activities; and/or (v) supervisor of those engaged in 
proprietary trading, market-making or brokerage activities with respect 
to those activities is required to register and qualify as a 
Proprietary Trader Principal (TP) in WebCRD and satisfy prerequisite 
registration and qualification requirements, including, but not limited 
to passing the Series 24 General Securities Principal Examination or an 
acceptable alternative qualification examination. An associated person 
who is a Chief Compliance Officer (or performs similar functions) for a 
member that engages in proprietary trading, market-making, or effecting 
transactions on behalf of a broker-dealer is also required to register 
and qualify as a Proprietary Trader Compliance Officer (CT) in WebCRD 
and satisfy the prerequisite registration and qualification 
requirements, including, but not limited to passing the Series 14 
Compliance Official Examination or an acceptable alternative 
qualification exam.
Codification of Examination and Registration Requirements
    The Exchange proposes to replace the Series 56 qualification 
examination with the newly codified Series 57 qualification examination 
for those registration categories where the Series 56 is currently an 
acceptable qualification standard. Specifically, with respect to the 
Proprietary Trader registration, the Exchange proposes to replace the 
Proprietary Trader (PT) registration category with the newly codified 
Securities Trader (TD) registration category as well as eliminate the 
current Series 56 Proprietary Trader Exam prerequisite and, instead, 
include a Series 57 Securities Trader qualification examination in its 
place.\7\

[[Page 1265]]

The Proprietary Trader Principal (PT) and Proprietary Trader Compliance 
Officer (CT) registration categories would be replaced with the newly 
codified renamed registration categories of Securities Trader Principal 
(TP) and Securities Trader Compliance Officer respectively (CT).\8\
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    \7\ Neither the Exchange's current Rules nor the proposal would 
require that a Proprietary Trader or Securities Trader work at, or 
be associated with, a ``proprietary trading firm.'' Rather, both the 
current Rules and the proposal would require that an associated 
person that engages in proprietary trading, market-making, or 
effecting transactions on behalf of a broker-dealer qualify and 
register as a Proprietary Trader (or Securities Trader) in WebCRD. 
Whereas the current rule allows an associated person to qualify and 
register as a Proprietary Trader by either passing the Series 56 
Proprietary Trader qualification examination or Series 7 General 
Securities Representative qualification examination, the proposal 
would require an associated person to pass the Series 57 Securities 
Trader qualification examination in order to qualify as a Securities 
Trader after the effective date of the proposal.
    \8\ As is the case under the current Rules, under the proposed 
rule, only individuals qualified and registered as a Proprietary 
Trader Principal (TP) (Securities Trader Principal TP)) would be 
permitted to supervise a Proprietary Trader (PT) (Securities Trader 
(TD)).
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    The Exchange will announce the effective date of the proposed rule 
change in a Regulatory Circular. Currently, the Exchange intends for 
the effective date to be January 4, 2016. Under the proposed rule, 
associated persons who have passed the Proprietary Trader (Series 56) 
qualification examination and who have registered as a Proprietary 
Trader (PT) in WebCRD on or before the effective date of the proposed 
rule change, and associated persons who have passed the General 
Securities Representative (Series 7) qualification examination and who 
have registered as Proprietary Traders (PT) in WebCRD on or before the 
effective date of the proposed rule change, would be grandfathered as 
Securities Traders (TDs) without having to take any additional 
examinations and without having to take any other action, provided that 
the associated person's registration has not been revoked by the 
Exchange as a disciplinary sanction and no more than two years have 
passed between the date that the associated person last registered as a 
Proprietary Trader (PT) and the effective date. After the effective 
date, an associated person would need to pass the new Series 57 
Securities Trader qualification examination and register as a 
Securities Trader (TD).
    In addition, associated persons who have either passed the 
Proprietary Trader (PT) qualification examination or the General 
Securities Representative (Series 7) qualification examination and who 
have registered as Proprietary Traders (PT) in WebCRD on or before the 
effective date of the proposed rule change, and who have also passed 
the General Securities Principal (Series 24) qualification examination 
(or have completed any of the alternative acceptable qualifications 
requirements as defined in new .08 of Supplementary Material to Rule 
306) and who have also registered as Proprietary Trader Principals (TP) 
in WebCRD on or before the effective date of the proposed rule change, 
would be eligible to register as Securities Trader Principals (TPs), 
provided that the associated person's registration has not been revoked 
by the Exchange as a disciplinary sanction and no more than two years 
have passed between the date that the associated person last registered 
as a Proprietary Trader Principal (TP) and the date they [sic] register 
as a Securities Trader Principal (TP).\9\ After the effective date, a 
Securities Trader Principal (TP) would need to pass the Securities 
Trader (Series 57) qualification examination and the General Securities 
Principal (Series 24) qualification examination (or have completed any 
of the alternative acceptable qualifications as defined in new .08 of 
Supplementary Material to Rule 306) and be registered as such in order 
to register as a Securities Trader Principal (TP).\10\
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    \9\ See Rule 306(e) (Requirement for Examination on Lapse of 
Registration).
    \10\ As part of codifying this rule, the Exchange will include 
text .08 of Supplementary Material to Rule 306 regarding the 
supervisory responsibilities of the Securities Trader Principals, 
which would limit Securities Trader Principals' supervisory 
responsibilities to supervision of the securities trading functions 
of members as described in paragraph (a)(2) of .08 of Supplementary 
Material to Rule 306, and the activities of officers, partners, and 
directors of members.
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2. Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \12\ in particular, in that it is designed to 
promote just and equitable principles of trade, 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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    \11\ 15 U.S.C. 78f(b).
    \12\ 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,\13\ and in particular furthers 
the objectives of Section 6(c)(3) of the Act,\14\ which authorizes the 
Exchange to prescribe standards of training, experience, and competence 
for associated persons. The Exchange believes that the requirements of 
the Securities Trader and Securities Trader Principal registration 
categories and the new Securities Trader qualification requirements 
should help ensure that proprietary traders and the principals who 
supervise proprietary traders and proprietary trading are, and will 
continue to be, properly qualified to perform their functions which 
should protect investors and the public interest.
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    \13\ 15 U.S.C. 78f(c).
    \14\ 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 not necessary or appropriate in 
furtherance of the purposes of the Act. Implementation of the proposed 
changes to ISE Gemini's 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 associated persons and enhance the ability of the 
Exchange to fairly and efficiently regulate associated persons, which 
will further enhance competition. Additionally, the proposed rule 
change should not affect intramarket competition because all similarly 
situated representatives and principals will be required to complete 
the same qualification examinations. 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 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

    The Exchange has neither solicited nor received written comments on 
this proposed rule change. The Exchange has not received any written 
comments from members or other interested parties.

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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not 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 \15\ and Rule 19b-

[[Page 1266]]

4(f)(6) thereunder.\16\ The Exchange provided the Commission with 
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 the proposed rule 
change, or such shorter time as designated by the Commission, as 
required by Rule 19b-4(f)(6).
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
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    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 Commission believes that waiving the thirty day delay is 
consistent with the protection of investors and the public interest, as 
it will enable the Exchange to have the new requirements in effect at 
the same time as the other SROs. Therefore, the Commission hereby 
waives the thirty-day operative delay and designates the proposal 
operative as of January 4, 2016.\17\
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    \17\ 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 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 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 No. SR-ISE Gemini-2015-28 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-ISE Gemini-2015-28. 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 Commissions 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. Copies of such filing also will 
be available for inspection and copying at the principal office of the 
ISE. 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-ISE 
Gemini-2015-28 and should be submitted by February 1, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00247 Filed 1-8-16; 8:45 am]
 BILLING CODE 8011-01-P