[Federal Register Volume 87, Number 113 (Monday, June 13, 2022)]
[Notices]
[Pages 35826-35831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-12654]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95063; File No. SR-NYSECHX-2022-11]


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 7, 2022.
    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 May 25, 2022, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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\ The proposed rule change also makes conforming 
amendments to the Exchange's rules regarding registration requirements 
(Article 6, Rule 13). Among other changes, the proposed rule change 
requires that the Regulatory Element of continuing education be 
completed annually rather than every three years and provides a path 
through continuing education for individuals to maintain their 
qualification following the termination of a registration. 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.
---------------------------------------------------------------------------

    \4\ A Participant is a ``member'' of the Exchange for purposes 
of the Act. See Article 1, Rule 1(s).
---------------------------------------------------------------------------

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 Exchange proposes to amend its continuing education 
requirements in Article 6, Rule 11 and amend related registration 
requirements provided under various Interpretations and Policies to 
Article 6, Rule 13. 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.\5\ The proposed rule change is 
discussed in detail below.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 93097 (September 21, 
2021), 86 FR 53358 (September 27, 2021) (SR-FINRA-2021-015) (``FINRA 
Rule Change'').
---------------------------------------------------------------------------

    The proposed changes are based on the changes approved by the 
Commission in the approval order for SR-FINRA-2021-015.\6\ The Exchange 
is proposing to adopt such changes substantially in the same form as 
proposed by FINRA, with only minor changes necessary to conform to the 
Exchange's existing rules such as to remove cross-references and rules 
that are applicable to FINRA members but not to Exchange members.
---------------------------------------------------------------------------

    \6\ Id.
---------------------------------------------------------------------------

Continuing Education Rules
(i) Background
    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

[[Page 35827]]

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 (``SROs''). The CE Program for registered persons of 
Exchange members is codified under Article 6, Rule 11.\7\
---------------------------------------------------------------------------

    \7\ See also Interpretations and Policies .06 to Article 6, Rule 
13 (All Registered Persons Must Satisfy the Regulatory Element of 
Continuing Education).
---------------------------------------------------------------------------

a. Regulatory Element
    Article 6, Rule 11(a) (Regulatory Element) currently requires a 
registered person to complete the applicable Regulatory Element 
initially within 120 days after the person's second registration 
anniversary date and, thereafter, within 120 days after every third 
registration anniversary date.\8\ The Exchange may extend these time 
frames for good cause shown.\9\ Registered persons who have not 
completed the Regulatory Element within the prescribed time frames will 
have their Exchange registrations deemed inactive and will be 
designated as ``CE inactive'' in the CRD system until the requirements 
of the Regulatory Element have been satisfied.\10\ A CE inactive person 
is prohibited from performing, or being compensated for, any activities 
requiring FINRA registration, including supervision. Moreover, if 
registered persons remain CE inactive for two consecutive years, they 
must requalify by retaking required examinations (or obtain a waiver of 
the applicable qualification examinations).\11\
---------------------------------------------------------------------------

    \8\ See Article 6, Rule 11(a) and Article 6, Rule 11(a)(5). An 
individual's registration anniversary date is generally the date 
they initially registered with the Exchange in the Central 
Registration Depository (``CRD[supreg]'') system. However, an 
individual's registration anniversary date would be reset if the 
individual has been out of the industry for two or more years and is 
required to requalify by examination, or obtain an examination 
waiver, in order to reregister. An individual's registration 
anniversary date would also be reset if the individual obtains a 
conditional examination waiver that requires them to complete the 
Regulatory Element by a specified date. Non-registered individuals 
who are participating in the waiver program under Interpretations 
and Policies .08 to Article 6, Rule 13 (Waiver of Examinations for 
Individuals Working for a Financial Services Industry Affiliate of a 
Participant) (``FSAWP participants'') are also subject to the 
Regulatory Element. The Regulatory Element for FSAWP participants 
correlates to their most recent registration(s), and it must be 
completed based on the same cycle had they remained registered. 
FSAWP participants are eligible for a single, fixed seven-year 
waiver period from the date of their initial designation, subject to 
specified conditions. Registered persons who become subject to a 
significant disciplinary action, as specified in Article 6, Rule 
11(a)(2) (Disciplinary Actions), may be required to retake the 
Regulatory Element within 120 days of the effective date of the 
disciplinary action, if they remain registered. Further, their cycle 
for participation in the Regulatory Element may be adjusted to 
reflect the effective date of the disciplinary action rather than 
their registration anniversary date.
    \9\ See Article 6, Rule 11(a)(1) (Failure to Complete).
    \10\ Id. Individuals must complete the entire Regulatory Element 
session to be considered to have ``completed'' the Regulatory 
Element; partial completion is the same as non-completion.
    \11\ This CE inactive two-year period is calculated from the 
date such persons become CE inactive, and it continues to run 
regardless of whether they terminate their registrations before the 
end of the two-year period. Therefore, if registered persons 
terminate their registrations while in a CE inactive status, they 
must satisfy all outstanding Regulatory Element prior to the end of 
the CE inactive two-year period in order to reregister with a member 
without having to requalify by examination or having to obtain an 
examination waiver.
---------------------------------------------------------------------------

    The Regulatory Element consists of a subprogram for registered 
persons generally, and a subprogram for principals and supervisors.\12\ 
While some of the current Regulatory Element content is unique to 
particular registration categories, most of the content has broad 
application to both representatives and principals.\13\
---------------------------------------------------------------------------

    \12\ The S101 (General Program for Registered Persons) and the 
S201 (Registered Principals and Supervisors).
    \13\ The current content is presented in a single format leading 
individuals through a case that provides a story depicting 
situations that they may encounter in the course of their work.
---------------------------------------------------------------------------

    The Regulatory Element was originally designed at a time when most 
individuals had to complete the Regulatory Element at a test center, 
and its design was shaped by the limitations of the test center-based 
delivery model. In 2015, FINRA transitioned the delivery of the 
Regulatory Element to an online platform (``CE Online''), which allows 
individuals to complete the content online at a location of their 
choosing, including their private residence. This online delivery 
provides FINRA with much greater flexibility in updating content in a 
timelier fashion, developing content tailored to each registration 
category and presenting the material in an optimal learning format.
b. Firm Element
    Article 6, Rule 11(b) (Firm Element) currently requires each firm 
to develop and administer an annual Firm Element training program for 
covered registered persons.\14\ The rule requires firms to conduct an 
annual needs analysis to determine the appropriate training.\15\ 
Currently, at a minimum, the Firm Element must cover training in ethics 
and professional responsibility as well as the following items 
concerning securities products, services and strategies offered by the 
member: (1) general investment features and associated risk factors; 
(2) suitability and sales practice considerations; and (3) applicable 
regulatory requirements.\16\
---------------------------------------------------------------------------

    \14\ The rule defines ``covered registered persons'' as any 
registered person who has direct contact with customers in the 
conduct of a member's securities sales and trading activities, and 
the immediate supervisors of any such persons. See Article 6, Rule 
11(b)(1) (Persons Subject to the Firm Element).
    \15\ See Article 6, Rule 11(b)(2) (Standards).
    \16\ Id.
---------------------------------------------------------------------------

    A firm, consistent with its needs analysis, may determine to apply 
toward the Firm Element other required training. The current rule does 
not expressly recognize other required training, such as training 
relating to the anti-money laundering (``AML'') compliance program and 
training relating to the annual compliance meeting, for purposes of 
satisfying Firm Element training.
c. Termination of a Registration
    Currently, individuals whose registrations as representatives or 
principals have been terminated for two or more years may reregister as 
representatives or principals only if they requalify by retaking and 
passing the applicable representative- or principal-level examination 
or if they obtain a waiver of such examination(s) (the ``two-year 
qualification period'').\17\ The

[[Page 35828]]

two-year qualification period was adopted prior to the creation of the 
CE Program and was intended to ensure that individuals who reregister 
are relatively current on their regulatory and securities knowledge.
---------------------------------------------------------------------------

    \17\ See Interpretations and Policies .07 to Article 6, Rule 13 
(Lapse of Registration and Expiration of SIE). The two-year 
qualification period is calculated from the date individuals 
terminate their registration and the date the Exchange receives a 
new application for registration. The two-year qualification period 
does not apply to individuals who terminate a limited registration 
category that is a subset of a broader registration category for 
which they remain qualified. For instance, it would not apply to an 
individual who maintains his registration as a General Securities 
Representative but who terminates his registration as an Investment 
Company and Variable Contracts Products Representative. Such 
individuals have the option of reregistering in the more limited 
registration category without having to requalify by examination or 
obtain an examination waiver so long as they continue to remain 
qualified for the broader registration category. Further, the two-
year qualification period only applies to the representative- and 
principal-level examinations; it does not extend to the Securities 
Industry Essentials (``SIE'') examination. The SIE examination is 
valid for four years, but having a valid SIE examination alone does 
not qualify an individual for registration as a representative or 
principal. Individuals whose registrations as representatives or 
principals have been revoked may only requalify by retaking the 
applicable representative- or principal-level examination in order 
to reregister as representatives or principals, in addition to 
satisfying the eligibility conditions for association with a firm. 
Waivers are granted either on a case-by-case basis under 
Interpretations and Policies .02 to Article 6, Rule 13 
(Qualification Examinations and Waivers of Examinations) or as part 
of the waiver program under Interpretations and Policies .08 to 
Article 6, Rule 13.
---------------------------------------------------------------------------

(ii) Proposed Rule Change
    After extensive work with the Securities Industry/Regulatory 
Council on Continuing Education (``CE Council'') and discussions with 
stakeholders, including industry participants and the North American 
Securities Administrators Association (``NASAA''), FINRA adopted the 
following changes to the CE Program under its rules.\18\ In order to 
promote uniform standards across the securities industry, the Exchange 
now proposes to adopt substantially similar changes to its continuing 
education rules.
---------------------------------------------------------------------------

    \18\ See supra note 5. FINRA's changes are based on the CE 
Council's September 2019 recommendations to enhance the CE Program. 
See Recommended Enhancements for the Securities Industry Continuing 
Education Program, available at http://cecouncil.org/media/266634/council-recommendations-final-.pdf. The CE Council is composed of 
securities industry representatives and representatives of SROs. The 
CE Council was formed in 1995 upon a recommendation from the 
Securities Industry Task Force on Continuing Education and was 
tasked with facilitating the development of uniform continuing 
education requirements for registered persons of broker-dealers.
---------------------------------------------------------------------------

a. Transition to Annual Regulatory Element for Each Registration 
Category
    As noted above, currently, the Regulatory Element generally must be 
completed every three years, and the content is broad in nature. Based 
on changes in technology and learning theory, the Regulatory Element 
content can be updated and delivered in a timelier fashion and tailored 
to each registration category, which would further the goals of the 
Regulatory Element.\19\ Therefore, to provide registered persons with 
more timely and relevant training on significant regulatory 
developments, the Exchange proposes amending Article 6, Rule 11(a) to 
require registered persons to complete the Regulatory Element annually 
by December 31.\20\ The proposed amendment would also require 
registered persons to complete Regulatory Element content for each 
representative or principal registration category that they hold, which 
would also further the goals of the Regulatory Element.\21\ Under the 
proposed rule change, firms would have the flexibility to require their 
registered persons to complete the Regulatory Element sooner than 
December 31, which would allow firms to coordinate the timing of the 
Regulatory Element with other training requirements, including the Firm 
Element.\22\ For example, a firm could require its registered persons 
to complete both their Regulatory Element and Firm Element by October 1 
of each year.
---------------------------------------------------------------------------

    \19\ When the CE Program was originally adopted in 1995, 
registered persons were required to complete the Regulatory Element 
on their second, fifth and 10th registration anniversary dates. See 
Securities Exchange Act Release No. 35341 (February 8, 1995), 60 FR 
8426 (February 14, 1995) (Order Approving File Nos. SR-AMEX-94-59; 
SR-CBOE-94-49; SR-CHX-94-27; SR-MSRB-94-17; SR-NASD-94-72; SR-NYSE-
94-43; SR-PSE-94-35; and SR-PHLX-94-52). The change to the current 
three-year cycle was made in 1998 to provide registered persons more 
timely and effective training, consistent with the overall purpose 
of the Regulatory Element. See Securities Exchange Act Release No. 
39712 (March 3, 1998), 63 FR 11939 (March 11, 1998) (Order Approving 
File Nos. SR-CBOE-97-68; SR-MSRB-98-02; SR-NASD-98-03; and SR-NYSE-
97-33).
    \20\ See proposed Article 6, Rules 11(a) and (a)(5).
    \21\ See proposed Article 6, Rule 13, Interpretations and 
Policies .06 and Article 6, Rule 11(a).
    \22\ See proposed Article 6, Rules 11(a) and (a)(5).
---------------------------------------------------------------------------

    Individuals who would be registering as a representative or 
principal for the first time on or after the implementation date of the 
proposed rule change would be required to complete their initial 
Regulatory Element for that registration category in the next calendar 
year following their registration.\23\ In addition, subject to 
specified conditions, individuals who would be reregistering as a 
representative or principal on or after the implementation date of the 
proposed rule change would also be required to complete their initial 
Regulatory Element for that registration category in the next calendar 
year following their reregistration.\24\
---------------------------------------------------------------------------

    \23\ See proposed Article 6, Rule 11(a).
    \24\ See proposed Article 6, Rule 11(a)(5).
---------------------------------------------------------------------------

    Consistent with current requirements, individuals who fail to 
complete their Regulatory Element within the prescribed period would be 
automatically designated as CE inactive.\25\ However, the proposed rule 
change preserves the Exchange's ability to extend the time by which a 
registered person must complete the Regulatory Element for good cause 
shown.\26\
---------------------------------------------------------------------------

    \25\ See proposed Article 6, Rule 11(a)(1).
    \26\ Id. The proposed rule change clarifies that the request for 
an extension of time must be in writing and include supporting 
documentation, which is consistent with current practice.
---------------------------------------------------------------------------

    The Exchange also proposes amending Article 6, Rule 11(a) to 
clarify that: (1) individuals who are designated as CE inactive would 
be required to complete all of their pending and upcoming annual 
Regulatory Element, including any annual Regulatory Element that 
becomes due during their CE inactive period, to return to active 
status; \27\ (2) the two-year CE inactive period is calculated from the 
date individuals become CE inactive, and it continues to run regardless 
of whether individuals terminate their registrations; \28\ (3) 
individuals who become subject to a significant disciplinary action may 
be required to complete assigned continuing education content as 
prescribed by the Exchange; \29\ (4) individuals who have not completed 
any Regulatory Element content for a registration category in the 
calendar year(s) prior to reregistering would not be approved for 
registration for that category until they complete that Regulatory 
Element content, pass an examination for that registration category or 
obtain an unconditional examination waiver for that registration 
category, whichever is applicable; \30\ and (5) the Regulatory Element 
requirements apply to individuals who are registered, or in the process 
of registering, as a representative or principal. In addition, the 
Exchange proposes making conforming amendments to Interpretations and 
Policies .07 to Article 6, Rule 13.
---------------------------------------------------------------------------

    \27\ See proposed Article 6, Rule 11(a)(1).
    \28\ See proposed Article 6, Rule 11(a)(1).
    \29\ See proposed Article 6, Rule 11(a)(2). As previously noted, 
Article 6, Rule 11(a)(2) currently provides that such individuals 
may be required to retake the Regulatory Element. See supra note 8.
    \30\ See proposed Article 6, Rule 11(a)(5).
---------------------------------------------------------------------------

    Under the proposed rule change, the amount of content that 
registered persons would be required to complete in a three-year, 
annual cycle for a particular registration category is expected to be 
comparable to what most registered persons are currently completing 
every three years. In some years, there may be more required content 
for some registration categories depending on the volume of rule 
changes and regulatory issues. In addition, an individual who holds 
multiple registrations may be required to complete additional content 
compared to an individual who holds a single registration because, as 
noted above, individuals would be required to complete content specific 
to each registration category that they hold.\31\ However, individuals 
with multiple registrations would not be subject to duplicative 
regulatory content in any given year. The more common registration 
combinations would likely share much of their relevant regulatory 
content each year. For example, individuals registered as General

[[Page 35829]]

Securities Representatives and General Securities Principals would 
receive the same content as individuals solely registered as General 
Securities Representatives, supplemented with a likely smaller amount 
of supervisory-specific content on the same topics. The less common 
registration combinations may result in less topic overlap and more 
content overall.
---------------------------------------------------------------------------

    \31\ As discussed in the economic impact assessment in the FINRA 
Rule Change, individuals with multiple registrations represent a 
smaller percentage of the population of registered persons.
---------------------------------------------------------------------------

b. Recognition of Other Training Requirements for Firm Element and 
Extension of Firm Element to All Registered Persons
    To better align the Exchange's rulebook with FINRA's rulebook, and, 
in addition, to better align the Firm Element requirement with other 
required training, the Exchange proposes amending Article 6, Rule 11(b) 
to expressly allow firms to consider training relating to the AML 
compliance program and the annual compliance meeting toward satisfying 
an individual's annual Firm Element requirement.\32\ The Exchange also 
proposes amending the rule to extend the Firm Element requirement to 
all registered persons, including individuals who maintain solely a 
permissive registration consistent with Interpretations and Policies 
.01 to Article 6, Rule 13 (Permissive Registrations), thereby further 
aligning the Firm Element requirement with other broadly-based training 
requirements.\33\ In conjunction with this proposed change, the 
Exchange proposes modifying the current minimum training criteria under 
Article 6, Rule 11(b) to instead provide that the training must cover 
topics related to the role, activities or responsibilities of the 
registered person and to professional responsibility.\34\
---------------------------------------------------------------------------

    \32\ See proposed Article 6, Rule 11(b)(2)(D).
    \33\ See proposed Article 6, Rule 11(b)(1). As noted earlier, 
the current requirement only applies to ``covered registered 
persons'' and not all registered persons.
    \34\ See proposed Rule Article 6, Rule 11(b)(2)(B).
---------------------------------------------------------------------------

c. Maintenance of Qualification After Termination of Registration
    The Exchange proposes adopting paragraph (c) under Article 6, Rule 
11 and Interpretations and Policies .07 and .08 to Article 6, Rule 11 
to provide eligible individuals who terminate any of their 
representative or principal registrations the option of maintaining 
their qualification for any of the terminated registrations by 
completing continuing education.\35\ The proposed rule change would not 
eliminate the two-year qualification period. Rather, it would provide 
such individuals an alternative means of staying current on their 
regulatory and securities knowledge following the termination of a 
registration(s). Eligible individuals who elect not to participate in 
the proposed continuing education program would continue to be subject 
to the current two-year qualification period. The proposed rule change 
is generally aligned with other professional continuing education 
programs that allow individuals to maintain their qualification to work 
in their respective fields during a period of absence from their 
careers (including an absence of more than two years) by satisfying 
continuing education requirements for their credential.
---------------------------------------------------------------------------

    \35\ The proposed option would also be available to individuals 
who terminate any permissive registrations as provided under 
Interpretations and Policies .01 to Article 6, Rule 13. However, the 
proposed option would not be available to individuals who terminate 
a limited registration category that is a subset of a broader 
registration category for which they remain qualified. As previously 
noted, such individuals currently have the option of reregistering 
in the more limited registration category without having to 
requalify by examination or obtain an examination waiver so long as 
they continue to remain qualified for the broader registration 
category. In addition, the proposed option would not be available to 
individuals who are maintaining an eliminated registration category, 
such as the category for Corporate Securities Representative, or 
individuals who have solely passed the Securities Industry 
Essentials examination, which does not, in and of itself, confer 
registration.
---------------------------------------------------------------------------

    The proposed rule change would impose the following conditions and 
limitations:
     individuals would be required to be registered in the 
terminated registration category for at least one year immediately 
prior to the termination of that category; \36\
---------------------------------------------------------------------------

    \36\ See proposed Article 6, Rule 11(c)(1).
---------------------------------------------------------------------------

     individuals could elect to participate when they terminate 
a registration or within two years from the termination of a 
registration; \37\
---------------------------------------------------------------------------

    \37\ See proposed Article 6, Rule 11(c)(2). Individuals who 
elect to participate at the later date would be required to 
complete, within two years from the termination of their 
registration, any continuing education that becomes due between the 
time of their Form U5 (Uniform Termination Notice for Securities 
Industry Registration) submission and the date that they commence 
their participation. In addition, FINRA would enhance its systems to 
notify individuals of their eligibility to participate, enable them 
to affirmatively opt in, and notify them of their annual continuing 
education requirement if they opt in.
---------------------------------------------------------------------------

     individuals would be required to complete annually all 
prescribed continuing education; \38\
---------------------------------------------------------------------------

    \38\ See proposed Article 6, Rule 11(c)(3). However, upon a 
participant's request and for good cause shown, the Exchange would 
have the ability to grant an extension of time for the participant 
to complete the prescribed continuing education. A participant who 
is also a registered person must directly request an extension of 
the prescribed continuing education from the Exchange. The 
continuing education content for participants would consist of a 
combination of Regulatory Element content and content selected by 
FINRA and the CE Council from the Firm Element content catalog. The 
content would correspond to the registration category for which 
individuals wish to maintain their qualifications. Participants who 
are maintaining their qualification status for a principal 
registration category that includes one or more corequisite 
representative registrations must also complete required annual 
continuing education for the corequisite registrations in order to 
maintain their qualification status for the principal registration 
category. The proposed rule change clarifies that the prescribed 
continuing education must be completed by December 31 of the 
calendar year, which is consistent with the timing for the proposed 
annual Regulatory Element.
---------------------------------------------------------------------------

     individuals would have a maximum of five years in which to 
reregister; \39\
---------------------------------------------------------------------------

    \39\ See proposed Article 6, Rule 11(c). In addition, 
individuals applying for reregistration must satisfy all other 
requirements relating to the registration process (e.g., submit a 
Form U4 (Uniform Application for Securities Industry Registration or 
Transfer) and undergo a background check).
---------------------------------------------------------------------------

     individuals who have been CE inactive for two consecutive 
years, or who become CE inactive for two consecutive years during their 
participation, would not be eligible to participate or continue; \40\ 
and
---------------------------------------------------------------------------

    \40\ See proposed Article 6, Rules 11(c)(4) and (c)(5).
---------------------------------------------------------------------------

     individuals who are subject to a statutory 
disqualification, or who become subject to a statutory disqualification 
following the termination of their registration or during their 
participation, would not be eligible to participate or continue.\41\
---------------------------------------------------------------------------

    \41\ See proposed Article 6, Rules 11(c)(1) and (c)(6). Further, 
any content completed by participants would be retroactively 
nullified upon disclosure of the statutory disqualification. The 
following example illustrates the application of the proposed rule 
change to individuals who become subject to a statutory 
disqualification while participating in the proposed continuing 
education program. Individual A participates in the proposed 
continuing education program for four years and completes the 
prescribed content for each of those years. During year five of his 
participation, he becomes subject to a statutory disqualification 
resulting from a foreign regulatory action. In that same year, the 
Exchange receives a Form U4 submitted by a member on behalf of 
Individual A requesting registration with the Exchange. The Form U4 
discloses the statutory disqualification event. The Exchange would 
then retroactively nullify any content that Individual A completed 
while participating in the proposed continuing education program. 
Therefore, in this example, in order to become registered with the 
Exchange, he would be required to requalify by examination. This 
would be in addition to satisfying the eligibility conditions for 
association with an Exchange member firm. See Exchange Act Sections 
3(a)(39) and 15(b)(4).
---------------------------------------------------------------------------

    The proposed rule change also includes a look-back provision that 
would, subject to specified conditions, extend the proposed option to 
individuals who have been registered as a representative or principal 
within two years immediately prior to the implementation date of the 
proposed rule change and individuals who have

[[Page 35830]]

been FSAWP participants immediately prior to the implementation date of 
the proposed rule change.\42\
---------------------------------------------------------------------------

    \42\ See proposed Interpretations and Policies .07 to Article 6, 
Rule 11. Such individuals would be required to elect whether to 
participate by the effective date of the proposed rule change. If 
such individuals elect to participate, they would be required to 
complete their initial annual content by the end of the calendar 
year in which the proposed rule change becomes effective. In 
addition, if such individuals elect to participate, their initial 
participation period would be adjusted based on the date that their 
registration was terminated. The current waiver program for FSAWP 
participants would not be available to new participants upon the 
date the proposed rule change becomes effective. See proposed 
Interpretations and Policies .08 to Article 6, Rule 13. However, 
individuals who are FSAWP participants immediately prior to the 
effective date of the proposed rule change could elect to continue 
in that waiver program until the program has been retired. As noted 
above, FSAWP participants may participate for up to seven years in 
that waiver program, subject to specified conditions. See supra note 
8. As discussed above, the proposed rule change provides a five-year 
participation period for participants in the proposed continuing 
education program. So as not to disadvantage FSAWP participants, the 
Exchange has determined to preserve that waiver program for 
individuals who are participating in the FSAWP immediately prior to 
the effective date of the proposed rule change. Because the proposed 
rule change transitions the Regulatory Element to an annual cycle, 
FSAWP participants who remain in that waiver program following the 
effective date of the proposed rule change would be subject to an 
annual Regulatory Element requirement. See proposed Article 6, Rule 
11(a). Finally, the proposed rule change preserves the Exchange's 
ability to extend the time by which FSAWP participants must complete 
the Regulatory Element for good cause shown. See proposed Article 6, 
Rule 11(a)(1).
---------------------------------------------------------------------------

    In addition, the proposed rule change includes a re-eligibility 
provision that would allow individuals to regain eligibility to 
participate each time they reregister with a firm for a period of at 
least one year and subsequently terminate their registration, provided 
that they satisfy the other participation conditions and 
limitations.\43\ Additionally, the Exchange proposes making conforming 
amendments to Article 6, Rule 13, including adding references to 
proposed Article 6, Rule 11(c) under Interpretations and Policies .07 
to Article 6, Rule 13. Finally, the Exchange proposes certain 
additional amendments to its rules to further align the Exchange's 
rules with those of FINRA, including making changes to certain rules to 
correct typographical and grammatical errors. More specifically, the 
Exchange proposes to amend current Article 6, Rule 11(a)(1) to clarify 
that the provisions under the rule apply to a ``Registered Person'' by 
inserting the word ``Registered'' in front of ``Person.''
---------------------------------------------------------------------------

    \43\ See proposed Interpretations and Policies .08 to Article 6, 
Rule 11.
---------------------------------------------------------------------------

    The proposed rule change will have several important benefits. It 
will provide individuals with flexibility to address life and career 
events and necessary absences from registered functions without having 
to requalify each time. It will also incentivize them to stay current 
on their respective securities industry knowledge following the 
termination of any of their registrations. The continuing education 
under the proposed option will be as rigorous as the continuing 
education of registered persons, which promotes investor protection. 
Further, the proposed rule change will enhance diversity and inclusion 
in the securities industry by attracting and retaining a broader and 
diverse group of professionals.
    Significantly, the proposed rule change will be of particular value 
to women, who continue to be the primary caregivers for children and 
aging family members and, as a result, are likely to be absent from the 
industry for longer periods.\44\ In addition, the proposed rule change 
will provide longer-term relief for women, individuals with low incomes 
and other populations, including older workers, who are at a higher 
risk of a job loss during certain economic downturns and who are likely 
to remain unemployed for longer periods.\45\
---------------------------------------------------------------------------

    \44\ See The Female Face of Family Caregiving (November 2018), 
available at https://www.nationalpartnership.org/our-work/resources/economic-justice/femaleface-family-caregiving.pdf.
    \45\ See The COVID-19 Recession is the Most Unequal in Modern 
U.S. History (September 30, 2020), available at https://www.washingtonpost.com/graphics/2020/business/coronavirus-recessionequality/ and Unemployment's Toll on Older Workers Is Worst 
in Half a Century (October 21, 2020), available at https://www.aarp.org/work/working-at-50-plus/info-2020/pandemic-unemployment-older-workers.
---------------------------------------------------------------------------

d. CE Program Implementation
    As stated in the FINRA Rule Change, FINRA and the CE Council also 
plan to enhance the CE Program in other ways, and these additional 
enhancements do not require any changes to the FINRA rules.\46\ As it 
relates to the rule changes themselves, the FINRA changes relating to 
the Maintaining Qualifications Program and the Financial Services 
Affiliate Waiver Program (FSAWP) became effective on March 15, 
2022.\47\ The Exchange's proposed changes to the Maintaining 
Qualifications Program (paragraph (c) of Article 6, Rule 11 and 
Interpretations and Policies .07 and .08 to Article 6, Rule 11) and to 
the FSAWP (Interpretations and Policies .08 to Article 6, Rule 13) will 
become effective on the date this proposed rule change is filed. All 
other changes related to the FINRA Rule Change and to the Exchange's 
rules relating to the Regulatory Element, Firm Element and the two-year 
qualification period, will have an implementation date of January 1, 
2023.\48\
---------------------------------------------------------------------------

    \46\ See supra note 5. As described in more detail in the FINRA 
Rule Change, FINRA will work with the CE Council to develop and 
incorporate additional resources in connection with the Regulatory 
and Firm Elements. Similar to FINRA, these additional enhancements 
do not require any changes to the Exchange rules.
    \47\ See FINRA Regulatory Notice 21-41 at https://www.finra.org/rulesguidance/notices/21-41.
    \48\ Id.
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (the ``Act''),\49\ in general, and 
furthers the objectives of Section 6(b)(5),\50\ 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.
---------------------------------------------------------------------------

    \49\ 15 U.S.C. 78f(b).
    \50\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As noted above, the proposed rule change seeks to align the 
Exchange Rules with the recent change to FINRA rules which has been 
approved by the Commission.\51\ The Exchange believes the proposed rule 
change is consistent with the provisions of Section 6(b)(5) of the 
Act,\52\ which requires, among other things, that Exchange Rules must 
be designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, and, in general, to 
protect investors and the public interest, and Section 6(c)(3) of the 
Act,\53\ which authorizes the Exchange to prescribe standards of 
training, experience and competence for persons associated with the 
Exchange.
---------------------------------------------------------------------------

    \51\ See supra note 5.
    \52\ 15 U.S.C. 78f(b)(5).
    \53\ 15 U.S.C. 78f(c)(3).
---------------------------------------------------------------------------

    The Exchange believes that the proposed change to the Regulatory 
Element and Firm Element will ensure that all registered persons 
receive timely and relevant training, which will, in turn, enhance 
compliance and investor protection. Further, the Exchange believes that 
establishing a path for individuals to maintain their qualification 
following the termination of a registration will reduce unnecessary 
impediments to requalification and promote greater diversity and 
inclusion

[[Page 35831]]

in the securities industry without diminishing investor protection.
    The Exchange believes the proposal is consistent with the Act for 
the reasons described above and for the reasons outlined in the 
approval order for SR-FINRA-2021-015.\54\
---------------------------------------------------------------------------

    \54\ See supra note 5.
---------------------------------------------------------------------------

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

    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 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 \55\ and Rule 19b-
4(f)(6) thereunder.\56\
---------------------------------------------------------------------------

    \55\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \56\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
pursuant to Rule 19b-4(f)(6)(iii), 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 this proposed 
rule change may become operative immediately upon filing. In addition, 
Rule 19b-4(f)(6)(iii) \57\ requires a self-regulatory organization to 
give the Commission written notice of its intent to file a proposed 
rule change under that subsection at least five business days prior to 
the date of filing, or such shorter time as designated by the 
Commission. The Exchange has provided such notice.
---------------------------------------------------------------------------

    \57\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    Waiver of the 30-day operative delay would allow the Exchange to 
more quickly align certain of its proposed changes with changes that 
FINRA implemented on March 15, 2022, thereby reducing the possibility 
of a significant regulatory gap between the FINRA and Exchange rules, 
providing more uniform standards across the securities industry, and 
helping to avoid confusion for registered persons of the Exchange that 
are also FINRA members. For this reason, 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.\58\
---------------------------------------------------------------------------

    \58\ 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).
---------------------------------------------------------------------------

    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 change 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-NYSECHX-2022-11 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-2022-11. 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 (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 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 10:00 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.
    Persons submitting comments are cautioned that we do not redact or 
edit personal identifying information from comment submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-NYSECHX-2022-
11 and should be submitted on or before July 5, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\59\
---------------------------------------------------------------------------

    \59\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-12654 Filed 6-10-22; 8:45 am]
BILLING CODE 8011-01-P